Slumdog Millionaires Are Buying 

05/21/2009 12:01 am EST


Igor Greenwald

Chief Investment Strategist, MLP Profits

It took a month for India's 700 million voters to express their democratic will, and only 20 seconds for investors to rubber-stamp it. Victory went to the incumbent Congress party, which earned a mandate for further free-market reforms, as well as for a deficit-spending spree to tide the country over until the West stops fasting.

In response, Indian stocks levitated 17% in a third of a minute, whereupon the market sensibly took the rest of the day off to contemplate this transcendent stroke of luck. The following day, Mumbai barely budged. But by then, the giddiness had already spread to Singapore, Sao Paolo and New York, infecting the buyers of commodities and the sellers of dollars.

Indians' charming faith in majority rule might have fueled nostalgia for the old days, before democracy was perfected by corporate attorneys. But then along came Royal Dutch Shell (NYSE: RDS.A) to remind its owners that most of them don't really know best when it comes to paying the boss. The compensation package for its top executives, though puny next to what other companies pay, proved too rich for nearly 60% of the voting shareholders. The people who rigged the bonuses thanked everyone for taking the time and reminded one and all that the vote was merely advisory. Advisory voting is a prerequisite for the good life, as India will soon discover.

Similarly, the stock market's rolling referendum is strictly advisory, for those who don't wish to sell or buy. And lately the advisory has been that some 80% of the world's consumers didn't overborrow or overspend, just yet. Many of them have only just glimpsed the luxuries the lucky 20% take for granted. And they're not going to be deterred for long by something as trivial as a US housing bust or a few busted banks in the UK. Or by the need to print more cash to pay for life's necessities.
That's the message of crude futures powering up despite mounting US oil inventories. It's writ large in the shares of miners and agricultural suppliers. Asian economies were supposed to have crashed by now amid a historic export slump. That happened in Japan, where first-quarter GDP dropped an impressive 4%. As for the rest, the speed bump's in the rearview mirror.

As in India so in South Africa, where the incumbent party also scored a legitimate electoral triumph thanks to deft steering in treacherous economic currents. South African investment manager and blogger Dr. Prieur du Plessis is high on the prospects of his home market, just as he was bullish on India before its recent pop.

Greg Weldon of Weldon's Money Monitor has similarly high expectations for the wave of new dollars already washing ashore in Australia alongside vats of home-brewed fiscal stimulus. The commodity boomlet is good news for almost everyone but America's unhedged wage earners, who are throwing ground chuck rather than shrimp on the barbie.

It's certainly good news for Keppel (OTC: KPELY), the Singapore-based rig-building, engineering, and property concern embodying many of the recently fashionable investing themes. Yet Keppel remains down more than half from its 2007 peak and trades at less than nine times trailing earnings. Yiannis Mostrous of The Silk Road Investor likes that risk-reward ratio.

Any more bargains out there after two months of enthusiastic speculation? Jim Trippon points readers to shares of China Mobile (NYSE: CHL) and China Unicom (NYSE: CHU), which are up only moderately since March, pay a decent dividend (by Chinese lights), and retain grand growth ambitions. China Mobile has added 25.7 million subscribers this year, more than the population of Texas. Yet most Chinese still don't have a cell phone. And they won't wait for the rich world to put its accounts in order, either.

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