Capture Alpha with the next winners

The old China commodity story of consistent 8% GDP growth and commodity demand growth based on fixed asset investment is dead and gone. The new commodity story is different, and much more dynamic. Even if China moves onto a slower growth trajectory, as China SignPost believes it will, it will still exert profound effects on global commodity markets.

First, even at a 4-5% annual growth rate, China is one of the two fastest growing multi-trillion dollar economies in the world. As such, the baseline numbers are now large enough that even a slower annual percentage growth rate can still yield world-class absolute commodity demand volume increases each year.

Second, many commodity classes remain poised to benefit from consumption increases that will likely come at a multiple of GDP growth. For instance, China’s protein consumption continues to climb despite a badly overtaxed land and water resource base. Similarly, China faces energy supply questions that are in many ways far more complicated than those with which the U.S. grapples.

As China’s new leadership tries to find ways to keep growth robust and clean the country up, and Chinese consumers’ tastes continue to evolve based on a host of economic and sociological factors, a whole new class of commodity winners and losers will emerge. Gaining exposure to many of the new opportunities will not be as simple as buying major mining companies’ stocks in New York or Hong Kong, and the research and due diligence burdens of making investments in the new opportunity pockets will be exponentially higher than for the “old” China plays. China SignPost’s research methods and philosophies are geared to help you capture alpha in this new environment.