I wouldn’t normally just rehash something from Bloomberg, but think this is a very interesting article:
U.S. Overtakes China as Driver of Stock Returns: Chart of Day
2010-02-09 21:16:07.0 GMT
By Michael Patterson and Alexander Ragir
Feb. 10 (Bloomberg) — Shares of global companies that sell to U.S. customers are outperforming those that rely on Chinese demand for the first time since 2008. The trend will continue as America’s economic recovery quickens, HSBC Holdings Plc said.
The CHART OF THE DAY shows companies that get at least 33 percent of their sales from the U.S. are beating those that generate at least a third from China, based on stocks in the MSCI AC World Index. The U.S.-focused companies, which trailed the China-focused businesses every quarter since the period ended September 2008, have outperformed by 4.8 percentage points in 2010, according to indexes compiled by Bloomberg.
While “U.S. growth surprises on the upside, Chinese policy is more likely to tighten,” John Lomax, a London-based strategist at HSBC, wrote in a report. “This environment should, we think, be positive for U.S. equities and by implication markets which are sensitive to the U.S.”
Shares of companies that sell to China are underperforming as investors speculate policy makers will rein in stimulus programs and bank lending that bolstered the nation’s economy during the global recession. U.S. reports in the past month showed consumer confidence, economic growth and manufacturing are rebounding faster than economists estimated, while the unemployment rate unexpectedly fell.
The index of companies that sell to China has 184 stocks including Brazilian iron-ore producer Vale SA and China’s Bank of Communications Co. The gauge of U.S.-reliant companies has
248 shares including Canada’s Research in Motion Ltd., maker of the Blackberry, and Minneapolis-based retailer Target Corp. Both gauges are weighted by market capitalization and based on sales data as of Feb. 3.
Among 2,420 stocks in the MSCI AC World index, 617 disclosed the percentage of total revenue they got from the U.S., China or both, according to data compiled by Bloomberg as of Feb. 3.