| GaveKal | Published: July 11 2009 04:20:19 |
| What Will 2009 Be Remembered For? | |
| By Louis-Vincent Gave | |
| We all know what 2008 will be remembered for... and, in fact, most of us would rather forget about that dreadful year! But what will 2009 be remembered for? In five years time when we look back at the current period, what will we say about it? What will be the important trends that we wished we had identified and reflected in our portfolios? In the attached ad hoc, Louis starts off by highlighting that what is truly unique about 2009 is that the year marks the first economic cycle turn since the second world war in which the United States did not “make the turn”. Instead, the "growth leader", this time around is China. So, in a sense, it is "different this time". This is not your typical recovery. And of course, this begs a number of question such as a) how do we monitor this recovery (i.e.: will the old set of tools work?) and b) where will China's growth come from? This latter question is, we believe, the most important for investors today, if only because China's large productivity gains of recent years are unlikely to come through in an environment of falling exports. So what can China do to maintain a high level of growth? Simple: China can attempt to replace the lost LABOUR productivity gains with greater CAPITAL productivity gains... and China may yet pull it off.... |
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