Over the last few months we have produced a number of articles high lighting the potential for growth in the Mekong region, Korea, and the surrounding countries. This region forms the basis for the ASEAN economy. In order to support future growth they are pouring money into the infra-structure of their cities and the logistical links between their countries. They intend to be independent, but still trading with their big brothers in India and China. The bigwigs from America, China, India, Japan and even our own David Cameron have been touching the skin and kowtowing for all their worth to leaders of this region. All of the above is well known and can be witnessed by the colossal amount of fund money that has flooded into the Emerging markets over recent months. At Saltydog we launched our new Speedboat portfolio three months ago on the back of ETFs tracking these regions. A very happy move as the portfolio has risen 18% in this short time and certainly has much further to go, especially if the current revival in world markets continue.
So how does the above connect with Australia? Very simply, it supplies much of the hard commodities that are needed for this growth to take place. Also as these nations develop a middle class their demand for meat and grain will soar and Australia will confirm itself as the “bread basket of Asia”. Pre 2008 the Australian stock market and the Aussie dollar rocketed upwards on the back of the phenomenal growth in China, but since then they have fallen away and then levelled off as China`s economy has slowed. China`s economy is now said to be going to enjoy a soft landing as opposed to the predicted hard landing. Put this with the future ASEAN market growth and the Australian economy should enjoy a double whammy for growth.
If you agree with the above, then one way to take advantage of this potential windfall would be to invest in the ETF MSCI Australia (IE) ticker SAUS. This has risen to the top of the Saltydog ETF charts as it has been in the top two deciles for the last four weeks. The other obvious routes are to choose Emerging market and Australian commodity funds. This must be an area worth some thought and investigation.