NEW YORK (
Macroeconomic data on China for April that came out last week added fuel to the existing concerns that the country's economic growth was slowing. The quarterly data released earlier showed that China's GDP growth fell down to 8.1% a year in the first quarter of 2012, a sequential drop of 0.8%. Investors were anticipating a milder drop to 8.4%.
Much of the slowdown in China's growth rate stems from a drop in demand for its exports in key markets including the U.S. and Europe. The fact that China Mobile's growth is not dependent on exports but internal domestic consumption of its wireless services provides a better view of the company's prospects.China Mobile is the world's largest wireless carrier, with close to 670 million subscribers, dwarfing its U.S. counterparts
Smartphone, 3G Demand to Support GrowthWhile the era of double-digit growth rates in the world's largest economy may be over, we expect the economy to still grow at a 7%-8% clip. Even the country's Five-Year Plan for 2011 to 2015 had called for an annual long-term GDP growth of 7%. At this rate, millions of Chinese will still enter the middle-class strata every year. Greater disposable income will see demand for 3G-capable smartphones increase in the coming years. China is already poised to overtake the U.S. this year to become the world's largest smartphone market by volume, according to IDC's latest market figures. (See
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts