The Chinese Economy Charges Ahead in the Year of the Ox

Author: Frank Holmes
Date Posted: February 12, 2021 Read time: 45 min

Happy Year of the Ox! Today China and a number of other Asian countries celebrate the Lunar New Year, also known as the Spring Festival. In pre-pandemic years, the Lunar New Year has been an opportunity for individuals and families to travel and visit loved ones. Millions of Chinese people took as many as 3 billion trips in early 2019, representing the largest annual human migration in history.

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

Year of the Ox 2021

Happy Year of the Ox! Today China and a number of other Asian countries celebrate the Lunar New Year, also known as the Spring Festival.

In pre-pandemic years, the Lunar New Year has been an opportunity for individuals and families to travel and visit loved ones. Millions of Chinese people took as many as 3 billion trips in early 2019, representing the largest annual human migration in history.

As you might imagine, things look a little different in February 2021, more than 12 months into the global pandemic. Although China has mostly contained the virus, travel is largely being discouraged. Officials expect only 1.2 billion trips to be made this year by plane, train and automobile.

That’s bad for families, obviously, but good for Chinese factories and exporters, some of which are offering bonuses to workers who put in the hours over the holiday. New orders continue to be red hot following a record year for exports, proving again that China remains as the world’s factory floor.

China’s Export Business Surged to New Highs in 2020

The Asian country ended 2020 with a record trade surplus of some $78 billion as demand for medical supplies, electronics and household goods surged. For the first time ever, China’s total global exports amounted to 14.3% of all global trade, according to Morgan Stanley. China is now the single most important trading partner to an incredible 64 countries, up from only five in 2001. For comparison’s sake, the U.S. is the top trading partner to 38 countries, down from 60 in 2001.

China recorded a record trade surplus at the end of 5020
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It’s for this reason and more that I’m extremely bullish on the country and believe it to be one of the most attractive regions to invest in going forward. I find it remarkable that China responded to the virus without having to break the bank with excessive stimulus. Whereas the U.S. is likely to spend some $10 trillion in monetary and fiscal policy by mid-2022, or about 50% of its GDP, China’s cumulative spending over the same period is estimated to be only 6% of GDP.

China Could Overtake the U.S. as the World’s Largest Economy Earlier Than Expected

Speaking of GDP, China was the only major economy to see economic growth in 2020. It expanded 2.3% while the U.S. economy shrank at about the same rate.

This divergence could mean that China’s economy may overtake that of the U.S. much earlier than expected—by as soon as 2026, according to one estimate.

CHina could overtake US as worlds largest economy sooner than expected
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Take a look at the chart above. The spread, or difference, between the size of the U.S. economy and Chinese economy has been tightening since the mid-2000s, but I believe we may see it tighten further to an all-time record low by the end of 2021 as economic growth in China continues to outperform.

S&P Global Ratings expects China’s GDP to expand 7% this year. I’ve come across even higher forecasts—some as high as 8% and 9%—so this seems a little conservative to me. As for the U.S., the Congressional Budget Office (CBO) is looking for a 5.6% annual growth rate in 2021, which, if accurate, would be the fastest rate since 1983.

China could overtake US as worlds largest economy sooner than expected
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China Now the Top Destination for Foreign Direct Investment

Is it any surprise, then, that businesses are scrambling to get access to the country?

According to the United Nations Conference on Trade and Development (UNCTAD), China was, for the first time ever, the number one destination for foreign direct investment (FDI). Inflows into China rose 4% in 2020 compared to the previous year, marking the second highest rate following India, even as total FDI across the globe collapsed 42% due to the pandemic. Businesses poured $163 billion into China, making it the top country for FDI ahead of the U.S., which attracted $134 billion. That amount represents a nearly 50% plunge from 2019. Developing economies like China now account for more than 70% of all FDI, according to the UNCTD.

China and India saw positive foreign direct investment FDI inflows in 2020
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To clarify, FDI is not the same as investing in the shares of a foreign-based company. Examples of FDI might include mergers and acquisitions (M&A), manufacturing, logistics and more.

