U.s. Global Investors, Inc. · NASDAQ:GROW
U.s. Global Investors — Investor Presentation (July 2004)
23 slides from U.s. Global Investors's investor presentation, July 2004
Slide 1: China: Natural Resources
China: Natural Resources The new driver behind the bull market Frank E. Holmes, Chief Investment Officer U.S. Global Investors, Inc.
Slide 2: Synchronized Global Boom
Synchronized Global Boom “Synchronicity – leading indexes turning up” – Canaccord Capital With China’s demand for raw materials remaining strong and the composite of leading indexes turning up, the sustainability of rising or steady commodity prices remains constructive. The world is reflating, whil
Slide 3: Synchronized Global Boom
Synchronized Global Boom Source: Bridgewater 1-800-US-FUNDS www.usfunds.com 3
Slide 4: U.S. GDP Growth
U.S. GDP Growth Source: Bridgewater 1-800-US-FUNDS www.usfunds.com 4
Slide 5: Excess Liquidity
Excess Liquidity Record levels of excess liquidity suggests there is further room for multiple growth. 1-800-US-FUNDS www.usfunds.com 5
Slide 6: Comparison of 12-Month Growth Rates
Comparison of 12-Month Growth Rates GDP IP Metal demand/ consumption correlates better U.S. +3.28% -0.93% with industrial production (IP) than GDP. China’s IP growth rates far Germany -0.20% -0.27% exceed other major economies. Japan +2.97% +0.78% China +9.10% +16.3% 1-800-US-FUNDS www.usfunds.com 6
Slide 7: Industrial Production & Commodity Price
Industrial Production & Commodity Price Given the low level of inventory to shipments, this commodity cycle appears to further grow. Note the strong correlation between IP and commodity trends. Commodity prices usually do well when real rates are very low. 1-800-US-FUNDS www.usfunds.com 7
Slide 8: Global Industrial Production vs. Industrial Metal Prices
Global Industrial Production vs. Industrial Metal Prices Based on historical cycles, we believe this cycle still has momentum to rise. Credit Suisse First Boston believes real rates at the short end of the curve have to remain negative. We believe this will remain at least through May of 2004. 1-800
Slide 9: Oil Consumption Growth
Oil Consumption Growth “Asia will revolutionize the geopolitics surrounding the oil producing regions of the world” – Dr. Marc Faber Asia consumes 19 million barrels of oil daily with a population of about 3 billion. By contrast 285 million Americans consume 22 million barrels a day - a per capita c
Slide 10: China's Demand
China’s Demand Domestic Oil Production in China A doubling of 300 demand in Asia will lead to 250 significantly higher energy prices. 200 Ton mn Crude 150 Refined 100 Products 50 0 1993 1998 2001 2002 2003E Source: CEIC/Morgan Stanley 1 Metric Ton = 7.33 bbls 1-800-US-FUNDS www.usfunds.com 10
Slide 11: China's Demand
China’s Demand Oil Imports into China Crude demand increases 100 90 10 year + 400% 80 3Year + 50% Ton mn 70 Crude 60 Refined 50 Products 40 30 20 10 0 1993 1998 2001 2002 2003E Source: CEIC/Morgan Stanley 1-800-US-FUNDS www.usfunds.com 11
Slide 12: China's Demand
China’s Demand Iron Ore Imports into China 10 year growth is up 140 400%. 120 Tons mn 100 80 60 40 20 0 1993 1998 2001 2002 2003E Source: CEIC/Morgan Stanley E= 2003 estimates are extrapolations of the first eight months of data 1-800-US-FUNDS www.usfunds.com 12
Slide 13: China's Demand
China’s Demand Chinese steel consumption is still low compared to other developed economies. Korean and Taiwanese per capita steel consumption is 4 to 5 times larger than Chinese. If China was to rise to Korean steel consumption levels, the demand would stay strong for 25 years at 5% growth. 1-800-U
Slide 14: China's Demand
China’s Demand Metal Imports into China Strong GDP and IP 40 and Money Supply growth have seen a 35 dramatic increase in steel consumption. 30 Steel Since the Asian 25 Ton mn currency crisis, Aluminium China’s import 20 demand has increased 300%. 15 Copper incl. Scrap 10 5 0 1993 1998 2001 2002 2003
Slide 15: China's Consumption
China’s Consumption The big swing factor is China, which is still an under-consumer per capita of resources. China’s economic plans for rural China could easily sustain a strong demand for commodities. 1-800-US-FUNDS www.usfunds.com 15
Slide 16: China's Demand
China’s Demand The new Shanghai Gold Exchange and liberalization of citizens to freely buy gold and a cultural affinity towards gold, makes gold an attractive asset class. 1-800-US-FUNDS www.usfunds.com 16
Slide 17: Are Mining Stocks Overvalued?
Are Mining Stocks Overvalued? Metals and Mining: P/E relative (12m-forward) This cycle appears not over, unless Asian demand stalls. Source: I/B/E/S International, Datastream, CSFB research 1-800-US-FUNDS www.usfunds.com 17
Slide 18: Comparison of P/E Ratios & Dividend Yield
Comparison of P/E Ratios & Dividend Yield P/E Dividend Yield China 12.8 3.6% S&P 500 20.5 1.9% Source: FT December 6-7, 2003 1-800-US-FUNDS www.usfunds.com 18
Slide 19: Reform for 800 Million Rural Chinese
Reform for 800 Million Rural Chinese • China has embarked on a series of significant policy and legal reforms involving rural land rights and reduced taxes on agricultural products. • Analysts at CLSA believe this coming boom will dwarf earlier government programs. 1-800-US-FUNDS www.usfunds.com 19
Slide 20: Rural Reform
Rural Reform • Will potentially create broad-based, grass-roots economic growth for 1/7 of the world’s population. • Is a catalyst for renewed rural productivity and consumption for 800 million Chinese people. This is a massive number of consumers. 1-800-US-FUNDS www.usfunds.com 20
Slide 21: Rural Reform
Rural Reform • 210 Million farm households will be earning the ownership rights to 130 million hectares of arable land. A land transfer valued at an estimated $500 billion. • This wealth transfer will create numerous positive impacts on rural economic growth. • This stimulus can drive a cycle of bro
Slide 22: Potential Risks
Potential Risks • Potential new copper supply. • China’s economy slows. • High level of speculation in commodities by hedge funds. • Stocks continue performing well. • US economy stalls and short-term interest rates rise. 1-800-US-FUNDS www.usfunds.com 22
Slide 23: For more complete information about the Global Resources Fund
For more complete information about the Global Resources Fund (PSPFX) or China Region Opportunity Fund (USCOX), or any U.S. Global fund, including charges and expenses, obtain a prospectus by visiting us at www.usfunds.com or call 1-800-US- FUNDS (1-800-873-8637). Read it carefully before you invest
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