Japan’s growth was initially fueled by cheap labor and when labor back home became too expensive Japanese businesses sent jobs offshore. Likewise European companies and American companies outsourced to India and China. But China is getting expensive as is India. The next growth engine in Asia might be in the South East. Asean refers to the association of South East Asian Nations. Are ASEAN stocks the next big thing? Bloomberg Markets sheds light on this subject in an article about a commodities rebound but not in China.
China may be slowing, but a commodities rebound is under way and the world’s biggest miner knows where the next growth story is building – emerging economies in Southeast Asia.
Combined gross domestic product in the ASEAN-5 nations – Indonesia, Thailand, Malaysia, the Philippines and Vietnam – will rise about a third to $3 trillion in the five years to 2020, fueling commodities-intensive infrastructure projects. Momentum like this across Asia will help maintain and increase commodity demand, BHP Billiton Ltd.’s Chief Executive Officer Andrew Mackenzie said this week.
Australian mining operations are especially interested in renewed growth in South East Asia. If ASEAN stocks are the next big thing, Australian miners might be in for resurgence. What sort of ASEAN stocks might be good investments? But first of all which are the ASEAN nations?
ASEAN
- Brunei
- Cambodia
- Indonesia
- Laos
- Malaysia
- Myanmar
- Philippines
- Singapore
- Thailand
- Viet Nam
This region includes ten nations and 625 million people. Gross domestic product is 7.6 Trillion compared to 9 Trillion for China and 17 Trillion for the USA. Indonesia with 250 people is the most populous nation in ASEAN and the most populous predominately Muslim nation in the world. Singapore has only 5 million people but its GDP of $55,000 per capital exceeds that of the USA.
ASEAN Stocks
While there a stock markets in these nations the best approach for American investors and traders is to find ADRs (American Depositary Receipts) that trade in US markets. TopForeignStocks.Com lists ADRs by country. Indonesia has one stock, Telekomunikasi Indonesia, listed on the NYSE. This company is described as fixed line telecom. There are 51 stocks that trade as ADRs on OTC markets. Singapore has 90 stocks that trade on OTC markets as ADRs but none trade on US exchanges. The Philippines have one mobile telecom, Philippine Long Distance Telephone (PHI) that trades on the NYSE and 60 ADRs that trade OTC. This last company has been around for a long time. It was dollar stock in the 1980s and trades in the $40 to $80 range today while it has a 5.79% dividend yield.
Replicating the AT&T, GM and Coca Cola Stories
The golden days of AT&T, GM and Coca Cola are gone in the USA but this need not be the case in developing markets. Well established companies in ASEAN countries will grow at these nations build their infrastructure base. The old saying from the California gold rush days comes to mind. When everyone is digging the gold the best and most reliable income comes from selling picks and shovels. Think infrastructure in the ASEAN or perhaps consider Australian miners.