China itself has been making massive foreign direct investments through its One Belt One Road (OBOR) initiative, the country’s unprecedented infrastructure strategy across as many as 70 countries across four continents. Last year, renewable energy such as wind and solar made up a bulk of the OBOR’s energy investments as countries accelerate their shift away from fossil fuels. As a share of China’s total energy investment, renewables were 57%, or $11 billion, in 2020.

Asian Markets Were Top Performers in 2020

There’s some disagreement about whether FDI has any impact on stock market performance, but it’s worth pointing out that Asian markets outperformed their global peers in 2020 and continue to show momentum in the new year. Among the best performing markets were South Korea, Taiwan and China, which helped the MSCI AC Asia ex Japan Index end 2020 up about 20%, ahead of the S&P 500 and FTSE All-World Index. Denmark and Sweden rounded out the top five best performing markets.

Asian stocks currently have momentum
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It’s not just foreign investors who seek exposure to the country. In December, the Chinese mainland stock market added a head-spinning 1.62 million new investors, more than double the amount recorded in the same month a year earlier. For all of 2020, the Chinese stock market added 18 million new investors to its ranks, or about 1.5 million new accounts a month.

Eye on Metals

2021 isn’t just the Year of the Ox; it’s the Year of the Metal Ox.

Which is appropriate since metal prices this year should remain heavily supported by demand from China. On top or the ongoing OBOR initiative, the country is expected to spend $1.6 trillion through 2025 on advanced tech projects like 5G networks and electric vehicles (EVs), which will require biblical amounts of rare earth metals, nickel, copper, aluminum and more. This year, sales of EVs are projected to reach 1.8 million units, a 40% increase from 2020, which should be supportive of lithium prices.  

Speaking of metals, we have a webcast coming up on March 10 that I hope you’ll join us for. The topic will be gold and cryptocurrencies and how there’s room in your portfolio for both. Register for this free event by clicking below!

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Gold Market

This week spot gold closed the week at $1,824.23, up $10.12 per ounce, or 0.56%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 0.61%. The S&P/TSX Venture Index came in up 4.38%. The U.S. Trade-Weighted Dollar fell 0.66%.

Date Event Survey Actual Prior
Feb-10 Germany CPI YoY 1.0% 1.0% 1.0%
Feb-10 CPI YoY 1.5% 1.4% 1.4%
Feb-11 Initial Jobless Claims 760k 793k 812k
Feb-16 Germany ZEW Survey Expectations 60.0 61.8
Feb-16 Germany ZEW Survey Current Situation -66.0 -66.4
Feb-17 PPI Final Demand YoY 0.8% 0.8%
Feb-18 Housing Starts 1658k 1669k
Feb-18 Initial Jobless Claims 760k 793k


Precious metal surges to six-year high
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  • The best performing precious metal for the week was platinum, up 11.29%. Gold rose on Tuesday to a one-week high as the dollar and real U.S. Treasury yields fell. The metal was approaching its 200-day moving average. Inflation is a growing concern after Democrats released a first draft of key legislation to comprise President Biden’s COVID relief bill.
  • Platinum rallied above $1,200 an ounce to a six-year high on hopes that a recovery in industry and stricter car emission rules will tighten supply for the metal. Autocatalyst maker Johnson Matthey said Wednesday that it expects platinum’s share of catalyst demand to increase in 2021 after a 15-year decline.
  • Lunar New Year begins this week, which is traditionally an auspicious time to buy gold and sees strong demand out of China. Metals Focus predicts gold jewelry sales will be higher year-on-year this season given the low base in 2020 due to the pandemic. Sales continued to improve throughout 2020 after a weak first quarter. Retailer Luk Fook Holdings International Ltd. saw year-on-year same store sales growth of 11% at self-operated shops for its gold products in the further quarter, reports Bloomberg.  


  • The worst performing precious metal for the week was gold, but still up slightly, climbing just 0.59%. This is its first positive weekly gain in the past three. A surge in the long end of the yield curve over the past month has been a headwind for gold. This has driven modest outflow from the physically backed gold ETFs over the past week.
  • Venezuela’s gold reserves fell to 86 tons in December, down 19 tons from a year earlier, reports Bloomberg. The country sold reserves last year to keep its economy running after crude production collapsed. The struggling nation could continue to sell its gold. 
  • In another blow to Ghana’s proposed gold-royalty fund, Databank Group, hired by the government to advise on its creation, has withdrawn its services over reputational concerns. Ghana, Africa’s largest gold producer, suspended the fund’s $500 million share sale in October after the state prosecutor began an investigation into the transaction, reports Bloomberg.


