China reported faster-than-expected economic growth in the first quarter–but… Although Gross Domestic Product climbed 5.3% in the quarter–a faster rate of growth than in the first quarter of 2023 and above economist estimates, most of the good news came from the first two months of the quarter. In March growth in retail sales slumped and industrial output fell short of forecasts. That doesn’t bode well for the rest of 2024.
Today’s Quick Pick is Las Vegas Sands Corp. (NYSE: LVS). Is Macau gaming the best way to play China? I would say yes. News out of China is that it’s clearly reaccelerating and will easily hit 5% economic growth in the current quarter. The economy is reopening and growth is up and Macau, as a gaming center, is benefitting in a pure Covid reopening story. Total gaming revenue in Macau was up 247% year over year in March and 450% in April. Normally I’d look at MGM International to play Macau, but their Las Vegas presence outweighs their China presence, and at this moment, I’m looking for something with less presence in Las Vegas. Although the name may suggest otherwise, Las Vegas Sands has a much bigger presence in China and is in the process of selling their Las Vegas assets in order to invest more in Singapore and Macau. This is a good place to play China gaming as the country accelerates and I’ll be adding it to my JubakPicks Portfolio with a target price of $70 a share.
Commodity stocks rallied big time on Thursday, July 7, on news that China’s Ministry of Finance is considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of this year. This would be a huge expansion of the borrowing capacity of local governments–which had looked to be only around $330 million after local governments sold most of the year’s quota in the first half–and would provide a boost to infrastructure spending and China’s economic growth. The news comes as fears grow that China’s economy won’t meet the official goal of 5.5% growth in 2020.
Commodities have soared on prospects for a post-coronavirus vaccine economic recovery. And copper is one of the best commodities to own in order to invest in the recovery of the global economy–and especially the growth in the Chinese economy–as the coronavirus pandemic recedes in 2021. I already own Southern Copper (SCCO) in my Dividend Portfolio and First Quantum Minerals (FQVLF) in my Volatility Portfolio. Those stocks were up 56.83% and 77.64%, respectively, in 2020. Tomorrow, January 6, I will add shares of Freeport McMoRan Copper & Gold to my Jubak Picks Portfolio.
Good news and more good news on China’s economy. Industrial output up more than expected. Inflation lower than forecast. Total new loans by China’s banks less than expected. Retail sales up. I just wish all this good news wasn’t so clearly correlated with the meeting of the Communist Party’s Central Committee
Growth in China’s manufacturing sector in October was stronger than expected according to the official Purchasing Managers’ Index. The index came in at 51.4 for the month today. That was up from 51.1 for September and above the 51.2 median estimate among economists surveyed by Bloomberg.
Contrary and far less optimistic views of China’s economy keep coming in, casting doubt on exactly how much credence Monday’s official numbers pointing to an uptick in GDP growth should get. The quarterly report from China Beige Book International shows quarter-to-quarter slippage in corporate profits and revenues
The Purchasing Managers Index from China’s National Bureau of Statistics and the China Federation of Logistics and Purchasing showed a jump to 51.0 in August. That’s a 16-month high. In the U.S. the Institute for Supply Management’s manufacturing index climbed to 55.7 in August from 55.4.
