One of the Chinese drug companies I’ve been following for almost a year is Sinobiopharma, Inc. (OTC:SNBP).

by J. Christoph Amberger

Baltimore, MD: Last June, in a small ceremony in Guangzhou, China, U.S. and Chinese officials signed three agreements that will change the face of the global pharma industry. At face value, it was the most boring bit of news of the day.

But when the ink had dried into a deep royal blue, the United States government had committed to a huge strategic blunder. Like Napoleon selling Louisiana to President Thomas Jefferson… or Russia selling Alaska for $7,200,000…

Only bigger!

But here’s the good news: The “Guangzhou Agreements” have created an enormous investment opportunity! It could be like getting a second shot at investing in Chinese A-shares… in 1997! But let me give you an idea of the full scope:

In 2006, global spending on prescription drugs topped $643 billion. The United States accounts for almost half of the global pharmaceutical market. That’s more than the annual GDP of Venezuela… Greece… or Argentina! With one crucial difference: All these countries operate at a loss.

But profits for U.S. pharma companies actually grew as other top industries began to stall. In Fortune magazine’s annual survey, the pharma industry regularly tops the list of the most profitable industries, with a return of 17% on revenue.

Those Guangzhou Agreements mean one thing: The U.S. pharma companies will be shipping their profits abroad! And U.S. taxpayers will pay for them to do it!

Giving away the pharm

Here’s what went down: On June 18, the U.S. Pharmacopeial (USP) Convention reached three new cooperative agreements with Chinese drug control authorities.

You’ve probably never heard of the USP. It’s a scientific organization that sets standards for the quality of prescription and over-the-counter drugs. These standards are enforced by the U.S. Food and Drug Administration (FDA) in the United States. This was only the first wave in what Kiplinger magazine calls “a sea change in food safety regulation.”

Sidetracked by “health” reform, Congress is about to pass sweeping new legislation to overhaul of the nation’s food safety laws. Sources report there’s a “broad consensus” among consumers, industry groups, scientists, President Obama and members of both parties in Congress. It’s easy to understand why consumer groups and politicians are in it:

Remember the recent FDA investigation into the “Baxter heparin scare”… which uncovered a contaminated ingredient obtained from a Chinese manufacturer?

Or the 2008 scandal of melamine contamination in Chinese-made powdered formula, which sent 60 babies to the hospital?

Or how about the 2007 case when Chinese pet food ingredients killed and sickened thousands of dogs and cats in the United States…

It’s easy to see why politicians want to make sure Chinese food and drug exports are as safe as can be. U.S. companies are all for it, too. They want to avoid costly recalls. (The recent salmonella outbreak alone cost the peanut industry more than $1 billion.) Not to speak of billions in possible litigation awards! But there’s another reason for their enthusiasm:

Lack of reliable quality standards is the single major hurdle that’s kept the U.S. pharma industry from moving abroad!

And it’s been killing them!

U.S. politicians now demand that U.S. pharma companies make their products available at minimal profit margins. Nationalized healthcare threatens to undercut the profits needed to maintain vital research and development. But the industry hasn’t been able to offset increasing cost and shrinking revenues.

Over the next few months, U.S. pharma’s facing a rapidly declining return on investment as thousands of blockbuster drugs lose patent protection. Since 2007 the industry has laid off thousands of workers to cut costs.

There’s only one way out of this looming debacle: Follow the toy, textile, electronics, shoe, furniture, solar, and computer industry. And move to China!

Congress is now speeding up the process. This legislation will give the FDA more authority to enforce strong quality standards. Companies will have to verify that foreign supplies are safe.

Most importantly, there’ll be a bigger FDA presence abroad for more on-site inspections in more countries.

Especially China!

This is what the U.S. and Chinese pharma industry has been waiting for. You see, these days, 75-80% of all active pharmaceutical ingredients used by U.S. drug manufacturers are imported, mainly from India and China. So are 40%of finished dosage forms. But a recent government audit revealed that the FDA was unable to provide inspection records for a full two-thirds of the 3,250 facilities currently supplying the U.S. with pharmaceutical ingredients:

Right now, the FDA only carries out inspections of around 7% of the total number of foreign drug manufacturers a year. U.S. drug makers are subject to surprise inspections every two years. But foreign manufacturers are even given advance warning before an inspection takes place… and can provide the translators! China, which has the largest number of drug manufacturers eligible for FDA inspection (714), is scheduled for only 13 regulatory visits by the FDA this year.

That’s less than 2% of the country’s drug exporters!

Global competition

In a global economy, countries compete for manufacturing business via their labor cost and their currency. The country with the cheapest labor, pricing output at the most advantageous exchange rate, tends to get the order. But cheap labor is only good if it produces equal quality.

A DVD player, a car, a complex chemical “Made in China” can only compete if its quality is indistinguishable from counterparts made in Japan, Germany, or USA. It’s that quality differential that we owe the remaining American automotive and industrial manufacturing jobs to. The new wave of drug legislation will make sure that the risk of supply chain contamination is reduced drastically.

