Financial Professionals

Market Insights

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China

11/04/2009

A friend recently suggested that I find a tutor to teach my two sons Mandarin. The search is on not only because it is a great idea, but because it really will be critical to their future. Despite the chorus of disbelief surrounding the Economic super engine in, I am a believer, a big one in fact. On a recent Fast Money show I quizzed former Commerce Secretary Carlos Gutierrez on the validity of China's economic data. Happy with his answer, I continue to look East just as I did in the first quarter when China was the global stabilization force in the Armageddon storm. November brings some fresh data out of and further evidence of China's economic strength. It appears that Premier Wen Jiabao's $586 billion stimulus plan and loan growth strategy is working. The Federation of Logistics and Purchasing reports that the Purchasing Managers Index continues to rise, from 54.3 in September to 55.2 for October. China's export economy looks good as well, with export orders climbing in October as well. Clearly these numbers suggest the global recession has ended and that the recovery process is underway. Domestically robust Chinese auto sales rose above 1 million for the first time in September.

The Chinese government has an 8 percent GDP benchmark for 2009; the newly released data suggests the actual GDP number for 2009 exceeds that possibly challenging 10 percent. Not so bad for the world's third largest economy. The Chinese stimulus package mattered more to the U.S. investor than our own. The economic figures coming out of China should also matter to U.S. investors. The need to pay attention to China has never been more evident than in 2009.

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.