The Pacific - the world's primary economic growth engine this decade.
Asia offers the best stock-market values today, bar-none! Asia has some of the most undervalued currencies, bulging trade surpluses and $1.6 trillion dollars' worth of combined foreign exchange reserves. In short, it's truly an economic Titan.
What's compelling about most of Asia in mid-2007 is that unlike the rest of the world, the region has already suffered an economic depression in the late 1990s.
Compared to Europe or North America, for example, countries across the Pacific have already been forced to fix their fiscal imbalances through painful economic adjustments since 1997 when Thailand's currency devaluation unleashed a crisis in the region.
Today, Asia harbors bulging trade and budget surpluses for the most part, booming foreign exchange reserves, a rapidly rising savings rate and labor pension reform promising to boost local stock market investments.
For Real Asian Bargains, Look to the Land of the Rising Sun
Even Japan, a basket-case economy in the grips of deflation (falling prices) for many years, has emerged since 2003 as a strong economy having resurrected its economic model through regional (mostly Chinese) outsourcing.
Japanese companies have initiated a series of unprecedented stock buybacks, rising dividend payments and have even begun to appease foreign shareholders by approving the ouster of management at companies deemed capital inefficient.
The best values in Asia over the next 12-36 months reside in distressed REITs (real estate investment trusts) in Hong Kong, Japanese smaller companies, Taiwanese shares, and Thai blue-chip stocks.
All four sectors and countries provide the best absolute and relative values in the world today while the majority of financial assets sit at, or near, all-time highs. This means that you enjoy a big margin of safety when investing in these undervalued markets, which should be highly rewarded over the next few years.
Many of these markets have either declined or stagnated in recent years, creating outstanding values. Plus, these markets are also home to some of the most undervalued currencies against the U.S. dollar and especially, the euro. I'd also add Singapore to this bullish list of high-value markets.
Though REITs in Singapore have already soared over the last three years, this city-state's net supply of available commercial property is declining. I'd use any short-term correction as a long-term buying opportunity.
Singapore extols a surging trade surplus, strong economic growth, looming tax cuts and a steadily rising currency. Singapore is also one of Asia's fastest growing banking and investment hubs - in effect it's helping finance the economic boom going on in right now throughout Asia.
The main threat to Asia's strong growth prospects are rising U.S. interest rates, but I'm not too concerned at this point.
Rising Global Interest Rates a Worry,But Shouldn't Hurt Undervalued Asia
Despite all the noise about rising long-term bond yields across the globe since early June, U.S. Treasuries continue to trade in a five-year range. Interest rates are rising faster in other countries - mostly in non-dollar-based economies. And most of Asia's markets are still dollar-pegged and therefore follow the trail of U.S. monetary policy, not the European Central Bank or the Bank of England, which continue to tighten.
The threat of rapidly rising global long-term interest rates is unlikely to occur at this stage of the economic cycle because the United States is still struggling to find a bottom in its real estate bear market.
Housing woes will continue to put pressure on the Federal Reserve to either cut short-term rates or at the very least, leave them unchanged. Also, in a presidential election year in the United States in 2008, the Fed won't be in a rush to bury the economy through rate hikes. And China, despite its occasional rhetoric, won't derail its economic miracle ahead of the Beijing Olympic Games in July of next year.
Bottom line: Buy Asia. The region continues to offer the best risk-adjusted returns over the next 12 months and beyond. My favorite markets and sectors should also significantly outperform regional benchmarks since they remain well below their highs and harbor cheap currencies and strong macroeconomic fundamentals.
Asia offers the best stock-market values today, bar-none! Asia has some of the most undervalued currencies, bulging trade surpluses and $1.6 trillion dollars' worth of combined foreign exchange reserves. In short, it's truly an economic Titan.
What's compelling about most of Asia in mid-2007 is that unlike the rest of the world, the region has already suffered an economic depression in the late 1990s.
Compared to Europe or North America, for example, countries across the Pacific have already been forced to fix their fiscal imbalances through painful economic adjustments since 1997 when Thailand's currency devaluation unleashed a crisis in the region.
Today, Asia harbors bulging trade and budget surpluses for the most part, booming foreign exchange reserves, a rapidly rising savings rate and labor pension reform promising to boost local stock market investments.
For Real Asian Bargains, Look to the Land of the Rising Sun
Even Japan, a basket-case economy in the grips of deflation (falling prices) for many years, has emerged since 2003 as a strong economy having resurrected its economic model through regional (mostly Chinese) outsourcing.
Japanese companies have initiated a series of unprecedented stock buybacks, rising dividend payments and have even begun to appease foreign shareholders by approving the ouster of management at companies deemed capital inefficient.
The best values in Asia over the next 12-36 months reside in distressed REITs (real estate investment trusts) in Hong Kong, Japanese smaller companies, Taiwanese shares, and Thai blue-chip stocks.
All four sectors and countries provide the best absolute and relative values in the world today while the majority of financial assets sit at, or near, all-time highs. This means that you enjoy a big margin of safety when investing in these undervalued markets, which should be highly rewarded over the next few years.
Many of these markets have either declined or stagnated in recent years, creating outstanding values. Plus, these markets are also home to some of the most undervalued currencies against the U.S. dollar and especially, the euro. I'd also add Singapore to this bullish list of high-value markets.
Though REITs in Singapore have already soared over the last three years, this city-state's net supply of available commercial property is declining. I'd use any short-term correction as a long-term buying opportunity.
Singapore extols a surging trade surplus, strong economic growth, looming tax cuts and a steadily rising currency. Singapore is also one of Asia's fastest growing banking and investment hubs - in effect it's helping finance the economic boom going on in right now throughout Asia.
The main threat to Asia's strong growth prospects are rising U.S. interest rates, but I'm not too concerned at this point.
Rising Global Interest Rates a Worry,But Shouldn't Hurt Undervalued Asia
Despite all the noise about rising long-term bond yields across the globe since early June, U.S. Treasuries continue to trade in a five-year range. Interest rates are rising faster in other countries - mostly in non-dollar-based economies. And most of Asia's markets are still dollar-pegged and therefore follow the trail of U.S. monetary policy, not the European Central Bank or the Bank of England, which continue to tighten.
The threat of rapidly rising global long-term interest rates is unlikely to occur at this stage of the economic cycle because the United States is still struggling to find a bottom in its real estate bear market.
Housing woes will continue to put pressure on the Federal Reserve to either cut short-term rates or at the very least, leave them unchanged. Also, in a presidential election year in the United States in 2008, the Fed won't be in a rush to bury the economy through rate hikes. And China, despite its occasional rhetoric, won't derail its economic miracle ahead of the Beijing Olympic Games in July of next year.
Bottom line: Buy Asia. The region continues to offer the best risk-adjusted returns over the next 12 months and beyond. My favorite markets and sectors should also significantly outperform regional benchmarks since they remain well below their highs and harbor cheap currencies and strong macroeconomic fundamentals.
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