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Asian Emerging Markets The hot topic in the news these days - whether it's in The Wall Street Journal, on CNNMoney, in MarketWatch, or in Money and SmartMoney magazines - is the investment boom in Asia. Everyone's touting the emerging market in China - penny stocks, blue chips and ADRs in steel, oil, gold, copper and other commodities, along with the technology or the transportation industries. But there's two other Asian countries - Japan and India - that are slipping under Wall Street's and most investors' radar... and that's an investment strategy - investing in the emerging market of Asia - you, as an investor, should consider for your investment portfolio. Japan is on the way back. Yeah, I know, you've probably heard that a thousand times before. Maybe you heard it on CNN. Maybe in The Wall Street Journal, Investor's Business Daily, or in Fortune Magazine. And you may have grown quite skeptical of such statements. But if the stock market is anything to go by, investors are feeling much more comfortable with the speed and quality of Japan's recovery. And that could mean huge profits for your investment portfolio. Today the Nikkei 225 exchange shot to a new four-year high of 13,148.57, with investors continuing to feed off the convincing election victory of Prime Minister Junichiro Koizumi a few weeks ago, as well as renewed confidence in the economy's future prospects. The 14.5% climb for the Nikkei this year is a far cry from the depths reached back in April 2003, when the index sank to a 20-year low of 7,607.88. As recently as mid-June, the index traded at around 11,500 points, a good indication of how far it's come in a short time. Corporate profitability is at the best level since 1973. How to Play Japan for Profits in Your Investment Portfolio With interest rates still at zero, dividend-paying investments and particularly real-estate investment trusts (REITs) are proving attractive. Companies that should also chalk up healthy profits in a sustained Japanese resurgence are the top three automakers, Toyota, Honda, and Nissan, which are already faring well both domestically and globally. Given Detroit's downturn, the future looks bright for a while. One other direction for investors is the financial sector. A future savvy investment could also be in this sector, as interest rates rise and lending picks up speed. Japan's Not the Only Asian Investment Goldmine Elsewhere in Asia, India's Bombay Stock Exchange cracked the 8,500 mark, capping a remarkable run that has seen it jump more than 25% this year. Hardly surprising, really, since the economy is forecast to grow 7% this year and is proving attractive to foreign investors in search of better value and higher returns than other powerhouse markets like China, which some economists think has played out as an investment. Two guys who support this happen to work with me here at the Taipan Group. Bryan Bottarelli and Chris DeHaemer are not exactly renowned for agreeing on economic issues - but in this case, they do. And their theory could be very profitable for you. |
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A Sleeper Investment Opportunity in Asia China has been a hot topic for some time. India, on the other hand, has been more of a sleeper. As Bryan Bottarelli says: "Although China remains top of the American investor's 'hot list,' this is a big mistake. The effects that India will have on American business are so far-reaching, it's nearly impossible to comprehend. "For example, if you compare India's three-year market performance to China's, you'll see that Indian stocks outperformed Chinese stocks by 6 to 1! India's stock market has doubled - while China's has actually lost 25%." With statistics like that, you'd think India would be receiving much more attention from the economic world. But the fact that it isn't and that ordinary investors are unaware of this trend is their loss - and your gain. Investing in India: India has long been the home of many outsourcing solutions, contracting with American companies to provide customer service and technical support. But India is also striving to reach the forefront of several industries. These powerful demographics are why Michael Moritz, the venture capitalist who made 34,000% off Google, is only investing in companies with business plans involving India. He says, "We can barely imagine investing in a company without at least asking what their plans are for India." According to Chris DeHaemer, what's driving the opportunity in India is the country's cheap, brilliant, and highly productive workforce will help it become the first developing nation in history that uses brainpower (not natural resources or raw muscle) as its growth catalyst. India's exploding demographic of low-cost, high-IQ, English-speaking brainpower - without question - will have a more far-reaching impact on your investment dollars. And right now, you can buy stocks in India at levels not much above their 1994 highs! To put that in perspective, that's like buying the Dow Jones Industrial Average in 1994 for 4,000 - a full 6,500 points lower than today's levels! A Number One Investment to Profit Chris DeHaemer recently recommended in our Red Zone VIP service one of the companies leading the boom in India - a company that Chris expects to triple by June of next year. This stock is like owning the equivalent of Ford Motor, US Steel, General Electric, IBM, AT&T, Macy's, A&P, and General Motors. That's because this company provides everything an emerging nation needs - cars, trucks, buses, steel, construction equipment, computer services, telecommunications, retail stores, and food processing. But the division we're focusing on is its transportation division - a sector that drives the growth for any country. Why? Because the Indian car market exploded in 2000 thanks to changes in government regulations aimed at spurring growth in the lagging automobile sector. Now India boasts the hottest automobile market in the world - nearly doubling China's 13.5% growth rate in 2004. So it won't surprise you to see a company that's among the foremost brands in the Indian auto market. The company I'm talking about is Tata Motors (TTM: NYSE), a business producing over 130 models of cars and trucks for the Indian market and showing an increase in revenues of 40% last year, with its net income up 51%. People tend to scare away from foreign investments like Tata Motors. But here's the best news: You don't have to research for a foreign broker for Tata Motors... you don't have to deal with foreign currency. You buy Tata Motors right here on the NYSE with US dollars - by buying ADRs of Tata. Though ADRs do not eliminate risk - shares are still subject to currency and economic changes of the native country - they are generally much easier to trade than shares on the resident exchange. This is the best way to buy international companies while being able to realize gains and dividends in US dollars. |
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About the author: As Taipan's resident Brit, Martin Denholm adds to the group's already strong international flavor by bringing a knowledge of the British political, economic, financial and cultural arenas. He has been with the Taipan Group since September 2002, where he acts as the group's roving "Editor-at-Large." He is the author of the "Desk of Denholm," a message that appears in the Dynamic Market Alert each day, bringing readers the latest political, economic and market news from the US, Britain, the Eurozone and other global areas. Martin is also the Executive Editor and contributes regular articles to the monthly Taipan newsletter where you can find his latest stock recommendations, as well as content from the Taipan Group's other publications. Chris DeHaemer is the editor of Red Zone Profits, which focuses on undervalued, high-reward small caps, and Red Zone VIP, a trader's dream. He spent the early part of his career careening around the world in search of profits for Taipan's World Investor. He sought out undervalued bargains in Eastern Europe in the aftermath of the Soviet Union's collapse, and made a killing after the maiming of the Asia Tigers. Chris also called the October 2002 bottom, buying up handfuls of stocks when panic reached its zenith. With an admitted addiction to trading on Wall Street, Bryan Bottarelli represents the "new paradigm" of investment strategists. After developing his unique trading style on the Chicago Board Options Exchange (CBOE) trading stock options under the iron arm of pit-bull options traders, Bryan decided to leave the ruthless, sweat-filled option pits. Enticed by the promised wonders of the WaveStrength predictive system, Bryan combines his knowledge of options trading with the savvy market analysis of Adam Lass. The two have joined forces to run the WaveStrength family of index options trading products. Related stories: Other Stories by this author: |