  • Bloomberg reports that Impala Platinum Holdings Ltd. said its profit, excluding some one-time items in the six months through December, jumped more than four-fold on higher output and a rally in platinum-group metal prices. Profit per share by that measure, known as headline earnings, rose 316% to 336% year-over-year.
  • According to a report by Bain & Co. and the Antwerp World Diamond Centre, China’s retail jewelry market will drive a recovery in the diamond industry this year. Miners reported an increase of 5% to 8% in the price of gems sold in January. China’s diamond jewelry market is expected to recover fully early this year, with long-term growth of 2% to 3% a year over the period from 2023 to 2030, the report said.
  • Newcrest Mining CEO Sandeep Biswas told Bloomberg TV that investors might want to pick up some gold if they’re holding bitcoin to counter its extreme volatility. “If you’re into cryptos, you want to consider having some gold.” Bullion “may act as a bit of a hedge against the volatility of cryptos,” he said.


  • Tesla announced it invested $1.5 billion worth on Bitcoin – adding further momentum to the adoption of cryptocurrencies. Cryptos such as Bitcoin could continue to take demand away from gold as a perceived haven asset that potentially moves in the opposite direction of the wider market.
  • Pretium Resources announced a COVID outbreak at its Brucejack mine in British Colombia. The pandemic remains a threat for miners as cases among workers threaten to close or reduce operations.
  •  • Valentine’s Day is this weekend – historically, an important holiday for the jewelry market, writes Kitco. However, the pandemic is expected to take a bite out of sales in the U.S. According to data from the National Retail Federation, 18% of consumers surveyed are expected to buy jewelry this year, which is down from 21% reported in 2020, prior to the economy being impacted by the coronavirus. But if you staying home for the cold weather and Covid-19 protocols this weekend, you can always jump online to Men? -24k Gold Jewelry and find an attractively designed piece of investment grade jewelry to give this year.

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Index Summary

  • The major market indices finished up this week. The Dow Jones Industrial Average gained 1.00%. The S&P 500 Stock Index rose 1.23%, while the Nasdaq Composite climbed 1.73%. The Russell 2000 small capitalization index gained 2.51% this week.
  • The Hang Seng Composite gained 3.02% this week and the KOSPI fell 0.64%.
  • The 10-year Treasury bond yield rose 4 basis points to 1.206%.

Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was The Graph, rising 198.09%.
  • Tesla invested an aggregate $1.5 billion into Bitcoin this past week. According to an annual report, filed with the U.S. Securities and Exchange Commission, Tesla may acquire and hold digital assets from time to time or long-term. The company also mentioned that it plans on accepting cryptocurrencies as payment for its vehicles. This announcement sent Bitcoin surging through the week, reaching a new peak above $48,000.
  • With the massive net short positions taken by hedge funds on Bitcoin futures, the digital asset still managed to record a new high this week. As shown in the graph below, individual investors and asset managers have been the ones holding the net long positions on Bitcoin futures. It is worth noticing that the net short positions taken by hedge funds increased significantly as Bitcoin started its rally towards the $20,000 point in November 2020.

Net positions of CME bitcoin futures by trader catagory

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  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Alpha Finance Lab, down 16.86%.
  • Janet Yellen, U.S. Treasury Secretary, said that cryptocurrencies’ use for illicit purposes is a growing problem. She acknowledged the promise of these new technologies while highlighting the concerns of money laundering done by online drug traffickers using cryptocurrencies and its role in financing terrorism. These remarks came a week after the United Nations published a report stating that cryptocurrencies have been used to finance ISIS and Al-Qaeda.
  • Joker’s Stash’s founder, the pseudonymous JokerStash, is officially retiring after making a fortune of over $1 billion. One of the largest underground marketplaces for stolen payment card data, Joker’s Stash, saw $400 million sent to it since 2015. That number peaked at $139 million in 2018. The website makes its money through carding, the process of using stolen payment card data to purchase gift cards that can then be re-sold for cash. The recent rise in Bitcoin price substantially inflated JokerStash’s assets as the site has taken in around 60,000 bitcoins. The site becomes one of the few criminal marketplaces to shut down on its own terms.


