The recent growth numbers are not very good for China. In the third quarter, its economy grew by only 0.2% from the previous quarter and growth was 4.9% from the same quarter last year. While the signs of the story were already among the largest property developers in the country, Evergrand, Almost folding, causing stock market tremors around the world FTSE 100 Indicator
And now it is in official numbers. I am keeping a close eye on the unfolding development of the economy. This is because I have an impact on their FTSE 100 stocks for which I think China is a big market. And it’s no coincidence that ever since bad news started coming in from the country, these stocks have sunk.
Share prices fell for China-centric FTSE 100 stocks
Think like multi-commodity minors Anglo American And Rio Tinto. Anglo-American was at a multi-year high in early August, but has since lost more than 17% of its value. Rio Tinto has declined 31% since the beginning of August. In this case though, it has its own challenges to deal with. Another luxury brand and retailer Barberry, Which saw the most dramatic fall of them all. The British brand, which is popular with the Chinese with its fast-growing income, has dropped more than 40% since the beginning of August!
Since I hold three stocks in my portfolio, it has had some impact due to the recession in China. And maybe even more, because 50% to 60% of their revenue comes from China.
Why could they start rising again
However, I think they can get out of this situation. And the reason is that the value of all these companies has existed for a long time and their markets are much bigger than just China.
Why China’s economy makes up a large part of their revenues because other parts of the world are not growing fast. However, demand is growing in the rest of the world. And that’s when foreign travel is still limited. I hope that the remaining economic engines will gain momentum, we will see that the demand has increased further. Despite some recent declines in forecasts, global growth is expected to be strong both this year and next.
Other than that, these stocks are cyclical no matter what. So sharp corrections are nothing out of the ordinary for them. Indeed, even with the latest fall, Anglo-American is still up 45% year-over-year, Rio Tinto 10% and Barberry 20%. If I hold them for a long time, they can be more fruitful.
And at least for now, the miners also pay huge dividends. Rio Tinto’s dividend yield is about 10%, while Anglo Americans’ 6.3%.
What would I do
If I hadn’t bought them already, I wouldn’t have missed buying these stocks in October when they were still down. With the FTSE 100 returning to pre-epidemic heights, I think they could start to rise soon.
Manika Premsingh owns shares in Anglo American, Barberry and Rio Tinto. Motley Flowers UK recommends barberry. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.