By Tian Huang and Thomas R. Keene
Sept. 28 (Bloomberg) — Investors should buy shares of global companies selling to the Chinese consumer instead of mainland equities to take advantage of growth in the economy, Goldman Sachs Group Inc. chief economist Jim O’Neill said.
“It always depends on the relative price because you have this huge rally in Chinese and other emerging markets’ stocks this year,” he said in an interview with Bloomberg Radio. “Find a basket of the 50 best brand-name companies in the U.S. and Europe, obvious names, and think about the ones that are really focusing on developing in Asia, and off you go.”
O’Neill said valuations for Chinese companies have matched and sometimes exceeded their American and European counterparts. The Shanghai Composite Index has gained 52 percent this year as Premier Wen Jiabao’s 4 trillion yuan ($586 billion) stimulus package drove the world’s third-largest economy out of the steepest slump in more than a decade.
O’Neill cited Daimler AG, the maker of Mercedes-Benz cars and trucks, as a global consumer company that is benefiting from increasing sales to China. Demand for Mercedes-Benz is “strong” in that country, he said.
China’s economy will grow 9.5 percent next year after rising 8.3 percent in 2009, according to the median estimate of 21 economists surveyed by Bloomberg in August. Goldman Sachs predicts China’s economy will grow 11.9 percent in 2010.
O’Neill, who is credited with coining the term BRICs for the fast growing economies of Brazil, Russia, India and China, said Chinese domestic demand may spur a jump in U.S. exports.
“ I think it’s quite feasible that you’ll get a positive surprise to U.S. exports from the rest of the world, particularly Asia,” he said.
To contact the reporters on this story: Tian Huang in New York at email@example.com. Thomas R. Keene in New York firstname.lastname@example.org
Last Updated: September 28, 2009 15:30 EDT