The Chinese love it! They’ve already committed $1.7 billion to improve the quality of the food and drugs manufactured fro export.

Now the Americans will not only show them how to apply quality controls. They’ll do the work for them… at U.S. taxpayers’ expense! It’s a classic Win-Win situation!

Uncle Sam, on his own nickel, is removing the last obstacle to shifting not just raw materials production but the manufacture of complex pharmaceuticals to China: If the quality of output is identical, manufacturers will go with the cheapest labor and the most advantageous business climate.

Here’s the inevitable outcome:

Once rigorous quality controls are in place, U.S. pharma manufacturers will follow their colleagues from the the toy, textile, electronics, solar industries to Guangdong, Shenzen, Shanghai. The benefits are unbeatable: Political culture in the United States is by now fully anti-business and pro-entitlement.

At home, the U.S. pharma industry’s being painted as a major obstacle to “affordable healthcare”. It’s a prime litigation target. High taxation and government-mandated unionization of many aspects of the labor market have already reduced the attractiveness of the United States as a manufacturing location for other industries.

China, however, loves business. The massive domestic market in China is just the icing on the cake!

Starting in early 2010, American drug makers will increasingly shift production abroad. They can do so safely: The U.S. government will make sure drugs can be manufactured at equal quality — but for a fraction of the cost. Plus, the Chinese government has initiated a $124 billion spending stimulus on healthcare for 2009-2011!

But to operate effectively within the Chinese system, foreign companies require well-connected partners. Merger & acquisition activity involving American and Chinese pharma companies will start picking up as early as this fall… and come to a boil by Spring 2010!

The most likely take-over candidates are not the large corporations… with whom American companies have partnered for manufacturing and distribution since the 1990’s.

It’s small but well-established Chinese companies with existing high-quality manufacturing capabilities and a foot in every door that counts in Beijing

One of the Chinese drug companies I’ve been following for almost a year is Sinobiopharma, Inc. (OTC:SNBP).

Read on right here…

Article first published on Today's Financial News

The Big Picture for Sinobiopharma, Inc. (SNBP)

Sinobiopharma, Inc. (OTC:SNBP) has been rising pretty much out of the blue. How to play a stock that’s as volatile as this?

by J. Christoph Amberger

Baltimore, MD: One of my favorite Chinese drug manufacturers, Sinobiopharma, Inc. (OTC:SNBP), is up to above $0.31 — from a low near 21 cents on January 8. That day, I last recommended this stock as a short-term speculation to readers of TFN’s now “retired” high-end trading service, Penny Stock Confidential.

Now, the last spike above 30 cents — on my last day at TFN, Jan. 15 — occurred on excellent earnings and revenues growth news.

I see no clear indication where the current interest is coming from. But in the first hour of trading, volume has already reached half of the average daily trading volume.

Overall, I continue to recommend SNBP as a worthwhile — if extremely volatile! — speculation. Revenues growth year-over-year is bound to level off as the numbers get better each quarter. The past year has proven that this is a very news-sensitive company: Even the publication of an approved product list can set the price of the ADR soaring.

Protracted periods of no news, however, have a tendency to erode the value of the shares. Use these inevitable pullbacks to near a quarter per share as buying opportunities.

Please be sure to sign up to my email and blog updates on this and other high-potential stocks!

Similar Posts:

• Turnaround for Sinobiopharma (SNBP) – October 21, 2009
• Interesting jump for Sinobiopharma (SNBP) – January 18, 2010
• The Top Investing Strategy for 2009 – September 23, 2009
• Technical Analysis: OraSure’s big move – September 25, 2009
• Why biotechs like CombinatoRx (CRXX) make the best penny share speculations – November 20, 2009

Article first published on Today's Financial News

Sinobiopharma, Inc. (SNBP) soars on — what exactly?

Anheuser-Busch InBev (NYSE:BUD) investors get a taste of European medicine

by J. Christoph Amberger

Baltimore, MD: People wonder why companies leave Europe for Asia. I wonder why that would still come a a surprise.

Today, Reuters reported that Anheuser-Busch InBev NV (NYSE:BUD) announced its Belgian production i(home of the gluttonous Inbev, which gobbled up American idol Anheuser-Bush without as much as a belch last year) had ground to a complete standstill after nearly two weeks of blockades over job cuts at its breweries.

Belgian workers have laid siege to InBev’s breweries in Leuven and Liege for 13 days and for a week at Hoegaarden protesting plans to lay off less than 10% of its Belgian workforce. No hops, no malt, no barley can come in, no empty bottles and crates and other packaging. Beer storage is at 100% capacityl.

InBev is wobbling: It has frozen its restructuring plan. I believe it eventually will cave in to union demands.

Shares of NYSE:BUD have shed only 2%-plus in early morning trading. The rewards of globalism: By acquiring non-European companies, InBev has prudently reduced the risks of being a large fish in a high-cot, entitlement-fed pond.

The stock is still trading near its pre-merger highs. We see an additional downside to $47.50. Resolution of the dispute may be good for a 10% rise from that bottom.

