While it’s common to look at the world by the size of a country’s economy relative to others, it is more interesting and helpful to think of the economy that is driven by growth clusters that taken together account for a sizable amount of world economic output. And those growth clusters are driving one Chinese stock in particular.
Take a look at the below list of the largest 10 of these “mega regions” based on data from Oxford Economics.
The above powerhouses as a group bring in over $28 trillion in economic output each year, which is about 50% higher than America’s total economy.
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Operating revenue increased over 70%.
Gross profit surged 122%.
Net income was up over 60%.
It’s interesting that the Boston-New York-Washington corridor leads the way with its strengths in information technology, finance, and professional services. For the United States, it might surprise you that the Chicago-Pittsburgh mega region ranks higher than Southern California-San Diego-Silicon Valley corridor.
São Paulo, Brazil is the only city in the Southern Hemisphere to make the list. The city was once heavily reliant on manufacturing and trade, but the $780 billion city’s economy is now embracing its role as a nascent financial hub.
In the Far East, Asian mega regions combine for $8.7 trillion in total economic output. Of these, Greater Tokyo in Japan is the largest, while Shandong might be a name that some of you might not be familiar with. Located between Beijing and Shanghai, the coastal province houses extensive high-tech industrial and special export zones.
The latest stock addition to my Cabot Global Stocks Explorer advisory portfolio is from this region, and is a standout in terms of growth at the sweet spot of young Chinese spending on low-ticket items. This is important since China’s overall economic growth and spending are facing headwinds these days.
But my latest recommendation doesn’t rely solely on Chinese growth, expanding rapidly into other emerging markets in the Asia-Pacific and Latin America. Brazil and South Korea look particularly promising. While still a relatively small company, with a market cap of less than $5 billion, it has a clean balance sheet, $1.3 billion in cash in its coffers, and has the backing of a much larger public Chinese company.
This company plays in a high-growth market, with a global user base that’s expected to double in just the next two years. And that company itself grew its user base by 57% year over year last quarter, to reach 144 million users. Meanwhile, revenues nearly doubled (+94%).
It’s an aggressive, high-growth Chinese stock. But it’s one that doesn’t depend solely on China, with much of its growth coming from some of those large mega regions I mentioned above.
*Editor’s Note: This post was partially excerpted from a recent issue of Cabot Global Stocks Explorer.