If China slows down, ASEAN beneficiaries

In China, Commodities, Indonesia, Malaysia, Vietnam on 26/06/2012 at 6:22 am

(Or “What stocks, ETFs to buy”)

A  China slowdown need not be bad for everyone. Mr Frederic Neumann, Regional Economist at HSBC, distinguishes between hard and soft commodities. A Chinese rebalancing could actually be good for soft commodities*, such as wheat and soybeans*, if household spending were to rise.

Brazil’s loss, in other words, could be Argentina’s gain. Other commodities, such as palm oil**, used in processed foods, may also do better.

That could benefit countries such as Malaysia, which has ramped up palm oil*** production in recent years, and Indonesia**** – although the latter also produces hard commodities including coal.

On the other side of the ledger, some big oil importers***** could benefit from the weaker prices that a Chinese slowdown might produce.

*Think Olam, Wilmar, Golden Agri, Bumitama Agri, Kencana Agri and First Resources

**Think Wilmar and the other SGX plantation stocks.

***Think Felda, Sime Darby, United Plantations, IOI, Genting Plt, KL Kepong, TSH, Oriental.

****Think Astra Agro and London Sumatra Indonesia. Any other Indon listed plantations cos to think about? Do remember that the SGX-listed planters are mainly Indonesian planters and many of them are relatively new, giving them an advantage over the older Malaysian plantation players. Malaysian planters have also bought land in Indonesia partly because land in Malaysia is getting too expensive even in East Malaysia.

*****Think ETFs on Singapore, Thailand and Vietnam.

  1. If China does slow down,the main problem facing the Communist Party would be mass unemployment,unless China becomes a welfare state,that is little possibility of consumption,currently below 40% rising.Communist Party must give a proper bonus share issues to the citizens from State Oil,telecom,banking sector.It must not be like Singapore telecoms issue which reaped the benefit to Temasek only!

  2. Looks like somebody joining me in the Golden Age. ha ha.

    China will start throwing money from their USD3.5T warchest at the first sign of slowdown trouble. The commies will stick their AK74s into the arses of the peasants to make them spend the money. This is the real reason why countries like Indo, Sinkie and Thai will do well.

    If all else fails, the commies will go nuclear and roll over the peasants with 50-ton tanks and squishing their brains, blood and bones as new fertiliser for growing rice and wheat. Indo, Sinkie and Thai will collapse, but China and the little emperors will survive.

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