Last year, with stock markets around the world becoming increasingly unstable, I decided it was time to invest more money in the Asian Emerging Markets stock I have invested in for several years. As a small-time investor, but one who lives in an emerging market, Thailand, I know as well as anyone why investing in Asian emerging market stocks could be a good strategy. If you're considering investing in an Asian emerging market stock, here are several reasons why it could be a good idea for you too.
Asia is Booming - I've lived in Asia for almost seven years and can tell you, from first-hand experience, Asia is set to take over the world. I live in Thailand but travel often to Malaysia, Singapore and Hong Kong. All of these countries, plus Vietnam, China, Japan and other Asian countries are going to be booming in the next few years. With Asia accounting for more than 60% of the world's population, and most of those people in China, it only stands to reason countries like the US, the UK and Germany, eventually won't be able to keep up.
Technology in Asia Is Far Ahead of the US - Asians are spending billions of dollars a year on technology and they're inventing much of it too. In Thailand, things like computers and mobile phones are months if not years ahead of the US. When I'm in the US and look at mobile phone shops, it's amazing to me how limited the options are when it comes to buying a phone. In Asia, we get top-of-the-line, innovative electronics as soon as they hit the market, and this is often months before they arrive in America.
Diversification - If you invest in US stocks, you are betting on the economy of just one country. By investing in Asian emerging markets stocks, you have your investment spread out over several companies. Diversification, just by its nature, makes this type of investing much less risky than simply buying stocks in America, especially as the US economy is still extremely shaky.
Asia Will Rise and America Will Fall - Every economist knows this is true. While Americans still believe the US will keep its world-dominance intact, unfortunately, it's simply not reality. As Asia's influence and power increases, so will its economic strength and, therefore, so will Asian emerging market stocks. Simple really. Money will start to move out of America and into Asia, because that's where the best investment opportunities will be and that will also affect America's influence and economic strength.
Good Stock Values - Buying many American stocks now is simply too expensive. Stocks are still overvalued in many cases, and many investors simply can't afford to buy in. Asia, on the other hand, has tons of emerging stock opportunities, with some extremely attractive investment opportunities for hardly any money. Think of Microsoft 20 years ago. They started somewhere and so are the millions of Asian companies that are now on stock markets all over Asia.
US Dollar Not Being Dominant Currency - Many world currencies are tied to the US dollar, so their values go up and down depending on what the US dollar is doing. That's likely to change and could change as fast as this year. When the dollar is no longer the world's dominant currency, another country will step in and, according to many economists, it's very likely to be the Chinese yuan. Plus, China is cash-rich, while the US is in debt. So China will keep buying physical assets in a move to use them as a type of currency - working against the US dollar.
These, and many other reasons, are why more and more investment specialists are now saying Asia is where the best investment opportunities are. Just be careful, if you decide to invest in Asian emerging stock, that you thoroughly vet the investment firm you go through and also the stocks or mutual fund you decide upon.
SOURCES: Money Morning - China seeks to dethrone the dollar, transforming the yuan into the dominant global currency
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