Major Plays on Asia Minor

12/12/2003 12:00 am EST


Ivan Martchev

Editor, Vital Resource Investor and Global Viewpoints

"Because the Oriental markets have outperformed their Occidental counterparts, expect a round of profit taking in the near future and then use the correction as a buying opportunity," say Yiannis Mostrous and Ivan Martchev in Personal Finance Here are their favorite risk plays on India, Malaysia, Singapore, and Indonesia.

"India remains a favored long-term Asian market. And although it remains a micro-story, the government has been moving slowly toward economic reforms. Hence, the macro picture has been changing and a lot of investors are starting to realize that there's more to India besides good companies. The growth of the consumer is the big factor. The rise in employment as well as the increase in household income and credit spending supports this story. And this consumer spending expansion should continue for at least the next decade. Growth favorite, Dr. Reddy's Laboratories (RDY  NYSE) is a great way to participate in the Indian market. Buy below 30.

"Malaysia is starting to follow in Thailand's footsteps. The new leadership is emphasizing the importance of domestic demand, and has started a reform process that should help it move toward its goal of becoming a First World country by 2020. Tax cuts to small businesses and privatizations are two of the main components of the strategy. As is the case with the majority of the Asian countries, Malaysia has been trying to benefit from Chinese growth. The country also has an easy monetary policy, and its pegged currency has been benefiting from the weak dollar, while at the same time offering stability. A good way to participate in the Malaysian market is through the iShares MSCI-Malaysia (EWM ASE), an exchange-traded fund, which tracks the Malaysian market and is concentrated in banks, capital goods and hotels. Buy below 7.

"Singapore' economy is recovering from yet another downturn. With the SARS scare over, tourism is reaching previously strong levels. The current rise in IT equipment spending and the easy monetary conditions (real rates are about zero) are extremely helpful also. Overall, spending (especially on jewelry) is improving, while housing is showing signs of strength. Singapore is also a beneficiary of a strong China, particularly its banks. The Singapore ETF is overweight banks, so it's a good way to get exposure to the best aspects of the country's top businesses. Buy the iShares MSCI-Singapore (EWS ASE) below 6.

"Another of our favorite up-and-coming countries is Indonesia, which is one of the most neglected markets in Asia. It's rich in natural resources and has a solid domestic demand story. But political instability has been one of the main reasons a lot of investors have stayed away. In July 2001 the country elected Megawati Sukarnoputri as its new president. She's brought a lot of stability in the political arena, and she's had a very positive impact on the economy. We're encouraging investors to get some exposure to this market. PT Telekomunikasi Indonesia (TLK NYSE) is the country's major telecommunications company and one of our favorite picks. It's also easily accessible since it trades on the NYSE. If you're ready for some Indonesian telecom, scale in using any dips as an opportunity to increase your position. Buy below 15."

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