  • BNY Mellon, the world’s largest custodian bank, announced that it will roll out a new digital custody unit later in the year to help clients deal in digital assets, including cryptocurrencies. The head of advanced solutions at BNY Mellon, Mike Demissie, said that the platform built by the company will be driven by client interest and demand, and that it will stay tuned to regulatory activity to make sure it supports assets that are allowed in a particular market. Also, the Ontario Securities Commission has approved the first publicly traded bitcoin exchange-traded fund (ETF) in North America
  • Mastercard announced that it is planning on giving merchants the option to receive payments in cryptocurrencies later this year. Although, Mastercard previously supported limited cryptocurrency transactions through its cryptocard partners Wirex and Uphold, it is now allowing transactions to be settled in cryptocurrencies as well. Meanwhile, Hester Peirce, U.S. Securities and Exchange Commissioner, said that the U.S. capital markets are ready for bitcoin exchange-traded products (ETPs) and that the SEC should provide for a natural way for investors to trade the ETPs.
  • Amazon is looking to strengthen its grip on the internet economy with the launch of a “digital currency” project in Mexico. The unnamed project is likely an effort to keep lucrative Prime customers eternally plugged into Amazon’s platform. A job post on Amazon stated that the new payment product will enable customers to convert their cash into digital currency which the customers can use to enjoy online services including shopping for goods and/or services like Prime Video.


  • Nigeria’s Securities and Exchange Commission (SEC) has put its plan regarding regulating cryptocurrencies on hold as the central bank of the country is prohibiting financial institutions from servicing crypto exchanges. Back in September 2020, the Nigerian SEC recognized digital assets and decided to create a regulatory sandbox for cryptocurrencies as part of its efforts to fully regulate the market. The central bank has argued that the move was taken to combat the use of cryptocurrencies by criminal element operating within its borders. Senator Sani Musa of the Niger East Senatorial District has claimed that Bitcoin has made the naira “almost useless.” 
  • A senior Finance Ministry Official in India told Bloomberg that India’s draft bill to put a complete ban on cryptocurrency transactions will likely be passed. The official also said that when the bill passes, cryptocurrency holders and companies will have a transition period of between three to six months to wrap up their activity in the digital currencies. The Cryptocurrency and Regulation of Official Digital Currency Bill is seeking to ban all “private cryptocurrencies” and only allow for a national digital currency to be used, which is something the country is working on.
  • Bank of America released a report on cryptocurrencies, warning about the risks and potential market disruption from anti-privacy government measures. The report states that encrypted private wallets with digital assets that can be transferred across borders would seem to undermine the monetary sovereignty of every nation-state. It also assesses the government taking the extreme route and banning all transactions in cryptocurrencies or the more plausible one, where it increases customer information and access requirements for cryptocurrency exchanges. The report also suggests that investors should approach cryptocurrencies cautiously as it expects the government to increase regulation and analysts are uncertain how the crypto markets would react to a reduced-privacy environment.

Tesla just bought $1.5 billion worth of Bitcoin

Domestic Economy and Equities

SP 500 Economic Sectors weekly performance
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  • Goldman Sachs upgraded its 2021 GDP forecast to 6.8% earlier this week. The Wall Street bank now assumes additional fiscal relief of $1.5 trillion, up from $1.1 trillion previously. If Goldman’s prediction comes true, it would be the fastest annual GDP growth for the United States since 1989, according to the St. Louis Fed.
  • President Joe Biden’s announcement that the administration will purchase another 200 million doses of COVID-19 shots means the U.S. has now ordered 600 million doses, enough for the entire U.S. adult population.
  •  Twitter was the best performing S&P 500 stock for the week, increasing 26.66%. The spike in Twitter stock over the past few days is largely attributed to the release of 2020 fourth quarter earnings results that beat analysts’ expectations. During the last three months of 2020, Twitter reported solid results reiterating what CEO Jack Dorsey called “an extraordinary year” for the company


