A Huge Tailwind for These Stocks That You Haven't Heard About

The Weekend Edition is pulled from the daily Stansberry Digest.


It was as if we were staring directly into the future...

Our group was wandering around the observation area on the 88th story of the famous Jin Mao Tower.

Everywhere we looked, we saw dozens of 30-story office buildings occupying Shanghai's busy skyline.

Some looked like they were plucked straight out of Las Vegas. Others looked like they belonged in Manhattan or Chicago. And a few even had massive LED displays projected on to them, changing the graphics every few seconds.

We got back to the U.S. last Sunday afternoon, after a grueling 15-hour flight. We had spent the past 10 days touring China with Steve Sjuggerud and a group of more than three dozen Stansberry Research subscribers and employees – including me.

While we were out there, we toured Beijing, Shanghai, and Hong Kong to see for ourselves why Steve has been so bullish on China for the past three years.

The group enjoyed a history lesson in Beijing – touring the Forbidden City, Tiananmen Square, the Summer Palace, and hiking around the Great Wall. We then took the high-speed "bullet" train to Shanghai, covering more than 800 miles in about five hours.

When we arrived in Shanghai, we stayed at the super-luxurious five-star Mandarin Oriental hotel...

Our first night there, we took an evening cruise around the Huangpu River. Everyone was in awe as we stared out at the jaw-dropping cityscape of high-rise office buildings before us in Shanghai's bustling Pudong business district...

The most amazing part? Most of these skyscrapers didn't even exist 20 years ago.

Yet this growth story has flown under the radar of most Americans, who seem to think that China hasn't changed much in the past two decades.

At the Asia Investment Opportunities Conference event in Shanghai, Steve shared a shocking chart...

It compares the per-capita gross domestic products ("GDP") of China and the U.S. As you can see, China's economy has grown more than 2,000% over the past two decades. In the U.S., GDP has barely doubled over the same time frame...

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And things don't appear to be slowing down anytime soon. By 2022, more than three-quarters of the country's urban population will qualify as "middle class," according to data from consulting firm McKinsey.

Because of this incredible growth, Chinese real estate prices have absolutely soared...

As you can see from the following graphic, real estate in China's three largest metropolitan areas – Shenzhen, Beijing, and Shanghai – is significantly more expensive than the notoriously pricey San Francisco, New York City, and Washington, D.C. markets. In fact, between China and the U.S., seven of the 12 most expensive cities are in China...

Our tour guide in Shanghai showed us an ordinary-looking apartment building downtown. Each home had window air-conditioning units and laundry drying on a clothesline outside. "Nothing to write home about," we all thought. And yet, these apartments go for around $2 million...

Together, Beijing and Shanghai's populations total around 46 million people. Each city houses more people than New York City, Los Angeles, Chicago, Houston, Phoenix, and Philadelphia... combined.

To prevent overcrowding, the government has resorted to a lottery system to award license plates in both cities. The Economist reports that in the April lottery, nearly 3 million Beijing citizens competed for fewer than 6,500 license plates. In Shanghai, an online-auction system resulted in an average winning bid of more than $14,000 – more than the cost of many Chinese-made cars.

Steve calls Shanghai and Beijing "two of the planet's most advanced cities"...

It might sound like hyperbole... But after visiting for myself, I can assure you it's not.

In all of our travels, our group was blown away to see firsthand how different China is from what we had imagined in our heads.

The streets were immaculate. Homelessness is virtually nonexistent in all of the areas we toured. People seemed busy and cheerful.

At times, it almost felt like we were peering directly into the future. It's the closest thing I've seen to a real-life version of The Jetsons.

For instance, I didn't see a single local carrying his wallet. Instead, people simply paid for goods and services with their smartphones – even tipping street performers by scanning their unique QR codes.

And I wasn't alone in my opinions. The well-traveled Dr. David "Doc" Eifrig also joined us on the trip. Even he was surprised by what he saw in our travels. As he told his Retirement Trader subscribers earlier this month...

You'd think given all the stories and stats you hear about China's growth, crowds, and construction that you'd know what to expect. What I saw, though, surprised me...

Yes, China is still a centralized command economy. But it's not the poor, socialistic Marxist economy I thought it was countrywide. Instead, the cities were seamlessly urban, and the countryside is moving that way. The trains and planes were better equipped and more comfortable than any seat on Southwest Airlines. Heck, I found a Burger King at the foothills of the Great Wall of China and Starbucks all over Beijing and Shanghai.

Our trip made one thing crystal-clear: It's easy to see why Steve says he has never before seen such a massive gap between perception and reality than what's happening in China today.

Of course, regular DailyWealth readers are already familiar with Steve's bullish thesis on China...

We've discussed it several times before, so we won't rehash the whole story again. In short, last year, index provider MSCI finally deemed China worthy of being included in its emerging markets indexes...

