Saturday, May 19, 2018

Another busy week and now China


So last week, we had our presentation at the CSPGs core conference. This week, I got more involved in Eucalyptus’ new regional evaluation of the Mannville Group in East Central Alberta around the Hackett High. Then a client is planning to drill a small but important drilling program – so that is sticking its head up.  Construction on my new residence is about to start and so there is the back-and-forth with the new builder. Yesterday I became eligible for Canada Pension and…  I started (for the how-maniest time now?) converting my blog posts into an e-book on investing.  After breakfast I studied some investment newsletters. I realize that China is a much different country than many of us think and it may be important to look at it closer now that the U.S. stock markets are flattening. Europe has been sluggish as well, so it may be time to look at the world’s second largest economy?
The newsletter pointed out that China’s mainland ‘A’ shares which were out of reach for most North American retail investors will now be included in the MSCI indexes. Thus, they will now be included into many ETFs. The process of inclusion is to take around 5 years. Imagine, most retail investors could not buy shares in the world’s 2nd largest (and possibly future largest) economy; now these stocks will be included into the ETF universe worldwide. Chinese stocks will be in large demand and thus they will experience the wind in their back for some years to come.
China is a rapidly changing economy. Yes, its dictatorial government style and human rights records are far from ideal. But it is also a quickly expanding yet maturing economy. It does not have a young and fast-growing population, yet it has a middle class that grows in prosperity with leaps and bounds. In its own way, China works on electric vehicles (there are at least 300 Elon Musk clones in Asia) to fight its coal polluted city atmospheres. China is building more nuclear power plants than any other nation in the world. Yes, it didn’t sign that useless peace of delusional propaganda that followed the failure of the Kyoto Agreement. But that doesn’t mean it doesn’t pay attention to pollution. To the contrary.
China puts out many more engineering graduates than the U.S. and it competes with tech giants like Amazon and  Google through its own versions: Alibaba, Tencent and China Mobile. Just to mention a few. Some Chinese insurance companies are so high tech and innovative they make U.S. and Canadian insurance companies look like dinosaurs. Their growth rates in terms of profits and revenue are mind stunning while their stock market multiples are cheaper than cheap.  Just a few years ago we had scandals like Sino-Forest but this is being addressed. China is quickly integrating into the world economy as a force to reckon with.
Chauvinism may make North Americans deny the realities of a new world, just like stodgy Europeans denied the diminished importance of their old empires. Doing so, is not only arrogant, it also is investing with blinders on; denying what the real situation is on our planet. Statistically China will become a new center of world innovation, ignore it at your own risk. For me, I have added a bit of China to my stock portfolio and hopefully my investment seeds will grow to a meaningful size over the coming years.
Gee, this is a long weekend. But there is new software to test for my company’s petrographic microscope and I must sit on my patio, working on my new investment e-book with the preliminary title: 'Portfolio Gardener'. So… I better run.  But before that, I want to make my own ‘Harry and  Meghan’ observation: Looking at Harry’s photos its is difficult to not observe his Anglo-Saxon features. In movies he could easily outdo Mel Gibson as a Scott or a rowdy Irish man. Then we have beautiful and radiant, but not so white, Meghan. The remarkable thing is that nobody seems to care and we all are enthralled with their fairy tale wedding. So, if these blue-blooders are no longer so bent on their bloodlines, the world is truly becoming a better, more inclusive, place.  Hurray for mankind.

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