Image by: Victor1558
By Michael Sterling
If there’s one international market most investors have their eyes on, it’s Asia. With trillions of dollars in revenue every year, it was almost a no-brainer that investors started paying attention to the ever rising arrows within its market. E-Commerce and a rise in manufacturing have made the Asian market a very lucrative investment.
In the last few months, there have been trends which are changing the landscape of Asia’s economy. According to researchers, many of these trends are here to stay, and as an investor, you need to take advantage of them before the opportunity passes. Otherwise, you’ll be stuck reading the money pages alone.
#1) Long-Term Investments In Emerging Markets
Emerging markets as a whole are stronger now than they ever have been. Their external debt-to-GDP ratio was at 35% in 2000, today it is less than 20%, according to the Wall Street Journal.
As interest rates rise in the United States, many investors are taking back their investments from emerging markets which is starting to affect countries like India and Thailand, but a smart investor will see this as an opportunity. Rising interest rates in the U.S. don’t change the fact that hundreds of millions of consumers are now entering the middle class.
Assets within emerging markets are very affordable now in U.S. currency which increase opportunities for middle class investors and small to medium-size businesses to reap the benefits with dreams of climbing the socioeconomic ladder. The Indian rupee itself declined by nearly 19% in the last four months!
Because of this rapid decline, many Asian governments are more willing to accept foreign-direct investments which can give you easy access to acquire desirable targets within emerging markets. With this kind of investment, it’s crucial to make long-term investments rather than short-term “tactical” ones since future growth is inevitable.
There will be no immediate return anytime soon, says WSJ, but if you want to create shareholder value, focus must not be on today’s currency. Instead, staying on track with strategies that focus on Asia’s value will take you all the way to a happy retirement.
#2) Credit Investing
According to research from Pimco, the U.S.’s dollar-denominated Asian credit (including corporates, sovereigns and quasi-sovereigns) more than doubled in just five years. Asia has become less self-sufficient within the last decade, and pretty soon we will see the continent expand even further overseas for financial support.
This has opened a huge window for Asian corporate issuers to come to the market for financing, either for long-term business plans or employment in traditional corporate finance and leverage strategies. It is predicted that larger economies (China, India, and Indonesia) will continue to increase their need.
Many Asian oil and gas companies, for example, have turned into loyal buyers of foreign assets, and also have tapped into international capital markets to get the funds they need. If you are interested in credit investing, you will find many opportunities with high quality energy companies or alternative energy companies, like Sempra (SRE), to reap a solid return.
#3) Real Estate
The real estate sector, especially in China, is gaining momentum among American investors with long-term goals. Many people are moving to urban cities which makes property within these districts more appealing for people willing to throw down some cash.
In the coming years, it’s expected to grow despite the rising costs and intense competitiveness surrounding it. But this doesn’t mean you should go all in to win. Asia’s local currency credit markets are developing, but credits currently accessible to American investors are very few, according to Pimco.
Dealing with China’s economy, especially, requires research which probably means a first-class ticket to Asia for you to see the property first hand. It takes a good nest of money to execute Asian real estate, but if you get it right the money will multiply more than you can imagine as the years pass and the dollar becomes more dominant over Chinese currency.