  • U.S. consumer sentiment unexpectedly fell in early February amid growing pessimism about the economy among households with annual incomes below $75,000, even as the government is poised to deliver another round of COVID-19 relief money. The ebb in sentiment reported by the University of Michigan on Friday was also despite a decline in new coronavirus cases and an improvement in the distribution of vaccines. It underscored the so-called K-shaped recovery, where better-paid workers are doing well while lower-paid workers are losing out.
  •  Small-business owners’ confidence in the U.S. economy declined in January for the third straight month as expectations of sales and business conditions dampened, data from a survey compiled by the National Federation of Independent Business showed Tuesday. The NFIB Small Business Optimism Index stood at 95.0 in January, down 0.9 points from 95.9 in December and three points below the 47-year average of 98.
  • Akamai Technologies was the worst performing S&P 500 stock for the week, decreasing 11.41%. The company’s fourth quarter earnings report received a cool reception from analysts and investors, who were uninspired by the company’s financial guidance. In particular, there was disappointment with Akamai’s projected growth rate for its security business, and worries stemming from cautious comments about the outlook for content delivery network (CDN) customers heavily impacted by the COVID-19 pandemic.


  • House Speaker Nancy Pelosi wants to pass President Biden’s $1.9 trillion stimulus package by early March. The Democrats’ plan leaves little room for error, but if everything goes according to plan, a House floor vote could come in less than two weeks. The goal is to have a new law before unemployment benefits expire for millions of Americans. And if checks get out at roughly the same pace they did previously, many Americans could have the $1,400 payments by late March.
  • Mastercard will allow merchants to accept select cryptocurrencies on its network later this year. A Mastercard executive said the payments giant was "preparing right now for the future of crypto."
  •  Lyft on Tuesday reported that its losses narrowed in the fourth quarter. The firm beat Wall Street’s expectations and said it still expects to be profitable on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis by the end of the year.


  • “Exuberant positioning” in the stock market could indicate a 10% correction is up ahead, but it will be a buying opportunity for investors, according to Bank of America analysts. "We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions," said a team of BofA strategists in a Tuesday note. 
  • Big Short investor Michael Burry says Tesla’s $1.5 billion bet on Bitcoin was a distraction, and Dogecoin’s record price signals a massive bubble. The famed short-seller suggested Tesla’s investment was distracting from interest from Chinese regulators.
  • Chipmaker Graphcore is challenging Arm’s Nvidia takeover. According to CNBC, Graphcore has filed documents with the UK’s competition authority objecting to the deal.

Energy and Natural Resources Market



Is the next commodity supercycle here?
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  • The best performing commodity for the week was again lumber, up 7.58%, as supply remains restrained, but housing demand is strong. Copper rose as much as 1.90% to hit an eight-year high in London on Wednesday as factory-gate prices in China rose for the first time in a year. This is sparking bets that inflation will rise globally as economies recover from the pandemic. Tin prices have hit the highest since 2013 as top exporter Indonesia faces lower production due to anti-virus rules at mining and smelting operations. Prices on the LME are up 15% so far this year.
  • JPMorgan said commodities appear to have started a new supercycle of years-long gains, as oil holds above $50 and metal prices are at all-time highs. Commodity prices may jump as an “unintended consequence” of the fight against climate change, which threatens to constrain oil supplies while boosting demand for metals needed to build renewable energy infrastructure, batteries and electric vehicles, the bank said. Commodities have seen four supercycles over the past 100 years, with the last one peaking in 2008 after 12 years of expansion, according to Bloomberg.
  • Total SE bucked the trend of weak fourth-quarter earnings for Big Oil after reporting figures that exceeded expectations. The French giant has outperformed its peers throughout the pandemic downturn due to lower costs, stronger cash flow, a preserved dividend, and being a leader in clean energy investments. More than a $2.4 billion of its planned net investments of $12 billion this year will go into renewables and electricity – an increase of 20% from 2020.


  • The worst performing commodity for the week was coffee, settling back 2.84% from slack demand amid new lockdowns around the coronavirus. Crude oil ended its eight-day winning streak on Thursday after the IEA said the rebalancing of the global oil markets remains fragile and cut 2021 consumption forecasts. Oil was up roughly 12% this month, but the recent stretch of price gains pushed its 14-day relative strength index (RSI) this week to the most overbought level since 1999, signaling a correction is due.
  • On Thursday, oil prices traded lower after running higher for eight straight sessions, reports West Texas intermediate crude oil settled down 0.75%. On Friday morning, Wall Street’s main indices opened slightly lower as energy stocks slipped and investors digested recent gains driven by stimulus bets, Reuters reports.