For more of Amberger’s continuing market commentary, click right here!Similar Posts:

• Harley Davidson: A pig in pain? – October 14, 2009
• No bailout needed: Good news from the rags – September 29, 2009
• Harley’s “reverse” strike pays off – November 25, 2009
• Three Monday morning movers – October 19, 2009
• Pigs infected! Get ready for a slaughter – October 19, 2009

Article first published on Today's Financial News

Beer Wars: Anheuser-Busch InBev (BUD) Belgian breweries are high and dry

Sinobiopharma (NASDAQ:SNBP) ended last week on a 20%-plus upswing! A dollar short and a week late… but some of our readers might be sitting pretty!

by J. Christoph Amberger

Baltimore, MD:  Sinobiopharma (NASDAQ:SNBP) was my last pick for TFN’s Penny Stock Confidential trading service. I recommended it on 1/08 at around 22 cents. HSC members, however, remember it as one of our more epic losses. But PSC members had taken substantial short-term profits on this stock before.

Friday, SNBP soared to 31 cents on earnings news… just as predicted in my last update.

SNBP announced earnings of $1,073,550 for the three months ended November 30, 2009, compared to a net loss of $1,045,239 during the same period a year ago.

Revenues increased 120% to $2,137,471 and gross margins that improved 182% to 80% of sales. Operating expenses decreased 63% to $596,154 due to a decrease in stock-based compensation and a reduction in general and administrative expenses. However, research and development expenses rose to $189,396 from $33,015 a year ago….

Read on right here, at Amberger’s blog…Similar Posts:

• Turnaround for Sinobiopharma (SNBP) – October 21, 2009
• Sinobiopharma, Inc. (SNBP) soars on — what exactly? – January 21, 2010
• HSC double-digit gainer #70: 32% on Silvercorp. (SVM) – November 18, 2009
• TFN eNews 11/17/2009: The Okies are heading back to the Dust Bowl – November 17, 2009
• TFN eNews 10/08/2009: How much gains on this silver miner? – October 8, 2009

Article first published on Today's Financial News

Interesting jump for Sinobiopharma (SNBP)

Holding on to a free TFN recommendation but wondering what your position should be for 2010? We’ve got the answer right here…

by Laura Cadden, TodaysFinancialNews.com

Baltimore (TFN): We’ve accumulated a good number of free recommendations for TFN readers. Many have written in requesting an update, so here’s our take for what to do with these positions in 2010:

Aastrom Biosciences (NASDAQ:ASTM): Aastrom is down from levels it was enjoying at the time we issued our free Report, Four Biotechs Set to Soar. We haven’t gotten out of this position because the anticipated results of the company’s current clinical trials are so promising. We’re expecting double-digit gains but be prepared to exit if the price drops back down below $0.28. You can always get back in later.

Capital Gold Corporation (OTC:GCLD): This penny stock is up 5% since we recommeded it in November. We still expect 30% gains by mid-year. To be safe, set a trailing stop at -10%. If you got in at our entry price of $0.92, that target would be $0.83.

Evergreen Solar, Inc.(NASDAQ:ESLR): Set a stop loss at -25% below our entry price of $2.19 — that would be $1.64.

ThermoGenesis Corp. (NASDAQ:KOOL): We’re still at breakeven on this one. Set a -10% trailing stop at $0.539.

Stewart Enterprises, Inc. (NASDAQ:STEI): Since we first recommended STEI in 2008, this stock has taken us on a roller coaster. After a stupendous drop last year, this undertaker to the South has clawed back from the dead. We’re not expecting to break even any time soon, so unless you are a resurrectionist, let’s close this one out at a -25% loss. That would be triggered at $4.80.

Gushan Environmental Energy (NYSE:GU): Let’s just call it quits on this one and sell!

GigaMedia Limited (NASDAQ:GIGM): Sell now.

Radient Pharmaceuticals Corporation (AMEX:RPC): Let’s use today’s 10% spike and sell now!

Vical Incorporated (NASDAQ:VICL): Let’s i a -10% stop loss at $3.14.

Geron Corporation (NASDAQ:GERN). This is a long-term hold. But establish a -10% stop loss at $5.90.

Marshall Edwards, Inc. (NASDAQ:MSHL): Today’s drop has put us in the red figures. We cry uncle at -10%… or $0.675.

Citigroup Inc. (NYSE:C): Set a -10% stop loss at $3.51.

Mitsubishi UFJ Financial Group Inc. (NYSE:MTU): A cautionary -10% stop loss at $4.80 should put a bottom on what we think will be a great long-term hold.

Capital Gold Corporation (OTC:CGLD): Limit your downside with a -10% trailing stop at 83 cents.

Heartland, Inc. (OTC:HTLJ): Set a -30% stop loss on this penny speculation. That’ll get you out at 19 cents.

Silver Wheaton Corp.(NYSE:SLW): Consider this stock Obama-insurance. Establish a 15% trailing stop on this one!

