Whisper it quietly, but all around the world, after so many years of recession, gloom and despondency, people are talking about recovery and growth.
The UK and US seem to have returned to very good growth. And emerging markets, which had slowed considerably, are now resuming their boom. Of the emerging markets, China in particular seems to be recovering strongly.
After slowing and slowing, growth is now accelerating in the Middle Kingdom. Industrial output is on the up, and experienced China watchers have been impressed by the recent raft of reforms.
And, crucially, the Chinese consumer is spending again. This all means that Chinese share prices are rising. And this made me think: what FTSE 100 companies should you invest in to benefit from this boom?
Burberry
My first pick is luxury clothing maker Burberry (LSE: BRBY). Whereas in the past you would have said that developed world markets led and emerging markets followed, now the Chinese consumer is leading global market trends.
China is now Burberry’s biggest market, where its trademark check scarves, coats and accessories are in huge demand. And with its profit margins of over 60%, Burberry is really minting it in China.
I expect Burberry to steadily grow, as it booms in China, and increases market share across the emerging and frontier markets.
HSBC
HSBC (LSE: HSBA) (NYSE: HSBC.US) is one of the leading banks in the world, and it has emerging relatively unscathed from the financial crisis. The bulk of its profits are made in Hong Kong, mainland China and Asia-Pacific, so it is well placed to benefit from a boom in China.
The company is already highly profitable, but I expect HSBC to steadily improve its profitability as the global recovery surges. Although there has been much emphasis on export and consumer growth, China is also experiencing a service sector boom that is transforming areas such as financial services. This means a banking and investment boom which HSBC will be at the heart of. That’s why HSBC is a strong buy for me.
Prudential
One of the financial success stories of recent years has been insurer Prudential (LSE: PRU) (NYSE: PUK.US). Whilst other financial shares have been volatile, Prudential, with its success in achieving emerging market growth, has seen its profits, and its share price, rocket.
Can Prudential maintain its growth rate? I think it can. Chinese and Asian spending on healthcare insurance, pensions and asset management is taking off, and Prudential is at the centre of this boom.