This Chinese internet company is expected to grow at an annual rate of 26.9% over the next five years.
Tencent Holdings Limited (TCEHY)
From Cabot Emerging Markets Investor
While U.S.-China tensions simmer on the back burner, Mexico is coming to a boil with the first round of 5% tariffs expected next Monday.
Meanwhile, media attention to rare earths and metals accelerated this week as China looks for tools to push back against the Trump Administration. Australia’s Lynas (LYC.AX, LYSCF) is now up 82% in 2019 and recently announced plans to open a refining facility in Texas. It should be clear by now that, in the U.S.-China trade conflict, both sides will pay dearly. The real winners are the Chinese and American competitors in Asia: South Korea, Taiwan and Southeast Asia.
To wit: Since the third round of U.S. tariffs on China went into effect in late September, U.S. imports from China have declined 18%. But Taiwanese exports to the U.S. have risen 21% over the same period. Vietnamese exports grew 34% and South Korean exports also surged in the first quarter.
My early predictions that Vietnam would benefit from a trade war between the U.S. and China are proving to be true. Vietnam has reaped the benefit of trade tensions as its exports to the U.S. have surged 50% over the past year.
In the first quarter of 2019, South Korea increased its trade surplus with the U.S. by 71% to $6.4 billion, Taiwan by 29% to $5.2 billion, Bangladesh by 23% to $1.4 billion and Cambodia by 24% to $998 million.
The most competitive economy in the world is Singapore. But with trade representing 400% of GDP, the Singapore stock market just suffered in May its worst month this year - down 8.3%.
Conversely, one of the best stock market performers in May was Indonesia, which like India just completed a successful election. Indonesia recently had its government credit rating raised by S&P.
In South America, Argentina’s upgrade to emerging market status sure seems at odds with its economic woes at home. Argentine unions are on national strike this week, so banks had to shut their doors, airlines had to ground flights. Inflation has hit 56%, among the highest in the world. And while the economy is shrinking, its stock market is now up nearly 20% over the past year.
Tencent Holdings Limited (TCEHY) is now trading just above where it began the year due to regulatory headwinds and lower-than-expected (16%) revenue growth in its most recent quarter. Online ad revenue grew 26% and new category fintech was up 44%.
This is a strong and dominant company. I encourage you to buy a half position at these levels if you have not yet done so. BUY A HALF.
Carl Delfeld, Cabot Emerging Markets Investor, www.cabotwealth.com, 978-745-5532, June 6, 2019