It normally takes me less than five minutes to pack, even for a three week trip. In this case, though, I’m having a tough time– too many climate zones in Asia, too many events. I need to cram SCUBA gear, beach clothes, professional attire, and formal wear all into one little suitcase…
… plus leave plenty of room for all the custom suits I’m going to have tailored.
I haven’t been watching the markets much today, and frankly I’m sick to death (no pun intended) of the obsequious eulogizing of the late Senator from Massachusetts, so I’ll refrain from comment.
But in the spirit of my forthcoming Asia sojourn tomorrow, I’d like to pass along a recent email from Christine Verone who sent along her thoughts on an emerging mega-trend in China:
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Simon-
I’m excited for you to come; I have an ambitious agenda lined up for when you arrive in Shanghai, so don’t show up here with any jet lag… CEOs, brokers, and government officials are waiting, plus I know you will want to meet with your sovereign fund guys.
By the way, from our earlier conversation I need to clarify something (and please make this change to your website). From the ‘Gold in China’ article a few weeks ago, it says that Chinese people were not allowed to own physical gold or silver until 2009.
This is not accurate and I think you misunderstood me when you edited the email. Gold was attainable by Chinese via Panda coins (China’s version of Eagles) or jewelry since the 1980s. Walking into a bank and buying coins/bars however is a recent phenomenon.
The critical point to understand is that the government has never before pushed gold and silver as an investment vehicle. It has gone from being illegal to being the hottest assets on the market simply because of the government’s marketing efforts.
I’m convinced that this will create significant upside, especially for silver. You should see how people stand in line at banks to buy silver bars now.
The other thing I wanted to discuss is an emerging megatrend on the mainland. The Chinese are aware they need to decrease their dependence on exports, especially now that American spending power has evaporated.
Consequently, the government has prioritized building up infrastructure and domestic consumption (two things that foreign analysts on Wall Street won’t be able to see). This included Chinese tourism.
The government supports the tourism industry and encourages domestic travel far more than international travel… just watch 20 minutes of the daily CCTV news in China and you’ll begin to understand what I’m talking about– I can just about guarantee that you will see travel/tourism commercials promoting the importance of the ‘travel experience’ in some far off city with cultural flair.
Overall, domestic Chinese tourism is going to be one of the biggest China growth stories over the next decade. You have hundreds of millions of people now that have enough money to leave their little town, their province for the first time ever.
Plus, culturally, Chinese travel in groups… we’re talking big parties on guided tours. Think Japanese tourists in the US in the 1990s and you’ll have the right idea. Naturally this creates a whole cottage industry with enormous growth potential.
A few months ago, as a play on Chinese domestic tourism, I bought a local company called Airmedia (NASDAQ: AMCN). At just a quick glance, most analysts would simply label it an innocuous ‘digital media provider.’
But if you put boots on the ground here, you’d see that Airmedia dominates Chinese airports and airplanes, particularly related to air travel advertising sector. And by ‘dominate’ I mean they are the exclusive advertising provider for some of the highest traffic airports in all of China.
Also, they’re expanding heavily into gas station advertising– on average, China is adding roughly 3000 miles of highways each year (this is expected to triple)— and its predicted they’ll soon surpass the US, taking the #1 position in terms of constructed expressways.
With so much highway construction connecting rural towns to urban mega centers (thanks to the Chinese stimulus package), there will be a lot of new gas stations sprouting up across the country… and Airmedia recently signed a deal to become the exclusive digital media provider at the state owned gas stations (Sinopec), essentially giving them the lock on road traffic as well as air traffic.
(Ironically, Mcdonalds is also capitalizing on this trend– they have signed with Sinopec to build over 30,000 drive-thru’s at highway gas stations.)
I bought at $3.91 and the stock now fluctuates between $6.90 and $7.20. Would I buy it now? No. But if it drops below $5, I’ll consider buying more assuming the fundamentals haven’t changed… so keep this one on your radar– the company stands to profit as millions of China’s new middle class take their first family vacations this year.
By the way, when you’re picking up your luggage at the baggage claim in Shanghai, look at the massive flat screen above your head… all the mini TVs, even wall adverts– this is all Airmedia.
— Christine
