I’m about half way through my Southeast Asia scouting trip.
I’m here to get a “boots on the ground” feel for where to find the best investment opportunities.
I’ve talked to stock brokers and private equity fund managers in Singapore…gotten a firsthand grasp of the great value story that is Vietnam…and I’m about to hit Cambodia—one of the most under-the-radar pre-emerging markets in the world right now.
What have I learned?
Most important, I’ve learned that the world is equalizing.
As Americans and Europeans slowly get poorer, Asians are slowly getting wealthier. And as Americans and Europeans slowly lose their sense of optimism about the future, optimism in Asia is growing.
Of course, Asia is a big place. Vietnam is about as far away politically from Singapore as the U.S. is from Cuba. And Cambodia is about as far away economically from Thailand as the U.S is from somewhere like Sri Lanka.
For instance, China remains a one-party Communist state. India is the world’s biggest democracy. China has an export-driven economy. India’s economy is driven mainly by domestic demand.
But wherever you travel in Southeast Asia, this place is booming.
Take Vietnam, where I’ve been exploring this week.
In 1986 the Communist Party here launched a program of reforms known as doi moi (literally “renovation”). Since then Gross National Income per head has gone from $100 to over $1,100.
And Vietnamese GDP has grown at an average rate of over 7% a year for the past decade (more than double the kind of growth we’re seeing in the U.S. right now.)
China’s achievements have been even more impressive. Whatever you personal view of China’s future is, it’s undisputable that China is the modern world’s greatest development story.
Since Beijing introduced its own set of economic reforms in 1979 the country has moved from economic obscurity to become the world’s second largest economic power after the U.S.
Many economists and investors were—and still are—skeptical about China’s abilities to move from Maoism to consumer-based capitalism. But the results speak for themselves.
Since the early 1990s China’s income per head has increased more than fivefold. And since the turn of the millennium China has contributed about twice as much to world GDP growth as the U.S. (measured on a purchasing power basis).
Of course, you have to have a strategy for investing in these far off places.
In a recent radio interview with Business Daily legendary investor Jim Rogers said the best way to invest in the Asian growth story is to buy commodities, “because the Chinese have to buy cotton, they have to buy zinc, they have to buy oil, they have to buy natural resources because they don’t have enough.”
Rogers, who co-founded the Quantum Fund along with George Soros, is smart as a whip when it comes to natural resource investing.
He’s also an expert on the region. He lives in Singapore, where I’ve just come from. And he is teaching his daughters to speak Mandarin.
Rogers is bullish on soft commodities such as sugar and cotton.
He’s also bullish on oil, which he says will go to over $200 a barrel due to constrained supply and increasing demand…particularly from Asia.
As Rogers puts it, “Unless somebody discovers a lot of oil very quickly, prices are going to go much higher over the next decade.”
I wouldn’t bet against it.