German industrial companies are rolling in with impressive numbers
Posted by Kay Stanford Jr Kastum at 12:46 AMThe top lines at leading German industrial companies are rolling in with impressive numbers for an almost zero-growth economy. With the euro down nearly 15% this year and at a two-year low against the U.S. dollar, the world's largest exporting nation is worth a good look. So is another country that has thriving exports in spite of a stronger currency. We're talking about Japan and Germany, respectively, the world's second- and third-largest economies.
A bright spot is Asia, where BMW expects to sell 150,000 cars per year by 2008. Overall, German exports are up for the third-straight month and sales to countries outside of the European Union rose 18% annually from a year earlier. Quarterly sales at Siemens rose 13%, the fastest since 2003. BMW's sales rose by 11% in the third quarter, although high raw-material costs and pricing pressure resulted in weak net profits.
Meanwhile, U.S. exports are up a paltry 2% since 2000. Although exports to China are up 35% during this same period, Americans are now buying seven times more from China than we are selling to them. A good reason why is that, according to research by Morgan Stanley's Stephen Roach, consumer spending represents 71% of America's gross domestic product. The figure is 42% for China and 55% for Japan. Clearly, the Germans are good at making stuff and selling it to the world, and the weaker euro is helping spur growth. Germany's DAX stock index is taking notice and is up nearly 20% year-to-date.
Fifty percent of its exports to China in 2004 were electrical equipment and machinery, and its top exports to the world include autos, electronic components, optical instruments, imaging equipment and computer parts. Much is made over China's huge trade imbalance with America, which reached $126 billion in the first eight months of this year. A majority of Japan's exports are manufactured goods and components.
Similarly in Germany, the iShares MSCI Germany Index is loaded with that country's top exporters and would be an excellent proxy for overall German export growth. Canon, Sharp, Hitachi, NEC and Toyota are all good plays on Japan's manufacturing edge, while Sony will continue to lag until it boosts its R&D and catches up in product development. The iShares MSCI Japan Index exchange-trade fund is an attractive option, since it has about 50% exposure to Japan's manufacturing sector with an annual expense ratio of only 0.59%.
A bright spot is Asia, where BMW expects to sell 150,000 cars per year by 2008. Overall, German exports are up for the third-straight month and sales to countries outside of the European Union rose 18% annually from a year earlier. Quarterly sales at Siemens rose 13%, the fastest since 2003. BMW's sales rose by 11% in the third quarter, although high raw-material costs and pricing pressure resulted in weak net profits.
Meanwhile, U.S. exports are up a paltry 2% since 2000. Although exports to China are up 35% during this same period, Americans are now buying seven times more from China than we are selling to them. A good reason why is that, according to research by Morgan Stanley's Stephen Roach, consumer spending represents 71% of America's gross domestic product. The figure is 42% for China and 55% for Japan. Clearly, the Germans are good at making stuff and selling it to the world, and the weaker euro is helping spur growth. Germany's DAX stock index is taking notice and is up nearly 20% year-to-date.
Fifty percent of its exports to China in 2004 were electrical equipment and machinery, and its top exports to the world include autos, electronic components, optical instruments, imaging equipment and computer parts. Much is made over China's huge trade imbalance with America, which reached $126 billion in the first eight months of this year. A majority of Japan's exports are manufactured goods and components.
Similarly in Germany, the iShares MSCI Germany Index is loaded with that country's top exporters and would be an excellent proxy for overall German export growth. Canon, Sharp, Hitachi, NEC and Toyota are all good plays on Japan's manufacturing edge, while Sony will continue to lag until it boosts its R&D and catches up in product development. The iShares MSCI Japan Index exchange-trade fund is an attractive option, since it has about 50% exposure to Japan's manufacturing sector with an annual expense ratio of only 0.59%.
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