Posts Tagged ‘China’s Growth’
Why China Is Hot for Travel Stocks
By George Leong, B.Comm. for Profit Confidential
China is rapidly become one of the top travel markets in the world for both domestic and international travelers. To deal with the increased travel, China has been steadily building its road, rail, and air infrastructure that will make travelling in this country much easier.
“China is the most attractive place in the world right now for hotels. That’s why investment capital is racing there and why the major international brands are racing there too,” said Patrick Ford, president of U.S.-based Lodging Econometrics, in an article on time.com.
China is the fourth top destination for tourism, but is expected to become the number one destination by 2020, according to the World Tourism Association.
The country is predicted to see major growth in its domestic travel from 2011 to 2013, according to a research report, China Tourism Industry Forecast to 2012, by traveldailynews.com.
China’s growth and travel industry are driven by a population of over 1.3 billion people and a steadily increasing middle class with money to spend on travel. As wages increase, so will the spending on non-essential items such as travel and recreation.
There is also a rising wave of foreign travelers that have made Asia and China premier travel destinations.
To handle the expected increase in travel, there is a push to build more hotels and motels across the vast country.
In the Chinese travel and hotel area, there are numerous operators that have excellent potential for the aggressive investor looking for growth areas.
Some of my favorite Chinese travel stocks include China Lodging Group, Limited (NASDAQ/HTHT), Home Inns & Hotels Management Inc. (NASDAQ/HMIN), and 7 Days … Read More
What Carmakers Are Doing in China Now
By Sasha Cekerevac, BA for Profit Confidential
The Chinese economy has accelerated at a high level for a number of years. While China’s growth might slow down in the short term, the long-term forecasts for the Chinese economy are extremely bullish. Many firms are hoping for an increase in corporate earnings by expanding sales and production within the Chinese economy. While most Americans still think of the Chinese economy as production only, meaning cheap labor, several corporations see more to the Chinese economy than that simple notion.
Ford Motor Company (NYSE/F) has just announced a $5.0-billion expansion in the Chinese economy. This includes a massive increase in production, as many would expect, but it is also expanding its dealerships throughout Asia. Ford, along with many corporations, sees the Chinese economy as the great frontier for corporate earnings growth over the next several decades. By completion of the fifth factory in 2015, Ford’s total capacity of production plants will be to build 1.2 million cars in China.
Ford isn’t the only carmaker looking to China for increased corporate earnings growth. General Motors Company (NYSE/GM) has been active in the Chinese economy and has a larger share of the market with its head start. GM is also looking to continue its expansion with additional joint venture partners and more production facilities to take advantage of the continued Chinese growth over the next two decades.
While GM is number one in overall car sales for non-Chinese automakers, Volkswagen Aktiengesellschaft (Pink Sheets/VLKAY) is also a large player in the Chinese economy, with additional production also set to take place over the next few years. As Ford stated in its release … Read More
China’s Domestic Consumption Ambitions
By George Leong, B.Comm. for Profit Confidential
China is set to announce its first-quarter gross domestic product (GDP) today and, trust me; there is global interest in the result. A weak result and speculation will swirl that the country will face a “hard landing,” which is not what the world wants to hear and could start a domino effect globally.
A month ago, Chinese Premier Wen suggested that GDP will come in as low as 7.5% this year in the worst-case scenario. The World Bank predicts growth of 8.2% this year—a 13-year low and down from an 8.4% estimate in January. For 2013, Chinese GDP growth is estimated at 8.6%.
Of course, the 7.5% estimate by the Chinese is on the conservative side and clearly is a move by the government to make sure the actual reading comes in well above to show the country is strong and can deliver. This is the kind of economic propaganda you find in China.
The stalling is also expected to spread to China’s neighbors. GDP in East Asia and the Pacific Rim is estimated to stall to 7.8% this year, versus 8.2% in 2011. The numbers continue to look strong relative to the other G8 countries, including the U.S. and Canada. Longer-term, China and India will be key players in Asia, which I discussed in Chindia: The Place to Be for Growth in the Future.
The important issue is whether the Chinese economy will have a “hard” or “soft” landing. The reality is that the country’s exports are declining, as the global economies continue to face growth issues. There is also a decline in domestic consumption, which is … Read More
More Signs of a Slowing Chinese Economy
By Sasha Cekerevac, BA for Profit Confidential
When it comes to the world economy, everyone is expecting China to come to the rescue. While the financial authorities there have reduced China’s growth expectations down to 7.5% this year, this pace is still envied by the rest of the world. The problem is that such a slowdown from over eight percent is starting to be felt by Chinese citizens…and soon the rest of the world.
Chinese real estate is a huge portion of China’s growth over the past decade. The Chinese authorities have been adamant in trying to lower costs for the average citizen, saying that they are trying to rein in the Chinese real estate bubble. Recent evidence appears that even though new Chinese real estate developments are being sold at 20%-30% discounts, the reductions are still not enough.
A recent survey published by the Chinese authorities states that 68% of households think home prices are still too high and only 14% were thinking about buying. This sign of the Chinese real estate market slowing down is going to be felt in many industries, namely commodities that are used in construction.
With China’s growth being reduced, especially in the Chinese real estate market, we’re going to see less demand for commodities like copper and iron ore. This past week, BHP Billiton Ltd. (NYSE/BHP) warned of flat iron ore demand from China.
China is the world’s biggest consumer of many commodities; for example, it’s responsible for the purchase of more than a fifth of global steel and over a third of copper demand. With BHP sending out the warning that China’s growth is appreciably slowing, changing future projections … Read More
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