Article first published on Today's Financial News

TFN open recommendations update

TFN ’s executive publisher, J. Christoph Amberger, debuts with his first novel, The Lazarus Smile

Baltimore, MD TFN: TodaysFinancialNews.com publisher J. Christoph Amberger is no stranger to controversy. An incorrible believer in the free market, American-style liberty, and Capitalism, he receives nasty letters every day. Such as this:

* “I am tired of your old rhetoric… always way off base.” — TFN eNews member Frank K., Dec. 30, 2009

* “Hogwash!” — TFN eNews member Vincent, Dec. 2, 2009

* “reactionary… purveying propaganda!” – TFN eNews member Kerry W., Nov. 10, 2009

Even colleague Laura Cadden calls his political and economic views “alarmist,” “paranoid,” “wacky” and “delusional” — and that’s what she says to his face!

Now imagine what kind of plot a twisted mind like this can concoct over the duration of 17 years! Which is how long it took Amberger, who emigrated to the United States from Berlin, Germany, in 1989,  to come up with the back story to his debut as a novelist, The Lazarus Smile.

“It started way back when in grad school,” says Amberger. “St. John’s College Graduate Institute requires that you actually read the core books of Western civilization — not just read about them in the footnotes of deconstructionist academics. After spending a good month on St. Paul’s Letters, I wondered how and why a Roman regulator and stool pigeon like him could turn into the chief proselytizer of Christianity. After a few years of digging, I found the answer.”

According to Amberger, it’s all in a name: Three little words, the name of a Saint, could destabilize the world and destroy Christianity.

Throw in some top-level World War II intrigue between Heinrich Himmler and the Vatican, the bloody struggle for power in Rome’s Four-Emperor Year (69 A.D.) and you get what some of Amberger’s writing colleagues call “a terrific thriller!” (Christopher Corbett, Poker Bride)

Alan Russell (Exposure, The Fat Innkeeper) adds: “J. Christoph Amberger could teach Dan Brown a thing or two about old enmities, unholy alliances, and conspiracy theories. The Lazarus Smile has all those plot lines and more. It is a book well researched and intelligently told.”

TFN’s Laura Cadden seems to agree: “I loved this book. Plenty of action with real historical figures intertwining a fascinating storyline. And Amberger actually WRITES well (unlike so many of the other thriller writers out there — sorry Dan Brown).”

J. Christoph Amberger just made his debut as a novelist with The Lazarus Smile

You may not care for Amberger’s reactionary world view. But cut the man some slack: He’s a “fresh-off-the-boat immigrant” and entitled to his opinions. But you could do worse than picking up his book to read over the dreary January weeks ahead!

Published by Secret Archives Press in Baltimore, the book is currently available exclusively from Amazon.com (NASDAQ:AMZN), both as a paperback and as a download for the Kindle.

And no, we do not expect the book to have a serious effect on AMZN’s bottom line or share price!

Buy it right here! Similar Posts:

• “Engaging, fast-paced and intriguing. Bravo!”: Bill Bonner on The Lazarus Smile – January 21, 2010
• TFN eNews 01/04/2010: A cyclical anomaly – January 5, 2010
• Best Books to Fight H1N1: 5 Great Reads to Beat the Swine Flu – November 4, 2009
• TFN in the News – September 25, 2009
• Silver Wheaton (SLW), Coeur d’Alene (CDE), Hecla Mining (HL) are racking up gains… who’s next? – October 15, 2009

Article first published on Today's Financial News

Financial Publisher turns Thriller Author

Tom Bulford, senior editor for Fleet Street Publications and small cap expert, shares three of his top picks for 2010 for the popular UK newsletter The Right Side.

Tom Bulford (The Right Side):

The hunt is on for next year’s “big winners”.

Yes, this is the time of year when business reporters, City editors and financial advisers start to chew the top of their pencils, run their eyes down the list of stock market prices and come up with some likely tips for the next calendar year.

The beginning of a new year is a time to look back, to celebrate the good things that have happened and write off the bad. And this applies as much to share portfolios as anything else.

It is also a time for some crystal ball-gazing, a time to think about what the next 12 months have in store and to place a few bets accordingly.

My in-tray is now filling up with suggestions for 2010 flyers, sent in by ever-attentive corporate PR advisers. Three of the names that come up are Nyota Minerals (ticker: NYO), Biofutures International (ticker: BIP) and Minoan (ticker: MIN). Let’s have a look at these three in turn.

Three hot penny shares to keep a close eye on

Nyota Minerals has the rare distinction in the macho world of mining of being led by a woman – Melissa Sturgess. The company used to be known as Dwyka Resources. It reckons it struck a bargain last June by acquiring Minerva Resources.

Minerva’s principal asset was its Tulu Kapu licence in Ethiopia, where an inferred gold resource of 690,000oz has been established. Since Nyota paid just £1.8m for Minerva, it gained control of this resource at a price of just $4 per inferred ounce of gold. This is a far below the $30-$40 per ounce at which inferred gold resources are valued elsewhere.
The target for 2010 is to extend this resource to over 1m oz, to upgrade its status from inferred to measured and get ready for production in 2011. If it achieves this and, of course, if the gold price stays north of $1,000 per oz, then the shares should certainly do well. You can rest assured that I will be watching closely…

Biofutures International came onto AIM with the intention of building a plant in Sabah, Malaysia, to derive biodiesel from palm oil. However, when the rising price of palm oil rendered this uneconomic it changed tack. It is now planning to build a palm oil refinery at a cost of about £7m.