  • Sumitomo Metal Mining Co. says copper and nickel are unlikely to keep rising. Managing Executive Officer Shuichi Yasukawa said neither market is experiencing tight conditions, and that current prices reflect funds flowing in due to worldwide monetary easing. They estimate copper at $7,500 a ton, far below its current level above $8,000.
  • Cameco beat fourth-quarter estimates and said that heading into 2021 it remains positive about the long-term fundamentals for the uranium market, citing focus on electrification globally and Biden administration support for nuclear power. The uranium producer added that demand for nuclear power is growing for traditional and non-traditional uses.
  • Qatar, already the world’s biggest LNG producer, has hired engineers for a planned $29 billion expansion of its capacity. The country’s output has remained flat for a decade. The expansion will boost annual output to 100 million tons per year from 77 million tons, reports Bloomberg.


  • The economies of at least 19 countries dependent on oil and gas experts are at risk from climate change targets that could cost them trillions in lost revenue by 2040, according to a report by Carbon Tracker. Azerbaijan, Angola, Congo, Libya, Nigeria and Saudi Arabia were among those in the most exposed categories, with some projected to lose about 40% of total government revenues. Bloomberg’s Marc Champion writes this is a wake-up call for nations to diversifier their economies.
  •  Following the same line of though, S&P Global Ratings followed through with their warning by lowering the credit rating by one notch for Exxon Mobil, Chevron, and ConocoPhillips due to the industry’s risk profile with regards to climate change and weak earnings.
  • States are clashing with the Department of Defense over water contamination from military sites into local communities, reports Bloomberg. Six states have drinking water standards for PFAS, known as a forever chemical, and has been linked to PFAS-laced firefighting foam used on military bases. “The states that have set these limits and EPA seem to have a different opinion about what is a safe level,” said Michael Wimsatt, director of the waste management division in New Hampshire’s Department of Environmental Services. The federal EPA has no enforceable drinking water standards.

Frank Holmes' 5 reasons to consider ethereum - video

Airline Sector



  • The best performing airline stock for the week was Mesa Air, up 38.6%, due to an earnings surprise. Airlines continue to have flexibility in managing their fleets. Singapore Airlines deferred $4 billion of capital spending related to delivery agreements. Some of the orders will be spread out further than the original delivery window of five years. The adjustments to deliveries were made with both Airbus and Boeing.
  • India’s recent budget allowed for the divestment of Air India and Tata Group is considered a leading bidder. It owns three of the six largest airlines in India and will be a strong competitor to IndiGo and SpiceJet.
  • Several carriers are resuming flights of the Boeing 737 MAX, with United Airlines and Ethiopian airlines being the most prominent. The fleet was grounded worldwide after safety issues occurred.


TSA Traveler Throughput
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  • The worst performing airline stock for the week was TUI AG, down 42.9% due to poor earnings. Passenger trends remain weak. Average daily passenger numbers are down 63% for the most recent week versus this period a year ago. A more complete trend can be seen in the graph below. Spirit Airlines indicated that Q4 revenues will be below estimates due to this trend.
  • A report was released indicating why Sriwijaya Air Flight 182 crashed. The main problem appeared to be controlling the engine’s thrust along with a difference in thrust between the two main engines. The auto-throttle system had been found to be faulty in the aircraft in the weeks leading up to the crash.
  • Air Canada said it is suspending 17 international routes and will lay off 1,500 employees because of the move. Additional challenges facing the company are integrating the newly approved Air Transat acquisition as well as having a new CEO. The company also reported revenues down 81% in the most recently reported fourth quarter. Cathay Pacific also suspended many of its long-haul routes. Airlines, in general, are reducing the number of planes in service.


