Investors in Chinese stocks are not celebrating, however, as the Chinese market is down more than 25% from highs earlier this year. This year, global forecasters are expecting a rebound in growth to 8% - among the fastest rates in the world. Thus, it is a critical contributor to overall global economic growth, even if it "only" grows 5%-6% per year. China is a $14 trillion economy and represents about 16% of the $86 trillion global economy. Here are some of our top picks, all of which are rated BUY at Argus.ĭE,HON,EMR,ACM,LUV,ITW,LMT,UNP,CAT,GNRC,LHX,VNT,GD,CMI,MAS,BA,ODFLĭaily Spotlight: China 2021 Growth Forecast at 8%Įconomic trends in China bear watching closely, and not just because the country appears to be a guiding light for other countries trying to emerge from the GDP-crushing grip of COVID-19. It also underperformed in 2020, with a gain of 9.0%, and slightly underperformed in 2019, with a gain of 26.8%. The sector is underperforming the market thus far in 2021, with a gain of 13.5%. The sector includes industries such as transportation, aerospace & defense, heavy machinery, and electrical equipment. We think that investors should allocate 9%-10% of their diversified portfolios to the group. Over the past five years, the weighting has ranged from 7% to 12%. The Industrial sector accounts for 8% of S&P 500 market capitalization. Specifically, we believe that Industrial stocks will benefit from enhanced infrastructure investment and more-lenient trade policies during the Biden administration. After enduring the challenges of the pandemic, the cyclical stocks in the Industrial sector appear well-positioned within the changing political environment. Our rating on the Industrial sector is Over-Weight. Companies that potentially fit this theme for 2022 include the following. We think investors can benefit from these transactions if they look closely at the resulting companies and focus on the balance sheet, management, and earnings transparency. The other businesses are only slightly trailing the broad market. This split-up has most favored the HVAC company Carrier Global Holdings Corp. UTX, now Raytheon Technologies, or RTX, is now three listed firms, with focuses on Aerospace, HVAC and Elevators. Former conglomerate United Technologies blazed this trail in 2020. These companies, which took generations to build, have abruptly concluded that their best growth opportunities exist for them as smaller, more-nimble, and more-focused companies. Pharmaceutical titan Johnson & Johnson also announced it is planning to carve off its consumer division and focus just on drugs and devices. Last year, industrial icon General Electric decided to split into three companies, with one focused on Aerospace, one on Healthcare, and one on Power/Energy. In 2021, several major corporations announced that they were splitting into pieces, and we don't think the dismantling of conglomerates has run its course.
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