Australia and the ASEAN economies

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.

The Greater Mekong region

On the 17th of September I wrote about the importance of the up and coming Greater Mekong region. The countries involved being Thailand, Vietnam, Myanmar, Cambodia and Laos, all members of the ASEAN Free Trade agreement. I reported on how it was becoming self sufficient for oil and gas, it had a young cheap labour force with a total population in excess of 560 million people, and an economy of over 2 trillion dollars. It looked as if it would become the next source of cheap manufactured products for the world and possibly become self sufficient in its own right.

Well since that was written President Obama of the USA and Xi Jinping,  the President of China, have both made their first visits to a foreign country (since retaining or gaining office) to this region. Now that must be very significant for future trade and investment. Then last week we have the announcement that the newly elected Prime Minister of Japan, Shinzo Abe is also setting out to visit this same region. Now baring in mind that there appears to be a falling out between Japan and its largest trading partner China, then surely this visit must hold a similar significance. So unless these countries get over whelmed by hugs and kisses from these elderly relatives then they must be set fair for the future.

Looking at the numbers coming through from Saltydog on ETFs it is now showing the db X-tracker FTSE Vietnam rising towards the top. In fact this ETF has risen 22% in the last three months with 16% coming through in the last month. This must be connected with all the attention that this region is receiving, and perhaps we are seeing only the very beginning of these fund rises. We will continue to look out for, and report on, other funds heavily invested in this area.image