Weekly international investment round up to February 9, 2010
Valentines Day and the Chinese New Year coincide this Sunday. Two distinctly separate events but both increasingly celebrated in the East and the West symbolizing the intertwined world in which we all now live.
Most of us are also aware that the Chinese lunar calendar is represented by an animal with many knowing I am sure that this will be the Year of the Tiger. Fascinatingly, according to Chinese legend Buddha summoned all the animals to witness his departure from earth but only twelve turned up to say goodbye. In order of those who arrived were the rat, ox, tiger, rabbit, dragon, snake, horse, ram, monkey, rooster, dog and finally the pig and as their reward Buddha then named the following years by order of their arrival. All good stuff but what has this got to do with the investment markets? By tapping into the psyche of more than a billion people and understanding that their very expectation of events may actual help influence them could this give us an edge?
While all of their main economic rivals battled with recession last year the Year of the Ox would appear to have lived up to many of it’s attributes with the Chinese displaying hard work and patience while toiling methodically to achieve prosperity and although their GDP figures may have declined from the previous year overall their economy still expanded by an enviable 8.7%.
As the third position of the Chinese Zodiac, the Tiger symbolizes characteristics such as bravery, competitiveness and unpredictability while their instinctive behavior and wish to be centre of attention could be traits for investors to be wary of.
As the Chinese word for tiger, hu, sounds similar to their word for wealth this year’s positive attributes are unlikely to cool an economy which may be overheating as property prices spiral upwards somewhat resembling those in the West just before the credit crunch struck home.
It is often considered in Europe and America that China seeks to imitate their economies while in reality China has a better understanding of one much closer to its shores in Japan. In fact, China’s meteoric rise very much resembles post-war Japan before things went wrong in what is now referred to as it’s ‘lost decade’ of the 1990’s. Investors in China are surely hoping that lessons have been learnt from the Japanese experience and the new decade will be one in which the tiger roars.
Having quizzed investment fund managers over the years occasionally they say something interesting for example, some use research data issued by the world patent organisation, the WIPO, as a future indicator. Last year China increased its world patent activity by some 30% while America’s declined by 11%, growing evidence of a shift from imitators to innovators. Interestingly, last year China’s Zonda Bus Company successfully trialed its new amphibious bus around the coast of Malta while the company saw export growth of 168% however, I fear amphibious buses may be too innovative for those now bidding for our bus routes! But for sure, this decade China’s crouching tiger is set to leap.
