Two Ways to Play: Honda Struggles to Keep Up in China
Strengthen your portfolio in good times and bad.
Honda Motor Company (HMC) is planning to build a new plant in China to keep up with the booming demand.
According to the Wall Street Journal, Honda's main joint venture in the city of Wuhan in Hubei province is already nearing capacity, expecting to sell some 200,000 vehicles this year. It could exceed the 240,000 max capacity as soon as next year.
Executives are targeting the new venture to begin production near the end of 2011, which should be able to add 100,000 cars a year. Analysts expect China to overtake the US as the largest auto market this year. Vehicle sales have grown about 50% through November and are poised to add another 10% to 15% in 2010.
From the Bull Pen: This is just another example of demand fueled by the Red Dragon, and how the American leadership position is gradually slipping away. In looking at the daily chart of Honda, we see the stock nearing the 33 pivot point, which may set up as a buy. Those bullish can set a sell stop 2% below that level. Toyota (TM) may also have the same setup near 81.
From the Bear Cave: If you're bearish on China, then the financial-heavy China 25 ETF (FXI) may be one for consideration. A better entry awaits, possibly near 43 to 44. If and when, and remember to set a buy stop.
For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.
A Quick Check Around the World
Asian trading closed with the Nikkei 1.91%, India 0.55%, Hang Seng 0.69%, Shanghai -2.32%, and Taiwan 0.88%.
Across the pond, we see the FTSE 1.04%, CAC 0.68%, DAX 0.36%
As of 8:15 AM EST, S&P Futures are trading +4.25 to 1112.50. Nasdaq futures are +9.25 to 1834.25
A Look at Commodities
Over in commodities, crude oil is -0.38 to 73.34 while gold is -8.400 to 1087.80 this morning. Silver is -0.120 to 16.915 and copper -0.345 to 3.1220.
The dollar Index is +0.0300 to 78.4500.
On the Radar
08:30 GDP- Third Estimate 2.7% cons.
08:30 GDP Prices- Third Estimate 0.5% cons.
10:00 Existing Home Sales 6.30M cons.
Click here for the full trading radar.
Good luck today!
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