Last week it was boosted by the appointment WS Bioengineering as the plant contractor and by arranging finance with Bank Kerjasama Rakyat Malaysia.

An obstacle remains in the shape of a £5m dispute with Lurgi, the firm originally appointed to build the biodiesel plant. All being well the plant should be up and running by this time next year. Although profitability of refining operations is notoriously hard to predict, the plant will be supplying a growing market of Chinese, Indians and others warming to the health benefits of cholesterol-free palm oil.

Click here for the rest of Mr. Bulford’s report, on Fleet Street Invest.

Article first published on Today's Financial News

Looking forward – three British small-caps worth watching

Karim Rahemtulla, emerging markets analyst and options guru, brings his analysis of emerging markets and their investment potential to Investment U.

Karim Rahemtulla (Investment U):
As the size and depth of the U.S. economic recession became apparent in 2008 and continued into 2009, we’ve seen one, four-letter acronym bandied around with increasing regularity.

BRIC.

With investors scurrying to seek better investment opportunities in other parts of the world, the so-called emerging market BRIC nations – Brazil, Russia, India and China – have barreled to the front of the line.

This was certainly the case at a very hush-hush Family Wealth Conference that I attended last month. The conference featured some of the wealthiest families in America, and their top investment choice was emerging markets…

Why the allure? Well, for investors of all stripes, America’s financial implosion has proved the importance of diversifying out of the United States. Not for unpatriotic reasons, but from the realization that a globalized economy truly offers some great opportunities elsewhere, too – and especially away from an economy and currency that have sunk.

However, the recent Dubai debt issue has served as a stark reminder that emerging markets are vulnerable to shocks, just like the United States. So what’s the deal with emerging markets? Where are they headed in 2010 and beyond?

The Risks of Emerging Market Investments

I began my career as an emerging markets analyst long before they were “en vogue.” I spent time in Turkey, Indonesia, China, Chile and Malaysia and even went to places like Timor in search of investment opportunities.

Over the years, my readers have banked profits on companies like Malaysia’s Sime Darby, Indonesia’s Telekom Indonesia and Indosat.

There’s no doubt in my mind that emerging market investments deserve to be in your portfolio. Now more so than ever, in fact. Simply put, it’s where the growth is and it’s where a lot of money will be made.

However, there are risks. We stayed away from many more companies because emerging markets, while compelling, can sometimes offer false hopes and empty promises.

In addition, the BRIC countries, with the exception of Brazil, are prone to foreign over-investment. For example, over the past five years, India has received more foreign investment funds than in the previous 10 years combined. When you’ve got huge amounts of cash plowing into a small, illiquid market, you can understand how you’d get meteoric rises and even more spectacular crashes.

But when you find the right companies in the right emerging markets, the profit potential can be lucrative.

For example, when I visited India two years ago and took a tour of some tech sector companies, it was apparent that the potential was huge. We bought Infosys (Nasdaq: INFY) when it was trading in the $30s and now are getting ready to jettison the position from our portfolio in the Xcelerated Profits Report for a healthy profit. And it was the first-hand inspection and research that gave us the information we needed.

So where should you look in 2010 – and what should you buy?

Click here for the rest of Mr. Rahemtulla’s article on Investment U.

Article first published on Today's Financial News

The allure of emerging markets – thinking outside the U.S. economic box

When rap superstars are ringing the opening bell, you know something is up on Wall Street. This week has been anything but ordinary. As we get closer to the end of the year, the hair-raising action will continue.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): We’ve come to the end of a pivotal five days of trading. As soon as Snoop Dogg rang the opening bell on the NYSE on Monday morning, it was obvious this was going to be no ordinary week.

The action didn’t let us down.

All week, it’s been about the dollar. After last Friday’s surprising strong unemployment figures, the value of a buck has climbed steadily. It’s not necessarily because the American economy is looking any stronger or that interest rates will rise anytime soon, but compared to our international brethren, the good old US of A, isn’t looking so bad.

First we had Dubai making credit waves. Then it was Greece. And most recently it’s Spain. As the contagion spreads, the dollar is likely to climb. It’s ready to break the $1.45 barrier against the euro today.

That’s good news for plenty of shareholders.

Even better for Uncle Sam

While the Chinese yuan is anything but free-floating against the dollar, a stronger American currency will certainly have an impact on any country exporting goods to the States.

That’s just part of the reason why shares of AutoChina International (NASDAQ:AUTC) are up by over 15% today. The other major catalyst is the company’s latest fiscal results.

The Chinese auto retailer is a relatively young company with a market value of $270 million and some 25 dealerships spread across the country. In case you’re not familiar with the Asian market, it’s red hot right now.

The quarterly figures prove it. Over the last three months, the company recorded revenues of $242 million, a whopping 110% increase over this time last year. It turned the sales into a bottom line of $7 million, yet another triple-digit increase over last year’s figures.

