China’s imported over 10 million barrels of oil daily in 2019 according to the Energy Information Administration. Ten million barrels PER DAY, every day of the year or 3.65 BILLION barrels per year. So a $20 drop in WTI oil price means $70 billion in savings for China. Clearly demand will have been muted more recently by coronavirus, but the country stands to benefit substantially (compared to net exporters like the US and Canada) from the precipitous drop in the price of crude oil.
Since the pandemic seems to have peaked in China, now could prove to be an opportune time to look at funds or ETF’s with a concentration of holdings in Chinese stocks. WE tend to worry about the lower oil price and its impact on the industry, but you may have been as surprised as I was last time I filled the tank in my vehicle (car and motorcycle). It felt like I’d been given a wad of cash to keep.
Almost all businesses that mine, manufacture or build will be experiencing the benefits of lower energy costs once the lock-down caused by this crisis wanes. I bought some of the TFI International (TFII on TSX and New York), the North American transportation and logistics leader (partnered with a diverse group of customers in the US, Canada and Mexico) for this very reason (I discussed this idea in an earlier article). However I’m looking at buying as Asian fund pretty soon.