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The Middle Kingdom leads from strength


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Old 10-24-2013, 02:35 PM   #1
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Pie Chart The Middle Kingdom leads from strength

Since June the Chinese markets have “significantly outperformed other emerging markets, in part because much of the weakness has focused on… currencies in those countries with current account deficits,” says the RiverFront. “China has ample foreign exchange reserves, and a managed currency.”

The investment manager also notes:

* The Chinese currency, the yuan, “has strengthened to levels not seen since it was devalued in 1994.”

* The government implemented a “mini-stimulus” in July, eliminating taxes for small business and outlining plans to reduce costs and provide funding for selected industries, such as railway construction.

* Following a spike in interbank lending rates in June, when the monetary authorities deliberately withheld credit to shock the banking system into obeying policy-requiring restraint, they have “allowed credit to flow again.”

* According to Gavyn Davies in the FT: “China has about $3½ trillion of foreign exchange reserves, and holds net assets overseas worth 30 per cent of GDP. In the last financial sector work-out, these reserves were used to recapitalize the banking system, and the same could happen again.”
Although China is a clear leader, developing Asia-Pacific markets as a whole seem to have moved into a new uptrend.
So… time to select shares that look like good buys, based on their performance and prospects. Some suggestions are the large-caps Tencent and Samsung Electronics, the mid-caps Great Wall Motor and Want Want, the small-caps Biostime, Arwana, Sino-Thai.

CopyRight – OnTarget 2013 by Martin Spring
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