If you are frequent reader of TFN articles, AutoChina’s action is not new. We’ve been tracking and writing about this stock for months, as it share price quickly climbed from just $7 to over $30 and back to $24 today.

From here, you can expect shares to top out near the $30 range once again in coming months if current macroeconomic trends (including the strengthening dollar) continue.

As for next week, don’t even think about taking your eye off the dollar.Similar Posts:

• A lot to think about today – December 8, 2009
• Peabody Energy: Playing China’s red-hot coal Industry – October 20, 2009
• Where would you rather have your money? – November 20, 2009
• Why Obama went to China – November 16, 2009
• Profit opportunity: Get ready for a volatile earnings season – October 5, 2009

Article first published on Today's Financial News

The end of an upside-down week on Wall Street

It’s that time again – when we look back at the year that’s coming to a close, and look forward to what opportunities the future may bring. In this mood, Martin Hutchinson – contributing editor for Money Morning – surveys each continent and seeks out the sites with the greatest potential for the coming year.

Martin Hutchinson (Money Morning):
For global investors, 2010 is shaping up to be a year with two very distinct economic outlooks.

In the first “half,” which is actually likely to end in early September, investors can expect a continued escalation in commodity prices, generally bullish stock markets and an ongoing focus on powerful monetary and fiscal “stimulus” initiatives. In the second “half,” reality will reassert itself, and investors will find the going tough in many markets.

The real question is: “Which markets will win, and which ones will lose?”

The Top Challenges Facing Investors
When you take the time to look closely at the global economy, the disparity between the new year’s first eight months and final four months – call it the “Tale of Two Economies” – that I’m predicting actually makes good sense.

Huge monetary and fiscal stimulus programs throughout the world tempered the decline in global gross domestic product (GDP) that we otherwise would have seen from the 2008 financial crisis. And that likely made 2009 easier to navigate.

The beneficial effects from those two paths of rescue will continue during the first eight or so months of the new year. At some point, however, the bill for those initiatives must and will come due.

On the monetary side, bubbles in commodities will fuel consumer price inflation, so interest rates will have to be raised. On the fiscal side, the temporary boosts to demand will either run out or will be prolonged by further stimulus. In that latter scenario, the bond markets will at some point focus on soaring deficits.

I see three possible scenarios playing out in markets around the world.

First, countries that have done big monetary and fiscal stimuli – think the United States and especially Great Britain – face big doses of inflation and a possible bond-market collapse.

Then there are countries that rolled out big monetary stimulus initiatives, but held off on a fiscal effort. One example is China, where the fiscal-stimulus effort was big. That country had a major budget surplus when it announced its plan. Ultimately, however, China will face a big inflation problem.

Finally we have the countries that deployed fiscal – but not monetary – stimuli, such as France and Japan. Those countries . . .

Click here for the rest of Mr. Hutchinson’s article at Money Morning.

Article first published on Today's Financial News

Global Markets Review – Outlook 2010

Keith Fitz-Gerald, Chief Investment Strategist at Money Morning, offers his five key rules for investing in China – from evaluating domestic consumerism to China’s economic reserves.

Keith Fitz-Gerald (Money Morning):

Legendary investor, Bill “The Bond King” Gross made headlines recently when he said that China will one day have to contend with a bubble of its own making. Gross runs the world’s biggest bond fund at Pacific Investment Management Co. LLC (PIMCO). Millions of investors reacted just as you would expect when someone of his prominence makes such a pronouncement – they panicked.

While I can see how Gross would arrive at such a conclusion, his comment about China is akin to the economist who tells us that “the U.S. economy will recover.”

In either case, just when and how isn’t clear.

When it comes to China, therefore, it’s crucial to have the facts. The following Five China Profit Precepts not only bust a lot of widely held myths about overseas investing, they also lead to only one conclusion: If you’re a long-term investor, you can’t afford to ignore China.

I’ve detailed all of these for readers over the past year or more. But it’s now time to review each of these Five China Profit Precepts in some detail:

No. 1 – Consumerism is Taking Root: According to China’s National Bureau of Statistics, the country’s retail spending advanced 16.2% in October and should easily hit the 15% to 19% target for all of 2009 that we projected last year. Assuming the numbers play out as expected, when 2009 comes to a close, the aggregate increase in consumer spending in China will be larger than the retail spending growth in the United States, European Union and Japan combined.

All the right catalysts are already in place. Government stimulus programs – including rebates on “white goods” and tax cuts for low-emission vehicles – helped China’s car sales increase by 43.6% in October. China is now the world’s largest car market, having displaced the United States earlier this year. Sales of home appliances are also up sharply, rising more than 35%. Even real estate is on the mend, particularly in China’s western provinces.

Click here for the rest of Mr. Fitz-Gerald’s article at Money Morning.