  • Air carriers are upgrading their frequent flyer loyalty programs. There is a shift at Spirit from accruing from miles traveled to amount spent. Benefits are being more targeted at millennials, whose travel has been increasing from secondary and tertiary cities during the pandemic.
  • United ordered $1 billion of eVTOLs (200 aircraft), an aircraft that flies over congested cities. This is being done in partnership with Archer Aviation. eVTOLs are known as electric vertical takeoff and land aircraft. These aircraft are expected to debut in 2024. The initial market is expected to be Southern California, carrying four passengers that can travel up to 60 miles at 150 miles per hour.
  • Airlines continue to slowly rebuild their footprint. SAS plans to add 180 routes from Scandinavia to Europe during the spring and summer if restrictions continue to ease.


  • The airlines recovery may be delayed to 2022. New viral strains and slow vaccine distribution are hindering passenger growth.Younger leisure travelers are driving demand. The last group to return to the skies will be the business and international travelers, who are also the most profitable. Many carriers are concerned that the traditionally strong summer period will be weak for this reason.
  • India’s most recent budget did not offer any specific relief measures to help carriers cope with COVID-19
  • Lufthansa has been conceding valuable slots and key airports in return for state aid. If this plan proves to be successful, it is believed that Air France will be forced to do the same thing. Ryanair is pushing the EC to force France to stop sending aid to Air France, which could force Air France to offer slots for continued aid.

Emerging Markets



  • The best performing country in emerging Europe for the week was the Czech Republic, gaining 4.5%. The best performing country in Asia this week was India, gaining 9.6%.
  • The Russian ruble was the best performing currency in emerging Europe this week, gaining 1.2%. The South Korean won was the best performing currency in Asia this week, gaining 1.2%.
  • China continues to release strong economic data. Chinese foreign reserves increased in January and new yuan loans jumped to a new record high. Growth in broad M2 money supply remains at a healthy level but eased to 9.4% in January from 10.1% in December.


  • The worst performing country in emerging Europe for the week was Hungary, losing 1.5%. The worst performing country in Asia this week was Pakistan, losing 2.3%.
  • The Hungarian forint was the worst relative performing currency in emerging Europe this week, gaining 17 basis points. The Philippine peso and Thailand baht were the worst performing currencies in Asia, closing the week unchanged.
  • Eurozone investor confidence dropped on worries over slow vaccine rollouts and expectations of prolonged national lockdowns. Europe Sentix Investor Confidence declined to -0.2 in February from a positive reading of 1.3 a month ago.


  • Joe Biden held his first call with the President of China, Xi Jinping. Biden talked about China’s unfair economic practices, as well as human rights abuses in the Xinjiang region. He criticized Beijing for the implementation of the new security law in Honk Kong and increased tensions with Taiwan. However, Biden wants to ensure an open line of communication with Xi and his government. After the call, the new U.S. administration allowed a delay in restricting TikTok and WeChat, after the prior administration attempted to block new users from downloading the apps and technical transactions of TikTok and WeChat.
  • BlackRock Inc., the world’s biggest asset manager, recommends investing in the emerging markets of Europe, favoring Greece and Turkey. Chris Colunga, fund manager, is optimistic about Greek stocks on bets that tourism will recover and financial conditions, as well as investments, will improve. In Turkey, more traditional policies announced by the new economic leadership team should support the Turkish lira and improve the level of investments, Colunga says.
  • The year-on-year price growth in Czech Republic dropped from 2.3% in December to 2.2% in January and stayed above the central bank’s forecast of 2% despite lockdowns. The bank announced that it may start hiking rates from around the middle of the year, but the bank’s decision will depend on the pandemic. The Czech koruna has been one of the strongest currencies in the past six months and it may continue to appreciate.


Euorpe's long wait to herd immunity.
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  • Europe is slowly distributing vaccines for COVID-19. At the current rate, Hungary and Poland will need two years to inoculate 75% of the population with two-dose shots. The United Kingdom is the most efficient country within the EU and could vaccinate its population within one year.
  • Chinese Lunar New Year begins on February 12. This two-week holiday it usually occupied by a large population migration and increased spending, but this year’s celebrations might be much more subdued due to the pandemic. It could be positive for factories as production may continue and bad for travel as more people will stay local due to travel restrictions.
  • The European Union started working on a proposal to sanction Russia over the imprisonment of opposition leader Alexey Navalny. Novalny, 44, was detained in mid-January upon his return from Germany where he was treated for the poisoning that he and Western nations blamed on President Vladimir Putin’s Federal Security Service. Individual sanctions may be announced as soon as next week. Russia warned to break ties with Europe over sanctions.


