Investing in Asia

Invest in Asia – The Economic Growth Continues No Matter What

This article is an excerpt from a comprehensive economic report for investors that can be found here: Comprehensive Economic Overview For Investors by Sven Carlin, Ph.D.(it is FREE).

Invest in Asia even if it might be tricky if you never visited it. I suggest you go and visit because when investing, or doing anything else in life, you have to always check whether you have a biased opinion or not.

Asia Investing – the author in Malaysia 2018

We are mostly listening to what western media outlets say and what western investors say. The picture they paint is in line with the situation in their environments.

Invest in Asia for GDP growth

A look at the 2019 global GDP growth map shows how the growth is slow in developed economies, despite all the financial stimulus.

Figure 10 Real GDP growth – annual percent change

asia investing
Asia GDP growth

Source: IMF

However, if you don’t focus on the grey on the above map, but on the bright green, you see a square with 4.5 billion people growing between 3% and 10%.

Invest in Asia because of demographics

I firmly believe, the Asian economic development should be the most important piece of news discussed on a daily basis. 4.5 billion people outweigh the 1.3 billion in developed countries. Plus, developing countries are much younger, more eager and thus, economic growth will continue, just perhaps not in your currency and not where you might wish it happens.

Figure 12 Population pyramid – developed and developing countries – 1.3 billion vs. 5 billion

investing in Asia
Asian Investing – population growth

Source: Research gate

Connectivity, synergy and development

Then, there is something that makes comparing things to the 1930s, like Dalio is doing, practically worthless. In the 1930s, the new deal saved America. Today, we have the Chinese One Belt, One Road initiative working and developing the word – trade wars or no trade wars, this thing is moving forward. The purpose of the one belt one road idea is to “construct a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool, and technology database”.

The number of countries that have signed documents related to the initiative is staggering.

Figure 13 One belt one road footprint

invest in Asia - one belt one road
invest in Asia – one belt one road

Source: Wikipedia

Apart from the belt and road initiative, there is so much more that still has to happen, that can easily outweigh the ‘bad’ going on with developed countries. Just an example is urbanization.

Figure 14 250 million will move to cities over the next 10 years

investing in Asia - Urbanization
investing in Asia – Urbanization

Source: Consultancy

If the level of urbanization reaches the level in developed countries, there is a few billion homes that still have to be built over the coming decades. Not to mention infrastructure etc.

Then, perhaps the most important thing that wasn’t there in the 1930s, is technology and the internet. If I wish, I can chat with somebody in India in the next 30 seconds, I can hire people all over the world and the world is getting more and more connected. This communication, information and human connectivity, alongside economic connectivity, will keep the world much more integrated than it was the case in the 1930s.

Conclusion – what to take from this as an investor

Recessions can happen anytime and will happen sometime. There is nothing we can do about it but we can have some certainties:

  • Currencies are and will continue to be sacrificed all around the world.
  • The global economy will continue to grow with ups and downs. The power of developing Asia is incredible.
  • There will be many issues in developing countries, but I’ll park my money where whatever happens, I end up well off.

There are businesses selling in Asia and there are businesses selling in France and Italy. There are businesses selling globally and there are businesses focused on the local market depending on one company. Thanks to globalization, we can pick where to invest. That is what we as investors have to focus on. Dalio is playing a macro game, and he is really playing a game and he is a relative investor. Thus, the macro is what matters to him.

Figure 15 Building in Penang Malaysia

Investing in Asia
Investing in Asia – Construction sites Penang – Malaysia

Individual investors have to play the micro game, invest is what you need, minimize your risks and accept volatility as your best friend. It allows you to buy cheaper and build your wealth faster. You can’t time recessions nor predict economic developments.

It is pretty simple with the economy. In 15 years, the economy is going to be very different than whatever we can imagine now. It has been the case like that since ever.

15 years ago, nobody expected interest rates to be negative and stay so for almost a decade now. 30 years ago, China was a poor and weak country, now it is challenging the US for the globe’s dominant country.

30 years ago, you could buy good businesses with dividend yields of 7%, today you can’t. 30 years ago, we didn’t even have email (author’s note: I got my first email when I was 10 in 1993 – haha). So, worrying now about recessions or stock market crashes is a good story for the media to fill those headlines, but nobody knows what will happen. The solution remains always the same; invest in good businesses that will do well and deliver a good business returns no matter what happens and also, whatever happens, the businesses will be still in business. Focus on risk and leave the upside to the positive tailwind humanity creates.

Previous articles on related topics:

The next recession – Stocks will go up thanks to money printing

Economic Crisis – whatever it takes is the motto

Currency crisis ahead – printing money is destroying currencies

This article is an excerpt from a comprehensive economic report for investors that can be found here: Comprehensive Economic Overview For Investors by Sven Carlin, Ph.D.(it is FREE).

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