Today, we complete the trio of power trends that I see rewarding investors the most this year.
To recap, we’ve already covered…
- A standout sequel to the oil and gas sector’s strong performance in 2022, as detailed by “Old Energy” Still Shines…
- And a flourishing of the renewable energy megatrend (including battery metals and clean tech) that I identified in 2021 and 2022, respectively: “Greenflation” – Battery Metal Rush 2.0.
Our final power trend might be the most powerful of all; it spans already-existing megatrends, despite only just emerging.
That means now is the best time to act on the opportunities that come from it…
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2023 Power Trend No. 3: The Sleeping Dragon Awakens
My final Power Trend forecast features a resurgent Chinese economy – a sleeping dragon that finally awakens.
During the last three years, the country’s draconian “zero-COVID” policies did not merely put this dragon to sleep, but also threw it in a dungeon and shackled its wings to the wall.
The poor creature hasn’t been able to do much more than notch lines on the floor to keep track of the passing days. But a new era appears to be underway; China has scuttled its “zero-COVID” program and replaced it with a “let’s-make-money-again” program.
This about-face could produce surprisingly strong economic growth in China. Already, many industries are booming in and around the country, and I expect this boom to produce a powerful “echo boom” in various industries and economies around the world…
The Initial Stirrings
Earlier this month, the World Bank released its semiannual Global Economic Prospects report, which boosted its 2023 forecast for Chinese GDP to a robust 4.3%.
That’s the report’s only positive growth forecast for a major economy this year. Unlike China, the World Bank expects the U.S. and European economies to contract in 2023.
I don’t put much faith in any of those projections, but I do agree that the Chinese economy will outperform most others this year, perhaps by a large margin.
Accordingly, I expect the Chinese stock market to outperform most others this year.
But instead of investing directly in Chinese stocks or ETFs, I believe the best way to play China’s economic revival is to invest in specific companies that will benefit from that revival. Many of the current positions in the Investment Report portfolio fit that profile. You can learn how to get full access to my recommendations here.
China is singlehandedly powering the double-digit growth trajectory of several renewable technology industries like offshore wind, solar power, and renewable energy.
China is the major incremental buyer of oil, industrial metals, and almost every other commodity on the planet. Resource companies, like a few of my recent Investment Report recommendations, benefit directly from that buying activity.
You get the idea; you don’t have to “buy China” to benefit from a resurgent Chinese economy. The Sleeping Dragon is awake.
The Perfect Hybrid Play
One of the stocks I like that will benefit not just from our third and final 2023 power trend, but also from Power Trends No. 1 and 2, is Freeport-McMoRan Inc. (FCX).
Freeport is the largest U.S.-based copper producer.
Over the past year, the company unearthed about 1.25 million tons of the metal – accounting for nearly 6% of global copper production, which brings us back around to China the country that consumes more than half the world’s copper every year…
During the last few months, China’s monthly copper imports have been holding steady around the 500,000-tonne level, which is roughly 20% higher than pre-COVID levels.
Despite these relatively robust imports, however, physical stocks of copper in China have tumbled to 13-year lows.
Copper stockpiles are also falling in the Western world. As a result, the combined copper stockpiles of the major commodity exchanges in Shanghai, London, and New York have dropped to an 18-year low.
If global copper demand were actually as weak as some folks believe, stockpiles would not be falling to multi-year lows.
Additionally, the copper price is not showing irrefutable signs of collapsing demand… at least not yet. At $4.24 a pound, the price is 35% above its July 2022 low and more than double the COVID-crisis lows of early 2020.
Certainly, the copper price could drift lower once again, but it probably won’t hang around these levels for long; the supply-demand dynamics in the copper market continue to point to higher prices.
Copper-intensive green industries like EVs, solar power, and energy storage haven’t taken a break. Despite sluggish economic conditions, global demand for green technologies and products continues to power ahead.
The trend is undeniable… and it points quite clearly to booming demand for battery metals like copper.
And if you’d like specific instructions on how to play this multi-revolutionary stock… click here to learn more.