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Money Report


Global X: Keeping an Eye on China's Shoppers

Investors hoping to cash in on the growing strength of Chinese consumers might consider the Global X China Consumer Exchange Traded Fund. Launched by New York asset manager Global X on Dec. 1, the ETF is the first designed to tap into what could become a big driver of the world economy. On Nov. 13, China President Hu Jintao said China will take "vigorous" steps to boost domestic demand. "The next wave of global growth is going to come from developing a consumer base in China," says Bruno del Ama, CEO of Global X. Retail and food companies make up more than 50% of the fund, which charges 0.65% in fees and other expenses. Global X also launched an ETF to track China's industrial sector. Through Nov. 30, China's Shanghai Composite stock market index returned 78%—some 48% below its all-time October 2007 high.

Gold Continues to Surge

After hitting a bump in the road, gold continues its recent surge. Its price fell by as much as 4.2% on Nov. 27 as nervous investors, spooked by Dubai's attempt to postpone debt payments, rushed to the safety of the U.S. dollar. (Since gold is bought and sold in dollars, gold and the dollar tend to move inversely to one another.) The drop wasn't as drastic as it first appeared, says Barclays Capital (BCS) technical analyst Jordan Kotick. Gold bottomed at $1,137 an ounce, well above $1,127, the point at which technical analysts say demand will outweigh supply, and finished the day at $1,177.63, down just 0.9%.

On Dec. 1, gold traded at $1,201.63, an all-time high. It is poised to move higher. During breakouts that began in 2005 and 2007, gold shot up 54% and 60%, respectively. Its gain since Oct. 2, when the current rally began, is just 19%. Kotick expects it to reach $1,300 by March and says it could hit $1,500 by 2011.

Hedge Funds Boost Bets

Hedge funds are shoveling money into stocks as individuals make a quick exit, a sign to professional investors that the Standard & Poor's (MHP) 500-stock index should extend its gains. About $37.3 billion has left U.S. mutual funds since August, says the Investment Company Institute. In the third quarter, hedge funds boosted bets to the highest level since the end of 2007, data compiled by Goldman Sachs (GS), industry consultants, and Bloomberg show.

ICI numbers show individuals took $21.4 billion more out of equities than they added and put $312.8 billion into bonds in 2009 through Oct. 30. Over that period, says Morningstar (MORN), bear market and long-short mutual funds, designed to profit if stocks fall, got a record $10 billion from retail investors. (Asset managers have opened 19 long-short funds so far in 2009, the most in a year.) By contrast, Goldman Sachs data show hedge funds upping stakes in stocks by 21% in the third quarter.


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