Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Grow Your Wealth By Piggy-Backing on Emerging Markets

Companies / Emerging Markets Nov 04, 2011 - 07:14 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticleLarry D. Spears writes: It may be hard to believe that people are getting wealthier these days, but they are - just not in the United States.

No, the growth in personal wealth that we're seeing today is taking place in emerging markets half way around the globe - far removed from the employment and debt problems plaguing the West.


Brazil, Chile, China, Colombia, India, Indonesia, Malaysia and South Africa over the past decade have all posted annual gains in individual wealth of more than 10% - and some well in excess of even that figure.

That compares to growth of just 5% in that period for the United States, Japan, and Europe.

What these growth ratessignal is a trend toward steadily increasing purchasing power - as well as consumption and investment - among the people in the world's emerging nations. That means growing markets and increased profits for businesses and financial institutions.

It also means more moneymaking opportunities for savvy investors with the foresight to ride the trends along with them.

Where's the Wealth Growing?
To uncover the best ways to profit, we must first find where the wealth is growing the most - and where it will keep rising.

The McKinsey Global Institute (MGI), a consulting firm specializing in management and economic research, maintains an index of the world's leading urban centers, known as the City 600. MGI reports the 600 cities in that group - 380 of which are in developed nations, including 190 in North America - currently generate just more than half of global gross domestic product (GDP).

However, by 2025, that percentage will increase to 60% of global GDP, and 136 new cities will move into the top 600. All 136 will be located in developing nations - with 100 from China alone - displacing North American and European cities.

Another recent report from CLSA Asia-Pacific Markets, Asia's leading independent brokerage group, predicts wealth growth rates will increase even faster among high net worth individuals (HNWI), defined as those with investible assets of $1 million or more. CSLA forecasts an increase in Asian HNWI from 1.2 million today to 2.8 million by 2015 - a 140% increase - with roughly 60% of those coming from China.

So, if you truly want to target growing individual wealth, look toward Asia.

To be specific, the country with the largest rise in average personal wealth over the past decade is Indonesia.

After getting hit hard in the Asian financial crisis of 1997, Indonesia's average personal wealth jumped from about $2,300 in 2000 to $12,109 this year. Indonesia has plenty of room to grow since only 2% of its population has a net worth of more than $100,000, compared to a worldwide average of 9%. The biggest future growth will be in the country's number of high net worth individuals, expected to increase 25% by 2015.

Another Asian nation with a rapidly rising rate of personal wealth is India.

Individual wealth in India almost tripled over the past decade, rising from $2,000 at the turn of the century to more than $5,500 in mid-2011. The country's total wealth per individual is still low due to India's large population - roughly 735 million adults - but its middle class will continue to enjoy rising incomes.

And as expected, China is high on the list of countries getting richer.

China's average adult wealth has risen from $6,000 in 2000 to $21,000 this year - despite a 20% decline during the 2008-2009 financial crisis.

The Chinese yuan's slow rise relative to the U.S. dollar contributed to the increase, but it mostly resulted from actual economic expansion - a boom that lifted China to third place in terms of total household wealth worldwide, behind only the United States and Japan.

In fact, China is expected to surpass Japan to become the world's second wealthiest country by 2016, with total personal wealth rising by about $18 trillion to almost $39 trillion.

Profit from the Personal Wealth Shift
Investors can profit from these global changes with the following four individual companies, all poised to benefit from the shifting wealth patterns:

•Patni Computer Systems Ltd. (NYSE ADR: PTI), recent price $13.58 - A wealthier populace demands more information and better technology, and Patni helps provide both. It supplies IT consulting and software development services to a variety of Indian companies - including those outsourced call centers we all love so much. The company also operates in North America, Europe, Japan and the rest of the Asia-Pacific region. Patni earned $1.20 a share over the past year, giving it a Price/Earnings (P/E) ratio of 11.4, with estimates for $1.35 in the coming year and a potential price target of $21 a share - a 55% premium to where it's trading now.
•PT Telekomunikasi Indonesia ADR (NYSE: TLK), recent price $34.05 - State-subsidized PT Telekomunikasi, with its nine subsidiaries, is Indonesia's largest provider of phone, data-transmission and connection services and Internet access. This will be a popular industry as Indonesians have more purchasing power. The company is expected to earn $2.81 a share this year, with an increase to $2.98 in 2012. That equals a projected P/E of 11.1, with analysts offering an average one-year price target of $38.43.
•Seaspan Corp. (NYSE: SSW), recent price $12.71 - A growing and increasingly wealthy population quickly looks abroad for products it can't get at home, and many of those imported goods will arrive on container ships chartered from Seaspan. The company's 58 vessels (with three more leased and seven on order) also carry a huge volume of developing world exports to the West. The global downturn hurt Seaspan's revenue the past three years, and high oil prices reduced operating margins, but the new ships will improve fleet efficiency and rising demand will increase charter rates. This year's projected profits are $1.08 a share, with $1.40 projected for 2012, giving Seaspan a forward P/E of 10.1. The average analysts' price target is $18.88, and the 76-cent dividend provides a healthy 5.3% yield.
•Pearson PLC ADR (NYSE: PSO), recent price $18.28 - With increased wealth comes increased literacy, and London-based Pearson caters to that market. The company provides both printed and online reading materials (including The Financial Times, a share of The Economist and Penguin Books) to more than 60 countries worldwide. That includes China and Brazil, where demand for educational supplies has skyrocketed. Pearson has a hefty cash flow and generated earnings of $1.03 a share over the past 12 months, with $1.28 projected for fiscal 2011 and $1.36 for 2012. It has a variable dividend, but has paid 76 cents over the past year for a 4.0% yield.

For investors looking for a broader focus, here are three exchange-traded funds (ETFs) targeting regions with the greatest personal wealth growth and middle-class demand:

•Global X FTSE ASEAN 40 ETF (AMEX: ASEA), recent price $15.14 - With a current market cap of $22.5 million, this fund tracks The Financial Times index of 40 companies in four Southeast Asian countries. It was hit fairly hard in the August/September sell-off. However, it rebounded nicely in October and should easily regain its 52-week high of $17.51 if the economic recovery in the region continues at its present pace.
•Market Vectors Indonesia Index ETF (AMEX: IDX), recent price $29.27 - This is a passive fund tracking an index of the leading stocks trading on the Indonesia stock exchange, with a current market cap of $455.3 million. The fund is well off its 52-week high of $34.99, but has been in a steady uptrend since mid-September.
•EGShares Emerging Markets Consumer ETF (AMEX: ECON), recent price $22.81 - As noted earlier, increasing wealth translates into more consumption, and this EGShares fund is designed to benefit such improvements. It tracks the Dow Jones Emerging Markets Consumer Titans 30 Index, a ranking of 30 of the largest consumer-driven companies in the developing world. With $239 million in assets, ECON shares traded at $24.93 early this year, then pulled back in the market sell-off, but have rallied from a late-September low near $19.50.

Source : http://moneymorning.com/2011/11/04/grow-your-personal-wealth-by-piggy-backing-on-emerging-markets/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules