(By
Sid Riggs)The recent 21% tumble in the Chinese markets had investors around the world bailing out of China as fast as they could. But, this sell-off actually created one of the biggest buying opportunities of a lifetime. Here's why China is poised to take off – and how to cash in as China leads the global economic recovery.
August 2009 was one of the worst months ever for the Chinese stock market, with stocks dipping 21%. But the major sell-off wasn't based on any fundamental news – it was a case of frightened investors worried that China is the next bubble.
The truth is, China's fundamentals are sound. Chinese consumers are accelerating their purchases, exports are growing and Chinese GDP is on track to grow 7.9% by year-end. This is no bubble – Chinese stocks don't have anywhere to go but up.
Don't let western bias fool you. It is not the U.S. that will lead the global recovery – it is China and other emerging economies.
China's markets are for real – and so are the returns. Over the last five years, China's markets have returned over 100% – even after the massive sell-off caused by the global financial meltdown. Over the same time period the S&P has actually lost money.
This is just the beginning. This report will show you seven reasons the Chinese economy has nowhere to go but up – and how to profit.
1. Incredible GPD Growth Driving Returns
On July 15, 2009, China's National Statistics Bureau affirmed what we've expected all along. China's 2nd quarter GDP came in at an impressive 7.9%. Recently, HSBC China economist Qu Hongbin went a step further, forecasting that the Chinese economy will grow 8.1% this year and expand to 9.5% in 2010. The increasing GDP numbers reflect that China's recovery is much broader and more robust than most western analysts originally gave the red dragon credit for. This impressive growth comes not only from China's massive $586 billion fiscal stimulus package, but from strong growth in consumer demand.
2. China Can Stimulate Its Economy Without Going into Debt
While the U.S. has had to print trillions of dollars to attempt to stimulate its economy, China's story is much different. With $2.3 trillion dollars in reserves, China has been able to strategically stimulate their economy -without having to deficit-spend to do it. Even though the $586 billion Chinese stimulus package passed in November 2008 represents a whopping 16% of the country's GDP, China hasn't had to go into debt or print money like the U.S. did. This gives China an incredible opportunity to shore up the economy without damaging its future economic prospects.
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