On May 31, MSCI officially began to add local Chinese stocks – known as "A-shares" – to its indexes... and up to $1 trillion is now set to flow into China over the next several years as a result.

But this isn't the only reason Steve is super bullish on A-shares today...

You see, China has a problem – one almost nobody in the West knows about, let alone is discussing...

No one, that is, except Steve.

The good news is that China's solution to this problem will drive even more money – as much as $1 trillion – into Chinese stocks over the next several years.

It's the story of China's pension crisis.

China's population is rapidly aging, and the country doesn't have enough young workers to support its retirees. Worse yet, its pension-fund system is woefully underfunded.

Meanwhile, China allows its citizens to start collecting pension benefits when they turn 60 years old. Seven years from now, China will have more people collecting pensions than the entire U.S. population... And by 2050, China will have just 1.3 working citizens per each retiree – roughly half the rate of the U.S. Steve shared the full story in last month's issue of True Wealth China Opportunities...

How did this happen? First, as China develops, people have been living much longer than they used to. The life expectancy in China in 1960 was 43 years. Today, it's 76 years.

Second, the one-child policy of the 1970s severely limited the birth rate in China. When it started the policy, China was worried about population growth after its "baby boom" in the 1950s. Now, the lack of young people in the workforce is taking a toll.

China relaxed some of the restrictions of its one-child policy in 2015... And it's considering ending the policy entirely. But that obviously won't solve the problem in the short term. China needs a solution that will boost pension returns for the next 20 years while the current generation is raising families (and supplying the next generation of pension funders).

So... how will China possibly pay for all of its retirees? It could raise the retirement age... encourage folks to sock away more money... or earn a higher return on that money. More from Steve...

Unless something changes, China is facing a huge problem down the road. Meanwhile, China's pension assets are tiny today... Pension assets made up just 14% of GDP in 2015 – compared to 121% of GDP in the U.S.

Consulting firm KPMG says this is about to change dramatically... KPMG forecasts that China's pension assets will grow at a crazy rate – from 14% of GDP in 2015 to 47% of GDP in 2025. That's only seven years away...

How will it grow so quickly? Beyond the typical ways, China will contribute the proceeds of the national lottery to its pension funds. And it will contribute 10% of the proceeds of the IPOs (initial public offerings) of state-owned companies to pension funds.

In other words, China is going to use the stock market to fund its pension system. More from Steve...

KPMG predicts the assets in the two government funds – the national pension fund and the social security fund – will grow nearly fourfold, from 5.5 trillion yuan (combined) in 2015 to 20.4 trillion yuan in 2025.

Think about this: If just 30% of that money is invested stocks, that's about 6 trillion yuan – or roughly $1 trillion – worth of Chinese pension-fund assets going into stocks by 2025.

That's a lot of money in a short period of time. But it's not only possible for $1 trillion to flood into the Chinese stock market by 2025 – it's likely...

Remember, China's social security fund is allowed to invest up to 40% of its assets in stocks and mutual funds.

More important, China NEEDS to get a high return on its pension assets to keep up with a declining workforce and a rising number of retirees. Stocks are the place for high returns over the long term.

In short, as much as $1 trillion of foreign investment is set to flow into Chinese stocks thanks to the MSCI inclusion story... And up to another $1 trillion more are set to flow into these same stocks thanks to China's pension crisis.

You can see why Steve is calling this one of the biggest investment opportunities of his lifetime.

It's OK to be skeptical about the China story...

After all, China is still run under a Communist regime... And the government censors plenty of media so that its citizens can only see what it wants them to see. Google, Facebook, Twitter, YouTube, Instagram, and other forms of social media are all blocked when you're in mainland China.

But this story is bigger than all of that... And politics aside, folks who ignore his advice will miss out on a once-in-a-lifetime investment opportunity.

If you don't yet own any Chinese stocks, I urge you to reconsider today. As Steve has explained, the easiest way to take advantage of this opportunity is through the KraneShares Bosera MSCI China A Fund (KBA). This fund holds the exact stocks that MSCI will include in its indexes... and likely the same stocks that China's pension funds will invest in over the next several years.

Regards,

Sam Latter

P.S. China isn't the only big idea Steve is excited about today... He says he has found the "next asset set to soar 500% or more" in America.

In fact, Steve says he has only been this certain about an investment opportunity a few other times in his entire career: U.S. stocks in 2009... real estate in 2011... and of course, Chinese stocks beginning in 2016. And we likely don't need to tell you how incredibly profitable those calls have been.

Steve is hosting a special live event on Thursday, June 21, at 8 p.m. Eastern time, to explain it all – and he's even giving away one of his favorite ways to profit from this opportunity, absolutely free. Go here for more details.