Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Goldman Forecasts China Economy in the Ascendency

Economics / China Economy Jun 11, 2009 - 09:36 AM GMT

By: Richard_Shaw

Economics

Best Financial Markets Analysis ArticleGoldman Sachs now forecasts that the China economy will overtake the US as the world’s largest economy by 2027.  Several emerging market countries are predicted by Goldman to overtake key developed market countries in the not too distant future.


They predict near term-growth for China at 8.3% in 2009 and 10.5% in 2010, compared to the world economy at -1.1% for 2009 and 3.3% for 2010.

Ranking countries by projected GDP for 2027, Goldman sees:

  1. China
  2. United States
  3. EU-5
  4. India
  5. Japan
  6. Germany
  7. Russia
  8. UK
  9. Brazil
  10. France

By 2050, Goldman sees this ranking:

  1. China
  2. United States
  3. India
  4. EU-5
  5. Brazil
  6. Russia
  7. UK
  8. Japan
  9. France
  10. Germany

The World Bank president says that China is the force that is stabilizing the world economy and may be the force to pull the world out of its slump, while acknowledging the fragile nature of the world situation and its vulnerability to new shocks.

We have consistently suggested that investors consider higher emerging markets equity exposures than are typically recommended.

Generally, we suggest that wherever you are in the allocation spectrum between equities, bonds and other; that your equities portion thinking begin with a world market-cap mixture from which you deviate based on perceived opportunity and risk.  We think the opportunities in emerging markets are greater than the opportunities in the US and EAFE countries, but with more volatility.

Consistent with the shift in the balance of economic power from developed toward emerging countries is the recent transfer of ownership of auto brands: Jaguar to an Indian company, Hummer to a Chinese company, Opel to a Canadian company with the help of equity from a Russian state controlled bank, and now Volvo being considered for purchase by a Chinese company.

Those auto changes are tangible examples and illustrations of continuing growth and financial power shift toward emerging countries — and of course, let’s not forget the central role China is playing in buying US massive Treasury issuance.

Once the lender to emerging markets, the US is now the borrower from them.  Once the financial disciplinarian to emerging markets, the US is now the one being cautioned to show discipline itself by China, its banker.

We own an emerging market basket (VWO), as well as China (FXI) and Brazil (EWZ) directly; and are overweight emerging markets within our equity allocation.

The emerging markets are closer to a bull condition than the US or other developed markets.  Accordingly, they should be somewhat more fully invested in an intended ultimate allocation than the US or EAFE countries by those who are reinvesting in stages based on evolving trends.

The primary trend is still down for most major indexes, as well as for China, but we may be in the process of approaching a new up trend (which would be indicated by an upward slope to the 200-day moving average by the cautious and conservative) — then again the situation is far from certain.

We are not out of the woods yet, so there is still plenty that can go wrong.  Keeping a sharp eye on developments, or better yet persistent trailing stop loss orders, is the prudent thing to do.

By Richard Shaw 
http://www.qvmgroup.com

Richard Shaw leads the QVM team as President of QVM Group. Richard has extensive investment industry experience including serving on the board of directors of two large investment management companies, including Aberdeen Asset Management (listed London Stock Exchange) and as a charter investor and director of Lending Tree ( download short professional profile ). He provides portfolio design and management services to individual and corporate clients. He also edits the QVM investment blog. His writings are generally republished by SeekingAlpha and Reuters and are linked to sites such as Kiplinger and Yahoo Finance and other sites. He is a 1970 graduate of Dartmouth College.

Copyright 2006-2009 by QVM Group LLC All rights reserved.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

Richard Shaw Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in