Navigating China with Louis Navellier:
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China: Largest Untapped Market in the World
08.07.08
On Tuesday, the market soared over 330 points when the Federal Reserve decided not to raise interest rates. Though keeping rates steady was good news, the real catalyst for the big move was the Fed's statement after the meeting. Wall Street felt the statement implied the Fed won't raise rates for the rest of the year, and that was all traders needed to push prices higher.
The Fed said, "Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth." I used to work for the Fed and I can tell you that their statements are purposely written in a way to convey as little meaning possible. This time around, however, the message rings loud and clear: The Fed thinks the rate cuts it has already made will work and it's going to wait and see the results.
Financials Flounder and Unemployment is Up
Even though Wall Street was surprised and delighted by the Fed's decision to hold rates steady, I can't say it surprised me. The credit market is still in shambles–just take a look around! Yesterday, Freddie Mac (FRE) announced its fourth straight quarterly loss, and its dividend is going to be slashed by at least 80%. Today, shares of American International Group (AIG) had their worst day in over 25 years! Over the last three quarters, the company has lost over $18 billion, and in the past year, the stock is down 92%. Ouch! Not surprisingly, both Freddie and AIG are rated F by PortfolioGrader Pro, my FREE stock rating tool. Also, Wal-Mart (WMT) just reported sluggish sales for July, which probably reflects the end of the effects of the economic stimulus checks.
Trouble also plagues the U.S. job market. The government announced today that unemployment claims rose to a six-year high. The unemployment rate has risen 0.7% in the past three months, which is the fastest increase in 26 years.
The Outlook is Brighter in the East
Despite the troubled U.S. economy, there are still plenty of opportunities for investors. If you're a little brave and a lot smart, you'll look outside U.S. borders for portfolio growth. It's true, one of the best ways to diversify a portfolio is by holding fundamentally superior stocks based in emerging markets. That's why in this week's issue of What's Working on Wall Street Now, I want to focus on China and highlight some the great investment opportunities this emerging economic giant has to offer.
China has one of the largest economies in the world, second only to the U.S. China has a population of 1.3 billion people, and soon that will mean 1.3 billion who will demand many of the same things consumers in the West enjoy–everything from flat-screen TVs and sports cars to Starbucks and cell phones. Since free market reforms were introduced 30 years ago, the Chinese economy has grown by an average 10% a year. That's an astounding growth rate. Yet, many North American investors are still a bit skittish about investing in China. To be frank, some caution is definitely prudent.
In my Global Growth investing service, we've been able to pinpoint some of the best, and safest, China stock opportunities. The game I like to play is to look for a Chinese counterpart for a great American stock. For example, we all admire the tremendous gains of Warren Buffett's Berkshire Hathaway (BRKA). Is there a similar stock in China? There could be, my Global Growth subscribers made 187% in China Life Insurance (LFC) in just 15 months. How about a stock similar to Southwest Airlines (LUV)? At Global Growth, we made a quick 41% in China Southern Airlines (ZNH) in less than five months.
If you're not familiar with many stocks in China, here's a list of 20 major names along with my current PortfolioGrader Pro ratings.
Company
Ticker
Grade
AgFeed
FEED
A
AsiaInfo
ASIA
A
Baidu.com
BIDU
A
China Medical
CMED
A
China Unicom
CHU
A
Jinpan
JST
A
Sohu.com
SOHU
A
China Life Insurance
LFC
B
China Mobile
CHL
B
China Netcom
CN
B
China Petroleum & Chemical
SNP
B
China Telecom
CHA
B
CNOOC
CEO
B
New Oriental Education
EDU
B
PetroChina
PTR
B
Simcere Pharmaceutical
SCR
B
Yanzhou Coal
YZC
B
Zhongpin
HOGS
B
Huaneng Power
HNP
C
Trina Solar
TSL
C
With the Beijing Olympics kicking off tomorrow, this is an excellent time to focus your portfolio on China and several other emerging markets. Today, I want to extend to you an opportunity to sign up to my Global Growth service. Over the last ten years, our system has beaten the U.S.-based S&P 500 by more than 10-to-1.
Our secret is finding explosive growth stocks on international exchanges that are mostly unknown to American investors. At least, they're unknown for the moment. Today we're currently investing in stocks based in countries like Brazil, Ireland, Russia and South Africa. However, our #1 country right now is China. You can sign up now for one year of Global Growth for $5,000. Or you can try a three-month trial for $1,395.
That's all for this week. I'll have the next issue of What's Working on Wall Street Now next Thursday, August 14.
Sincerely,
Louis Navellier
Sincerely,
Louis Navellier
P.S. Don't forget General Steel (GSI), the Chinese steel stock that I highlighted two months ago. Since then, the shares are up nearly 40%! Enjoy watching the Olympics and sign up to Global Growth today.
Other recent e-letter issues:
08.07.08: China: Largest Untapped Market in the World
07.31.08: Preview of the New Emerging Growth
07.24.08: Earnings Season Part II: Finding the Best Stocks to Buy on Wall Street
07.17.08: Earnings Season:
Finding the Best Stocks to Buy on Wall Street
07.10.08: Going Green: How to Invest in Alternative Energy |
