Why Invest in China?
If you are an aggressive growth investor looking for superior returns with the associated risk, you have to consider invest in China growth companies.
The Baby Boomer generation in the US was 76 million strong. From 1946 to 1964- the Post WWII era, there were 76 million births representing the largest single bulge of population in the history of the US. As that massive bulge of population grew up and became productive, the largest consumer class in the history of the world emerged, and fortunes were made in the US stock market as companies grew and prospered on the strength of the baby boomers.
Those 76 million births led to 20 years of the greatest growth and prosperity in the US. However, those 76 million baby boomers were a mere drop in the bucket compared to what's coming in China over the next 20 years. Consider the following:
There are 1.3 billion Chinese Citizens....
Twenty years ago, a very tiny percentage of those Chinese citizens had enough wealth to be viewed as consumers.
It took 15 years for 5% of the 1.3 billion- about 65 million, to have enough wealth to be consumers of goods and services.
It only took 5 more years to double the numbers of consumers- from 5% to 10%, or from 65 million to 130 million.
If the number of consumers doubles in the next five years, China will have grown to 260 million consumers and surpass the US in shear numbers, though undoubtedly consumer spending on a per capita basis will be lower. Five years after that, China will officially surpass the US as the largest consumer market in the world in terms of population and GDP.
There were 76 million baby boomers. There
are 1 billion more Chinese that will become consumers.
Today, high end goods are in high demand. Chinese consumer pay the highest prices in the world for Louis Vitton Purses, Mercedes Benz cars, and high end Wines. Demand is far outpacing supply.
Over the next 20 years there will be literally hundreds of small cap companies becoming far larger as the most dramatic consumer class in the history of the world emerges. Goods and services will be in high demand. There will be a greater need for energy and infrastructure, and companies in those sectors will prosper as well.
China officially surpassed the US as the largest market in the world for new cars this year. General Motors sells more new cars in China than it does in the US, and over 70% of GM's growth is coming from China.
The following delivers a greater understanding of the magnitude of the opportunity in China. After looking at the data, I'm sure you'll agree the opportunity to invest in highly profitable ground floor situations over the next five years is the most exciting the world has ever known, and Larry Isen's Emerging China Stocks will help you find the best of those small companies. The fortunes of a life time will be made as many of those small companies become larger companies.
China - The Rising East
- An economic revolution spanning three decades
- Efficiencies from China's economic reforms
- A growth engine for the global economy
- The emergence of a middle class - a focus on domestic consumption
- A tenacious population of entrepreneurs which own over 150,000 SME's
10 Wealthiest Nations in the World (GDP)
China's Projected GDP
Source: Barclays and Goldman Sachs
A Great Balance Sheet
- The Chinese Government topped $2.3 trillion in cash reserves. The U.S. is nearly $11 trillion in debt and growing.
- Chinese individuals hold roughly $4 trillion in combined savings and save over 25% of disposable personal income. US consumers save <1%.
- China's share of world consumer spending is projected to equal the US by 2020.
Source: Fortune; Asia Times Online; US Bureau of Economic Analysis, China Statistical Yearbook 2008
- Aggressive macro economic policies from the central government to support growth - currently government spending accounts for 25% of GDP
- Ample liquidity, low leverage, and no securitization will cushion negative shocks from the global credit crunch and deleveraging process
Source: CEIC, JP Morgan Economics
China's GDP Growth
The highest economic growth of any developed country (~10%)
$586 Billion Stimulus Package
Growth Firmly on Track
Indications of Stability & Growth
China Based - US Listed Companies
There are approximately 600 companies listed in the US, with major operations in China or Hong Kong
- Over 90% initially began trading on OTC BB
- Now over 150 listed on NYSE or NYSE/AMEX, 150 listed on Nasdaq,
200 listed on OTCBB, and 100 listed on pink sheet
- The group currently trades at approximately
10x earnings with forecasted growth of 20% PLUS
- Shanghai market trades at 30x PLUS
- Shenzhen market trades at 40X PLUS
- New Gems market trades at 80x PLUS
- Hong Kong market trades at 25x PLUS
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