Archive for November, 2007
After having the opportunity to visit a rural farming community in China it made me realize many things about China’s impressive growth. It is not an efficient growth, but an inefficient one. We see skyscrapers and massive Olympic structures being constructed every month but this is only a small part of China. Outside the two great cities of Beijing and Shanghai some small communities with de-collectivized farms hardly have any paved roads, and some have none at all. While we see this huge growth in China now, I do not believe that this growth is sustainable. My main reasons are as follows:
1. No infrastructure between inner and coastal China exists. During my visit to a small village the people said…
Over the course of this month I will be posting a series of articles on the Chinese economy. Just so you all know, I have been studying here at Beida for the semester or as foreigners call it Beijing (Peking) University and have come across some interesting realizations about China and their economy. While I do think this double digit growth they have been going through it true even by United States calculations, we do not see what this growth actually looks like and how long this is sustainable for. We see their stock market quadruple, and ADR’s skyrocket on U.S. capital markets but you get a new perspective when you are living in it. The questions that I will be looking at and the series or articles I will be posting will be on a wide range of topics about the Chinese economy. Please feel free to post comments and or suggestions of future articles for this month. Stay tuned for new articles.
Saturday, Nov. 10, 2007
by Alex
China’s market is getting harder and harder to understand; if they are in a bubble and how long it will last, or if there will be a correction and when, is a major topic with the coming Olympics. So I thought I would move the topic to another area. While there have been huge amounts of FDI in Asian countries, especially China, most people have been overlooking Africa. Global FDI levels for 2006 put Africa at 2.7% with investments equaling $36 billion.
Africa is in its growing stage. Africa’s GDP is expected to grow by 6.2% in 2007 according to the IMF which means it would grow faster then the world economy. Ghana’s stock market was even the world’s third best performing market last year, and Egypt topped that list. Africa is so filled with investment opportunities with a growing infrastructure, many more businesses will be able to begin operating in Africa. This is without even mentioning the abundance of natural resources spread across Africa.
There are already some opportunities to invest in Africa right now through ETF’s such as EZA, and GAF. Both have been increasing over the past year. Do some research and this may seem like a good opportunity for you. This could be a good spot to hedge against the U.S. markets.
Thursday, Nov. 8, 2007
by Alex
This two-part series by Bryant Urstadt is some of the best investing writing I’ve ever read. Bryant gives a run down of exactly what-the-f happened this Summer 2007. After reading these two pieces, "it all makes sense, man".
Part 1: The Blow Up
Teaser:
On Wednesday, August 8, not long after the markets closed, 200 of the smartest people on Wall Street gathered in a conference room at Four World Financial Center, the 34-story headquarters of Merrill Lynch. August is usually a slow month, but the rows of chairs were full, and highly paid financial engineers were standing by the windows at the back, which looked out over black Town Cars below and the Hudson River beyond. They didn’t look like Masters of the Universe; they looked like members of a chess club. They were "quants," and they had a lot to talk about, for their work was at the heart of one of the most worrisome summer markets in decades.
Part 2: The Blow Up
If you’re prompted to subscribe, do it. It’s very quick, and I’ve gotten no spam from these guys.
(thanks, Ugly)
Monday, Nov. 5, 2007
by Jason
As we all saw on Wednesday, the Federal Reserve made equal 25 basis point cuts to the Federal Funds Rate and the Discount Rate. While we are happy that core inflation is not going to be a large problem with this rate cut, and that we are easing rates in a growing economy where we just saw the U.S. economy grow at an annualized growth rate of 3.9%, I believe that many other problems will arise.
While lowering rates will bring along a lower borrowing cost I do not think that our economy needs this. Doing this will only bring people to spend more money on things they do not need. As we saw already companies that sold necessities like The Procter & Gamble Company(NYSE:PG) and Johnson & Johnson(NYSE:JNJ) have both been doing well though the subprime market problems.
Lowering rates now will also…
