Nike surprised the market last week with a 30% increase in Chinese sales. The resulting 8.6% weekly share price rise took the gain for 2015 so far to 30.0%. The Nike market performance (shown in yellow in chart below) has been the mirror image of the Caterpillar outcome (shown in blue). Last week, the Caterpillar share price fell another 9.6% to bring to 29.0% the fall during 2015.
The performance differential signals that the long-awaited pay-off for companies positioned to take advantage of the growth of Chinese consumption is becoming meaningful. The maturation of the Chinese economy will increasingly undermine macro-themed generalisations about Chinese exposure.
Forecasting GDP movements, which may have contributed to investment success in the past, will have lost some potency as strategic business positioning becomes a more important determinant of investment outcomes.
(Sourced from EIM Capital Managers)
