Is China Finally Slowing?
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While investors are focused on headlines from the Middle East and oil, a slowdown in China could be developing under the market's nose.
China of course has been aggressively trying to reign in the hot economy to avoid inflation. Maybe these moves are finally working, and quicker than expected.
Here are a few data points suggesting some slowing in the world's leading growth driver:
Industrial metals producers could be hit the hardest if China slows. Some specific companies include Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Cliffs Natural Resources Inc. (NYSE: CLF), Alcoa, Inc. (NYSE: AA), Vale S.A. (Nasdaq: VALE) and United States Steel Corp. (NYSE: X).
Coal miners including Peabody Energy Corp. (NYSE: BTU), Arch Coal (NYSE: ACI), and Alpha Natural Resources (NYSE: ANR), which is merging with Massey (NYSE: MEE), could also quickly feel the impact.
Fertilizer makers like PotashCop (NYSE: POT) and Mosaic (NYSE: MOS) would also not fair well if China is in fact slowing down.
Car maker GM (NYSE: GM) is strong in China and Ford (NYSE: F) is looking to make inroads. Any slowdown in China could limit growth prospects for the two.
Caterpillar (NYSE: CAT) makes much of the mining equipment used to extract resources around the world and would surely be impacted.
Yum! Brands (NYSE: YUM) has had huge success with its KFC franchise in China and Starbucks (Nasdaq: SBUX) is targeting massive growth in the country.
The list goes on and on.
China of course has been aggressively trying to reign in the hot economy to avoid inflation. Maybe these moves are finally working, and quicker than expected.
Here are a few data points suggesting some slowing in the world's leading growth driver:
- China auto sales rose just 2.6% in February, the slowest level in more than two years.
- Copper is seeing a sharp decline, closing at its lowest levels in three months.
- China itself is targeting a growth rate over the next five years of 7%, down from its recent +10% growth.
- Finasar (Nasdaq: FNSR) issued a profit warning yesterday citing among other things "a slowdown in business in China overall."
Industrial metals producers could be hit the hardest if China slows. Some specific companies include Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Cliffs Natural Resources Inc. (NYSE: CLF), Alcoa, Inc. (NYSE: AA), Vale S.A. (Nasdaq: VALE) and United States Steel Corp. (NYSE: X).
Coal miners including Peabody Energy Corp. (NYSE: BTU), Arch Coal (NYSE: ACI), and Alpha Natural Resources (NYSE: ANR), which is merging with Massey (NYSE: MEE), could also quickly feel the impact.
Fertilizer makers like PotashCop (NYSE: POT) and Mosaic (NYSE: MOS) would also not fair well if China is in fact slowing down.
Car maker GM (NYSE: GM) is strong in China and Ford (NYSE: F) is looking to make inroads. Any slowdown in China could limit growth prospects for the two.
Caterpillar (NYSE: CAT) makes much of the mining equipment used to extract resources around the world and would surely be impacted.
Yum! Brands (NYSE: YUM) has had huge success with its KFC franchise in China and Starbucks (Nasdaq: SBUX) is targeting massive growth in the country.
The list goes on and on.
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