Article first published on Today's Financial News

Five Things You Need to Know About China

These companies share prices will continue to suffer from Dubai’s credit default: ING Group (NYSE:ING), Woori Financial Holdings (NYSE:WF), Shinhan Financial Group Co., Ltd. (NYSE:SHG), HSBC Holdings plc (NYSE:HBC), Sony Corporation (NYSE:SNE), Deutsche Bank AG (NYSE:DB), MGM Mirage (NYSE:MGM), Standard Chartered PLC (LON:STAN), Royal Bank of Scotland Group plc (NYSE:RBS), and Barclays PLC (NYSE:BCS)

by J. Christoph Amberger

Baltimore, MD TFN: Stocks took a drubbing during today’s foreshortened trading day as investors reacted to news that Dubai World, a state-owned “sovereign” investment fund, asked creditors for an extension on billions of dollars worth of debt payments due next month.

The timing was perfect: American investors were either in a turkey-induced stupor — or swhaking down TJ Maxx for retail bargains.

In North America, losses were moderate. The Dow Jones industrial average lost 155 points. In Asia, where investors were alert and awake, Hong Kong’s Hang Seng index closed down almost 5% for the day.

Among the biggest losers were bankers with exposure to Dubai:

Dutch banker ING Group (NYSE:ING) — down almost 20%, Woori Financial Holdings (NYSE:WF) — down 14%, Shinhan Financial Group Co., Ltd. (NYSE:SHG) was down 9%, and HSBC Holdings plc (NYSE:HBC) — Dubai World’s biggest loan arranger since January 2007– closed down almost 6%.

Dubai, one of seven emirates that make up the United Arab Emirates, had borrowed $80 billion to fuel a construction boom that created indoor skiing arenas, a kilometer-high skyscraper, the largest airport in the world, and residential developments built on artificial reefs and islands that look like palm trees from the vantage point of Google Earth.

Dang goes that fully air-conditioned, self-cleaning, lavender-flavored beach I’ve been dreaming about!

Harbinger of defaults to come?

Compared to the new debt a reckless U.S. Congress has been taking on, Dubai World’s current $59 billion liability looks like chump change. Given the city state’s incestuous relations with other Arab sovereign wealth funds, I have no doubt the issue may be resolved, either by internecine loans or the sale of assets.

But this will have a domino effect on the company’s owned by Dubai Istithmar: The fund holds an undisclosed amount of Sony Corporation (NYSE:SNE) shares, owns Barneys department stores, has a 3.2% stake in troubled EU aircraft maker EADS, and owns 2.2% of Deutsche Bank AG (NYSE:DB).

It also committed $5 billion to MGM Mirage (NYSE:MGM) — an interesting choice for the government funds of an Islamic nation where all gambling and casinos are prohibited.

All those companies have shown significant declines in recent days. Because they’re potentially on the block.

Even more at risk are the creditors: UK banks such as Standard Chartered PLC (LON:STAN), Royal Bank of Scotland Group plc (NYSE:RBS), and Barclays PLC (NYSE:BCS) are exposed with a total of more than $30 billion in default risk.

All those companies are on our Red Alert List

Attracting foreign companies

Dubai lacks oil and gas reserves. The plan behind taking on all that debt was to create a “sustainable” economy — independent of natural resources. This was to be achieved by making the emirate a world-class banking and tourism center at the nexus of the Western world and Asia.

For the last couple of years, this seemed to work out quite nicely. There’s barely single young German professional I know who didn’t think it necessary to do an internship in Dubai!

Dubai’s business and tax environment is extremely attractive to foreign corporations. They managed to lure Halliburton Company (NYSE:HAL) to move headquarters (and its global tax base) out of Houston.

If Dubai’s entrepreneurial spirit prevails, the emirs will use the crisis — and their boatloads of unoccupied commercial real estate — to aggressively court European and American businesses looking to escape predatory taxation of their neo-collectivist governments!

Dubai has already seen its commercial real estate prices collapse by 50% over their 2008 highs. Some prestige projects have been suspended due to financing problems. The sovereign wealth fund may have to unload considerable amounts of property at distressed prices.

In a globalized world, this will drive the price of all commercial real estate lower.

We’re adding CB Richard Ellis Group, Inc. (NYSE:CBG), Grubb & Ellis Company (NYSE:GBE), and Jones Lang LaSalle Incorporated (NYSE:JLL) to our Red Alert List.Similar Posts:

• Sonic Solutions: Easy options opportunity – September 23, 2009

Article first published on Today's Financial News

Dubai credit crunch: Red alert for these companies!

Keith Fitz-Gerald, global investments expert and Investment Director for Money Map Press and Money Morning, analyzes the future of the world’s economy under a falling dollar.

Keith Fitz-Gerald (Whiskey & Gunpowder):
Washington continues to believe that the U.S. dollar is a weapon and most of the G8 is playing along. They simply can’t see – or won’t acknowledge – where the dollar is actually headed, even though the evidence is right before their eyes.

On the other side of the world, however, China is refusing to drink the U.S. Kool-Aid. It sees what’s really happening with the greenback, and understands the implications for its own finances and economic growth.

That’s why Beijing has taken matters into its own hands.

As Beijing breaks with the West, Western investors need to take notice – China is now a serious player on the global financial stage. It’s only going to grow in power and stature. And it has a powerful hand to play.

