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Monday, January 11, 2010

China Exports Up: Easy Y/Y Compares, But We'll Take Them + Seaspan

A headline came across Yahoo! Finance (YHOO) yesterday that reveals another sign of stabilization and the inevitable move positive Y/Y comparisons for most sectors of the economy (which we've previously highlighted): "China overtakes Germany as biggest exporter after December exports rise 17.7 percent" (link here). A few interesting points from the AP article:
  • [China's] Exports for the last month of 2009 were $130.7 billion, data from the General Administration of Customs showed. That raised total 2009 exports to $1.2 trillion, ahead of the 816 billion euros ($1.17 trillion) for Germany forecast by its foreign trade organization, BGA.
  • Boosted by a 4 trillion yuan ($586 billion) stimulus, China's economic expansion accelerated to 8.9 percent for the third quarter of 2009 and the government says full-year growth should be 8.3 percent.
  • China surpassed the United States as the biggest auto market in 2009 and is on track to replace Japan as the world's second-largest economy soon. China passed Germany as the third-largest economy in 2007.
  • China's trade surplus shrank by 34.2 percent in 2009 to $196.07 billion, the customs agency said. That reflected China's stronger demand for imported raw materials and consumer goods while the United States and other economies are struggling and demand is weak.
  • Even though China overtook Germany as top exporter, the customs agency said total 2009 Chinese trade fell 13.9 percent from 2008.
We are pleased to see the uptick in exports, even off of easy Y/Y comparisons. While some market pundits and investors see China as the next bubble on the back of such huge government stimulus, we expect the trend will continue upward over the long-term. As with any forecast, the near-term is very difficult to predict. For now, at least, China is growing through the global downturn.

One way we expect to participate in long-term growth (both in China and abroad) is through an ownership position in container shipping company Seaspan (SSW). We we acquired shares in the company last year and still see a margin of safety at current levels. Although some see/call large container ships "barnacle magnets," we sleep well owning a piece of the critical global freight transportation network. Further, we like Seaspan because of the company's stable, REIT-like business model.

We will try to briefly share our SSW thesis in a future post. Please stay tuned.

Happy investing,

Jeffrey Walkenhorst

Disclosure: long YHOO, SSW.
© 2010 Jeffrey Walkenhorst
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