Leaders and Laggards

Weekly Performance
Index Close Weekly
10-Yr Treasury Bond 1.21 +0.04 +3.52%
Oil Futures 59.63 +2.78 +4.89%
Hang Seng Composite Index 4,889.79 +173.81 +3.69%
S&P Basic Materials 467.06 +4.98 +1.08%
Korean KOSPI Index 3,100.58 -20.05 -0.64%
S&P Energy 334.99 +13.89 +4.33%
Nasdaq 14,095.47 +239.17 +1.73%
DJIA 31,458.40 +310.16 +1.00%
Russell 2000 2,289.36 +56.03 +2.51%
S&P 500 3,934.83 +48.00 +1.23%
Gold Futures 1,821.70 +8.70 +0.48%
XAU 141.72 +0.20 +0.14%
S&P/TSX VENTURE COMP IDX 1,067.44 +44.80 +4.38%
S&P/TSX Global Gold Index 303.85 -2.74 -0.89%
Natural Gas Futures 2.91 +0.05 +1.64%


Monthly Performance
Index Close Monthly
Korean KOSPI Index 3,100.58 -47.71 -1.52%
10-Yr Treasury Bond 1.21 +0.12 +11.25%
Gold Futures 1,821.70 -37.10 -2.00%
S&P Basic Materials 467.06 -15.85 -3.28%
S&P 500 3,934.83 +124.99 +3.28%
DJIA 31,458.40 +397.93 +1.28%
Nasdaq 14,095.47 +966.52 +7.36%
Oil Futures 59.63 +6.72 +12.70%
Hang Seng Composite Index 4,889.79 +420.63 +9.41%
S&P/TSX Global Gold Index 303.85 -10.31 -3.28%
XAU 141.72 -0.61 -0.43%
Russell 2000 2,289.36 +177.39 +8.40%
S&P Energy 334.99 +8.66 +2.65%
S&P/TSX VENTURE COMP IDX 1,067.44 +167.20 +18.57%
Natural Gas Futures 2.91 +0.18 +6.71%


Quarterly Performance
Index Close Quarterly
XAU 141.72 -0.32 -0.23%
S&P/TSX Global Gold Index 303.85 -38.88 -11.34%
Gold Futures 1,821.70 -63.70 -3.38%
DJIA 31,458.40 +2,378.23 +8.18%
S&P 500 3,934.83 +397.82 +11.25%
Nasdaq 14,095.47 +2,385.88 +20.38%
Korean KOSPI Index 3,100.58 +772.69 +33.19%
Natural Gas Futures 2.91 -0.07 -2.22%
S&P Basic Materials 467.06 +40.83 +9.58%
Russell 2000 2,289.36 +580.89 +34.00%
Oil Futures 59.63 +18.51 +45.01%
Hang Seng Composite Index 4,889.79 +790.58 +19.29%
S&P/TSX VENTURE COMP IDX 1,067.44 +336.30 +46.00%
S&P Energy 334.99 +89.78 +36.61%
10-Yr Treasury Bond 1.21 +0.32 +36.73%


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Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (12/31/2020):

Total SE
Luk Fook Holdings
Tesla Inc.
Pretium Resources Inc.
Singapore Airlines Ltd.
United Airlines
Spirit Airlines
Air Canada

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index. The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500. The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500. The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500. The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500. The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500. The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

There is no guarantee that the issuers of any securities will declare dividends in the future or that, if declared, will remain at current levels or increase over time. Cash Flow is a measure of the amount of cash generated by a company’s normal business operations. M2 Money Supply is a broad measure of money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds. The Sentix Investor Confidence Index rates the relative six-month economic outlook for the eurozone. The MSCI AC Asia ex Japan Index captures large and mid-cap representation across 2 of 3 Developed Markets (DM) countries (excluding Japan) and 9 Emerging Markets (EM) countries in Asia. With 1,169 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. The FTSE All-World Index is a market-capitalization weighted index representing the performance of the large and mid-cap stocks from the FTSE Global Equity Index Series and covers 90-95% of the investable market capitalization. The index covers Developed and Emerging markets. The small business optimism index is compiled from a survey that is conducted each month by the National Federation of Independent Business (NFIB) of its members.