Wheeling and Dealing

Not only does the Red Dragon have a $2.3 trillion cache of reserves to work with, it also has the world’s most powerful growth engine: An economy that’s advancing at an 8% clip, 1.3 billion consumers who save an average of 35% of their incomes, and a government that’s spending money in an effort to propel them into the 21st century.

What makes this especially poignant is that China understands its role – past, present and future. Most of its leaders are exceptionally well versed in Western history, meaning there’s a profound understanding of the problems and potential obstacles the West faces as it attempts to bounce back from the worst financial crisis since the Great Depression. There’s an irony here, since China may understand our problems even better than we do.

China’s outlook and economic fate is no longer totally dependent on the United States and other Western counterparts. China knows that it has to take matters into its own hands if it is to avoid being dragged down and smothered by Western has-beens. Beijing is doing just that.

What’s more, China’s leaders are taking a whole host of steps that will affect basically every asset class on the planet for years to come.

Click here for the rest of Mr. Fitz-Gerald’s article at Whiskey & Gunpowder.

Article first published on Today's Financial News

The fall of the dollar and the future of the global economy

Happy Thanksgiving! Our Chinese trend stock Origin Agritech Ltd. (NASDAQ:SEED) soars on excellent news. Time to bag some gains!

by J. Christoph Amberger

Baltimore, MD TFN: A few months ago, we recommended Origin Agritech Ltd. (NASDAQ:SEED) as part of our free TFN Report The 3 Best Chinese Stocks Under $5!

Today, news leaked out that SEED received the Bio-safety Certificate from China’s Ministry of Agriculture. This amounts to the final go-ahead for commercial approval of the world’s first genetically modified phytase corn. The stock has soared 45% since it opened this morning!

Having waiting for those gains to materialize since summer, we’re happy to take the gains. Our TFN tracking portfolio shows 68% profits on this play as I write. I say take gains off the table — then reinvest the money in a subscription of Hot Stock Confidential… where we’ve been cooking 70 gainers just like this so far this year!Similar Posts:

• TFN eNews 11/23/2009: Top Dividend Stocks – November 23, 2009
• Take 26% gains on Indian pharma giant Dr. Reddy’s (RDY) – September 25, 2009
• Dip in metals miners could spell buying opportunity – January 20, 2010
• TFN eNews 09/25/2009: Did you take gains on this swine flu stock yet? – September 25, 2009
• The end of an upside-down week on Wall Street – December 11, 2009

Article first published on Today's Financial News

Take 65%-plus gains on Origin Agritech (SEED)

Investors have an important choice. Invest domestically or put some money overseas? A look at a few of today’s movers makes it an easy decision.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): You could say it is the tale of two economies. The best of times in Asia, the worst of times here in the States.

While domestic investors wonder when some rogue piece of data will kick out the wobbly legs supporting the top-heavy equities market, savvy Chinese investors are raking in gains from an economy soaring ahead a 7% per year clip.

Where would you rather have your money?

A look at two of today’s winning stocks will help you decide.

Zumiez (NASDAQ:ZUMZ) is a sports-related retailer based in Everett, Washington. With 343 stores in over 30 states, its operations are as exposed to the nation’s economy as it gets. A look at the company’s third-quarter results prove how low our expectations have gotten.

Over the past three months, the $375 million company racked up profits of $5.1 million, down from last year’s corresponding figure of $6.8 million. The earnings-per-share figure of $0.17 beat expectations of $0.15, which helps explain why shares are up by over 10% so far today.

But that’s the only reason investors have to celebrate.

The company’s fourth-quarter expectations leave little room for joy. After booking revenues of $113 million last quarter, the company expects sales of just $122 million to $126 million over the next three months, which include the critical holiday shopping period. Last year’s Q4 was worth sales of $125.

Analysts, which were expecting a figure closer to $131 million, have plenty of reasons to feel disappointed with the news.

Of course, Zumiez is not the only retailer worried about a slower-than-expected fourth quarter. Just yesterday Dick’s Sporting Goods (NYSE:DKS) reported similar news. Its shares are down another 3% today.

And then there is Dell (NASDAQ:DELL), the Texas-based computer manufacturer that released a horrid set of third-quarter figures of its own. After disappointing the Street, its shares are down by close to 10% today.

Investors must be taking their money out of Dell and putting it into Netlist (NASDAQ:NLST), the California-based semiconductor manufacturer that sells an awful lot of its product in China.

Thanks to a robust Chinese market, with high demand for technology, shares of the $128 million company have flat-out soared over the past few weeks, climbing from $0.71 at the start of the month to as high as $6.78 today.

That’s a three week gain of 855%!

Again, I ask where would you rather have your money? China is looking better and better.Similar Posts:

• Why Obama went to China – November 16, 2009
• Beware the retail sector, it’s going to fall – November 19, 2009
• Only a few folks celebrating at Sirius – December 22, 2009
• OshKosh vs Cat: Not much of a fight – October 20, 2009
• The end of an upside-down week on Wall Street – December 11, 2009

Article first published on Today's Financial News

Where would you rather have your money?