Wednesday, December 1, 2010

Analysts and pundits have looked high and low for any indication of China’s future well-being...

China: Economic Indicators Are Looking Good
by: Tom Lydon November 30, 2010 | about: FXI / GXC / PGJ

One investment strategist points out a rather odd indicator of China’s economic prowess and another fund manager sees China as the go-to investment opportunity as the lack of returns in developed markets send investors packing. There are several China-related ETFs available for those who want to hop onto China’s rising potential.

Analysts and pundits have looked high and low for any indication of China’s future well-being, but Keith Fitz-Gerald for Minyanville believes that the price of hairy crab, a fall delicacy in China, is an accurate economic indicator. As Keith noticed, hairy crab prices fall when China’s economy is down. However, current hairy crab prices are up 30% year-over-year at around $105 per kilo, which suggests good economic times to come.

The Chinese government is in a process of rebalancing the economy in a way that would favor domestic consumption over export growth, and investors should begin to adjust their investments accordingly.

Anthony Bolton, a Fidelity fund manager, is “as convinced as ever” about China’s long-term outlook, reports Raji Menon for Reuters. China “will become the dominant economy in Asia and it will have an effect on every other country in the region – many of which will become satellites to China’s sun,” Bolton remarks.

“Chinese growth could return to 7-8 percent from its current double digit level but relative to growth of around 2 percent in much of the world,” adds Bolton. Still, Bolton commented that rates may continue to rise as the government prevents the economy from overheating.

Chief executive Tom Albanese of RIO Tinto (NYSE: RIO) stated that China’s move to cool its growth is a conducive to the health of the global economy and will help reduce overall risk in the commodities market.

* iShares FTSE/Xinhua China 25 (NYSEArca: FXI)
* SPDR S&P China (NYSEArca: GXC)
* PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ)

Max Chen contributed to this article.

Disclosure: None