King of the Birds, Lord of the Skies

King of the Birds, Lord of the Skies
Gather ye rose buds while ye may, old time is still a flying;
and this same rose that you see today, tomorrow will be dying.
CarpeDiem: Seize the Day!
- Dead Poets Society

Tuesday, April 24, 2007

The Seven Wonders (Economic Giants) of the World!

I won't keep you guessing as to who the giants are.
They're Russia, China, India, Japan, Brazil, Australia and Canada. (not in order of preference)
I will simply refer to them as “BRIC JAC”.
There is nothing that you do every day that is not connected to, or dependent upon, these seven countries. Quietly, invisibly, they have penetrated every corner of your daily life. If you do not hold significant investments related to these seven global giants, you are already missing out a lot. I am
seeing a series of largely untold economic miracles:

China
Consumer spending recently jumped from virtually zero to nearly $1 trillion. She currently boasts 1.3 billion consumers! Her stock market grew 130%. China plans to boost natural gas consumption by 500%, invest $4 billion in IT & infrastructure, expand fiber optic networks, beef up telco capacity, establish digital capable HDTV transmission & use GPS technology for traffic control. China is building massive skyscrapers, highways, city expressways, subway lines, & intra-city light rail. It's expanding the airports, improving water, electric, gas, & heating facilities. And it's investing billions to build 112,000 miles of rural roads — enough to circle the globe four times over.
Just imagine: raw materials & natural resources like cement, asphalt, tar & steel required to feed that kind of growth. That's why consumption of just about every imaginable resource is flying off the charts.
Gold & silver are surging. Ditto for copper. Aluminum prices are skyrocketing. Demand for zinc, lead, nickel & tungsten is roaring. Thanks to surging demand from countries like China and India, the price of uranium has also tripled in two years. Oil has zoomed from $20 to as high as $70 a barrel in three years.


India
India is like China 15 or 20 years ago. Look at these statistics:
i) India is currently home to more than 1 billion people and projected to surpass China as the most populous country on Earth by 2015.
ii) India's economy is growing 8 percent a year — the second fastest rate in the world.
iii) The Indian stock market has tripled in three years — creating a record number of billionaires.

One reason: Foreign investors have poured $30 billion into India's stock market in 36 months. Just like China, India needs massive amounts of natural resources & commodities to feed its booming economy. And this is not just a passing trend. It's an economic appetite that could last for a long time.

Brazil
Brazil's market, despite a relatively slower economy last year, delivered double the gains of S&P 500. The national leadership has implemented the most disciplined fiscal and monetary policy the country has seen in half a century. Brazil's currency was up by 69%, trade surplus by 225% from $14.1 billion to $45.8 billion. Her debts to the International Monetary Fund was 100% paid off! The Bank of Brazil (the equivalent to the US Fed) slashed its benchmark interest rate 14 times, to the lowest level in recent history. The economy is responding:
Retail sales have jumped 8.5%. Capital goods production jumped 18%. And Brazil's key stock index, the Bovespa, which rose 32.9% last year, is making new highs again. In just four years, Brazil's president, Luiz Inácio Lula da Silva, has transformed the Brazilian economy and forged monumental deals with China. Brazil's trade balance has gone from an $8 billion deficit to a $46 billion surplus. Brazil's natural resources are quivalent to those of the U.S. and Canada combined. But even those resources alone can't feed the needs of China, India, and all of Asia.


Canada
Canada is one of the strongest, most stable natural resource nation in the world. Unlike emerging nations, Canada has all the technology and expertise it needs to exploit its vast resources. Even more important, Canada has modern deep-water ports on both the Atlantic and Pacific coasts — giving it easy access to both European and Asian markets. Best of all, Canada is sitting on massive deposits of gold, uranium, coal, oil & other vital resources! And they're already cashing in. Canada recently recorded its fifth-best trade surplus in history. The reason? China.
Chinese importers are buying all the raw materials that Canada can sell them. That, plus a boom in mining projects and fattening margins, helps explain why the TSX-Venture exchange (Canada's small-cap market has outperformed the S&P 500 by 153% over the past five years. You know what? China has blanketed the country with a vast network of representatives to scoop up coal mines, oil sand fields, natural gas pipelines & metals.

Australia
In the 1800s, Chinese miners flocked to Australia for the great gold rush. Today, it's happening again. Only the Chinese aren't looking for gold; they're after uranium. They're coming with mountains of money. Why?Because Australia happens to sit on the world's largest known deposits of uranium — with more reserves than the United States, Canada, Russia & Brazil combined. And with more than 900 new nuclear plants now being planned, the hunger for uranium is just beginning.
Australia's abundant natural resources — including iron ore, nickel, coal, uranium, & more — are in such huge demand in nearby Asia. Australia's economy is now in its sixteenth consecutive year of expansion. Job growth has been the strongest in 17 years! Result: Consumer spending is growing & consumer confidence recently hit a 19-month high. There's no better indicator of a country's future than its currency, and the Aussie dollar recently reached its highest level since 1996 against the greenback.


Japan
The Sun is rising again! Japan is now enjoying its longest, non-stop, sustained expansion since World War II. Automakers are soaring. Banks are thriving. Unemployment just hit a record low. And the stock market has doubled in 24 months. So what's the mega-force behind Japan's remarkable recovery? You guessed it — China.
Japan's trade with China jumped to $189 billion last year, the seventh straight annual record. This year, it should easily top $200 billion. Just when most people (myself included) were giving up on Japan a few years ago, the country was cleaning up its balance sheet & starting to capitalize on China's economic boom. At the same time, Japan is also solidifying trade & security links with Australia. It's currently the biggest buyer of that country's coal, natural gas, oil, & agricultural goods. And if the two countries hammer out a free trade agreement, both economies will get an additional boost. Companies are now making more money & they're much more optimistic about the future. But investors aren't quite as bullish. So valuations on Japanese stocks are still among the lowest in the world.


Mother Russia
The Russian Bear used to use its military might to keep its European neighbors in check, but today Russia's vast natural resources are the weapons of choice. Europe has grown increasingly dependent on Russian oil - & especially natural gas - to power its economies. In fact, Russia really has a stranglehold on fast-growing Eastern & Central European nations. And the state-controlled Gazprom conglomerate now holds all the cards. According to a recent article in The Economist, Poland, Hungry, & the Czech Republic each depend on Mother Russia for more than 60% of their natural gas imports - while Bulgaria gets nearly ALL of its gas from Russia. In Western Europe, over 40% of Germany's gas imports come from Russia, while in Italy & France the figures are 30% and 20% respectively. What's her future? You do the maths.


This worldwide growth and expansion has come, and it will represents the greatest wealth-building opportunity ever. I hope I've managed to communicate the colossal magnitude of the expansion that's now happening. We will still be focusing on the US market, but we can intelligently diversify into these exploding markets and watch our portfolio multiply.

Remember: BRIC JAC!
Best of luck for your week ahead.

No comments: