Asia and the Garment Industry

November 21st, 2017 by admin No comments »

Post-Rana Plaza (manufacturing building) collapse in Bangladesh, industry businesses and individuals became concerned about their next step.  Having heavily relied on this one address for their garments, the realization of the impact of Environmental, Social and Governmental (ESG) practices were highlighted. Once it became known how abusive working conditions there were, investors pulled out.

In recent years, it is not just business that counts; to get investments portfolios have to reflect a strong value system and the Rana Plaza just wouldn’t have cut it. One recent example of this was discussed in a Bloomberg article entitled The Cost of an Investment Conscience by Mark Gilbert of DBS Group Holdings with the promise of Scandinavian institutional investors of divesting from banks (in Asia, North America and Europe) which support destructive palm oil ventures in South Asia.

In other words investment dollars are influencing investee action as ESG factors become more prominent.  Gilbert quotes AQR Capital Management co-founder Cliff Asness who explained:

If the virtuous decide they won’t own something, the sinners then have to, and they have to be induced to through getting a higher expected return than otherwise. This in turn is achieved through a lower than otherwise price. If the discount rate used by sinful companies isn’t higher as a result of constraints on holding sinful stocks then there was no impact. And, if the discount rate on sin is now higher, the sinful investors make more going forward than otherwise. If the virtuous are not raising the cost of capital to sinful projects, what are they doing? How are they actually affecting the world as they wish to?

Given the fact that Norway’s Rainforest Foundation has quadrupled in growth since 2009, it has become a world equity market major investor, imbuing it with a substantial influence over the companies in which it invests.

 

If Asia wants to retain its status as a global leader in the garment industry it looks like ethical awareness and preservation have to be at the top of its priority list.

China’s Emerging Markets

October 21st, 2017 by admin No comments »

Emerging market economies – most notably China and India – are expanding faster than those in developed nations.  With this growth, emerging market companies are able to offer potentially attractive returns to long-term stock investors, while bond investors can reap the benefits of generally higher interest rates than in developed markets.

According Tao Zhang, IMF Deputy Managing Director it is crucial for emerging markets at this point to remain “vigilant” to potential risks.  China’s economy is currently encountering substantial changes during its transition to a consumption-led economy which moves away from dependence on cheap good exports. As such, it is vital leaders are aware of the “rapid credit expansion.”

Still, at the latest World Economic Outlook, the forecast for China’s economic growth (this and next year) was increased to 6.8 percent (2017) and 6.5 percent (2018); a 0.1 percentage higher than July forecasts.  The region’s economic growth is mainly due to progress within economic reforms, in particular, supply-side structural measures along with the capacity of the government to maintain a stable macroeconomic policy.

It should also be noted that there is a targeted urban area population increase in 2020 of 60%, translating into a move of 41 million individuals from rural areas to urban centers in China.  What this means is that there will likely be significant investment opportunities given that urban residents have different consumption patterns and higher wages.

Infrastructure Investment in Asia

September 21st, 2017 by admin No comments »

In this video, CGTN Africa’s reporter Sumitra Nydoo discusses how the region has been opened up for infrastructure investment. However, for the next two decades, the continent needs $93 billion per year to address its developmental needs – most of which is slated to come from FDIs.

Is India Surpassing China as Fastest Growing Economy?

August 21st, 2017 by admin No comments »

Evidence is pointing to India becoming the newest fastest growing economy in the world, taking over China’s Number 1 position, according to Harvard University’s Center for International Development (CID) growth projections.  Further, it is expected that the region will maintain this leading position, encountering an average 7.7 percent growth until 2025.

One reason for this, it is thought, is that, geographically it has the potential to expand into new markets, including automobiles, chemicals and (some types of) electronics. This is in direct contrast to those regions that rely solely on oil.

Other regions in the east expected to follow suit include Bulgaria, Indonesia, Turkey and Uganda, similarly because they have broader geographical and institutional dimensions.   As the report stated:
“What they share is a focus on expanding the capabilities of their workforce that leaves them well positioned to diversify into new products and products of increasingly greater complexity.”

Growth projections are measured by each country’s economic complexity, looking at the productive capabilities found in exports and how hard/easy it is to further diversify.

Amazon’s Asia Investments

July 21st, 2017 by admin No comments »

Amazon just received approval from the government of India to sell food products via actual stores in the region.  For the next five years, Amazon will spend $15 million on this venture.

This could just be the start of grocery store investment and expansion in India.  Big Basket and Grofers (online grocery stores in India) are looking for similar approval to set up food outlets.

In June of 2016, 100% of FDI was allowed in India in multi-brand food retail. With this, however, all food products must have some connection to the country: manufactured, processed or produced in India.  But with Amazon, this is the first FDI case to have received an “in-principle clearance” after the closure of the Foreign Investment Promotion Board.

What is also good for India investments is the interest in this industry being shown by brands throughout the world.  To date, more than 40 major brands have come into India since 2015.

Why Invest in Asia NOW?

June 21st, 2017 by admin No comments »

When we talk about investing in Asia, we are not just referring to the more-commonly discussed FDI-attractive regions like East and Southeast Asia; we’re suggesting investors broaden their horizons and look at investment possibilities spanning as integral as India and as far-removed as the Former Union Republics of the Soviet Union. It is staggering when one looks a little beyond the surface and finds these regions so naively overlooked.

So what does Asia have to offer for investors? First thought: its size. With a world population of less than 8 billion, Asia comprises over half of that with a 4.4 billion headcount. Making an investment in that region is in effect investing in humanity. In addition, the scope of a place makes it a more attractive location for global firms to set up shop there when they expand as they realize that the market there is way bigger for their product/service. This results in higher growth and the stats show that Asia’s FDI has bolstered the region’s larger economies.

Another reason to look to the region for investment purposes – especially NOW – is because the scope of industries is so large that something is bound to appeal. You’d be hard-pressed to find that kind of diversity anywhere else. In other regions it’s very much limited to a type of market; not so with Asia.

And then there is the infrastructure. Replete with private placements, mutual funds, multi-asset funds etc., this makes for a very attractive environment for investors from anywhere around the world.

So these are just some of the reasons why it makes so much sense to invest in Asia right now.

Asian Economies: The Good, The Bad and the Ugly

May 21st, 2017 by admin No comments »

Asian economies contribute substantially to the global outline of fiscal opportunity.  As such, once in a while it is potentially helpful to look at what they are – and are not offering.  In a nutshell, here are some oversights of current status of economies in the region and how they impact investment opportunities.

The Good

Anticipated growth for economies in the region throughout this year, is 5.5% which is a little higher than the number for 2016.  In addition, according to data released through the “2017 Regional Economic Outlook for Asia and Pacific: Preparing for Choppy Seas,” policy stimulus is maintain a healthy domestic demand in both China and Japan in the short term.  This is positive for all of Asia’s economies.

The Bad

With the growth in economies, there are two potential problems (one shorter term and one longer):

  1. Making worldwide fiscal conditions more stringent.
  2. With the aging populations, there is the emergence of limited productivity union.

There are possible solutions to this such as an influx of women and migrant individuals joining the work force; more secure pension systems; supplementary trade and FDIs, etc.

The Ugly

While there is predicted additional growth for 2017 in the region, when looking at 2018, this seems to be reversed, most notably with Japan which has a predicted 0.6% growth rate.  This has been explained as being due to the consolidation of fiscal policy and the proposed increase to consumption tax.

Ultimately, there is much to watch in the short and long-term with Asia’s economies.

 

 

 

Asian Regions: World Bank Predictions for Growth

April 21st, 2017 by admin No comments »

According to a recent study undertaken by the World Bank, these are the regions to watch in Asia for investment and economic success. They are: Laos, The Philippines, Cambodia, Myanmar and China.

The Laos economy — that has historically been regarded as the poor relation of fiscal success — is set to surge by 7% this year due to investments in the power sector alongside a more solid amalgamation with the 10-member Association of Southeast Asian Nations.

The Philippines – will probably remain the fastest growing economy from the Association of Southeast Asian Nations 6 (ASEAN-6). This is due to increased domestic demand alongside an escalation in infrastructure expenditure, the growth in the middle class and the upsurge in the Business Process Outsource (BPO) industry.

Moving over to Cambodia, it seems that the microfinance industry is what is currently propelling growth. Over the last 20 years or so, thanks to this sector, the economy has encountered significant growth, simultaneously mitigating poverty in the region. These two factors – growth and poverty elimination – are two high priorities for the government.

Most notably, the private PRASAC Microfinance Institution has played a huge role in this. Over this same time frame of Cambodian growth, PRASAC has become the country’s “largest and most sustainable MFI in Cambodia in terms of business size, customer care, flexible and sound financial solutions, and a wide network of offices and ATMs [having] developed a modern, transparent and dynamic core banking system.” As such it has received various awards for its part in putting the country’s economy on the Asian investment map.
Myanmar’s new oil pipeline has had a huge impact on its economic attractiveness. When activated, this will measure around 770 kilometers from western port city Kyaukpyu to the Chinese border. It has been hailed as “the crown jewel of economic cooperation agreements,” that was signed in Beijing.

And then of course let’s not forget China, which has always been known as the hero of growth and investment. Most recent figures from March showed an increase in trade surplus and exports (16.4%) a reversal of the 1.3% decline from February. Further, predictions for Q1 of growth in the region from economists is 6.8% from last year so that’s indicative of strength in economy too.

So for companies and high net-worth individuals looking to Asian locations to invest, watch these regions.

Asia and GCC

March 21st, 2017 by admin No comments »

The most dynamic economy today in the world, is Asia.  Comparative to North America and EU economies (encountering deceleration of optimistic economic activity), the markets throughout Asia are truly thriving.

Consequently, thriving countries in the Gulf Cooperation Council (GCC) region are becoming increasingly aware of the advantages of working with Asia, in particular they want places that are fiscally able to purchase their energy exports.

Looking at current relations between members of the GCC and Asia, we find that strong ones exist (and are growing in leaps and bounds) in particular with East and Southeast Asian regions.  Indeed, the economic bonds between these regions have shown particular burgeoning since 2007.  For five years from that time, exports from Saudi Arabia to China encountered a growth from around $17 billion to $55 billion.

Further, in 2014, GCC yields became more appealing for new issue investors with new issuers coming to the bond market with the capacity to diversify their investments more. it is likely that the trend of the GCC bringing in more foreign investors (most notably from Asia regions) will continue.  When investment links strengthen, this will further bolster the process.

Opportunities in Vietnam’s Luxury Hotel Resort Market

March 6th, 2017 by admin No comments »

Newly enacted laws liberalizing real estate investment for foreigners have caused a boom in real estate investment in the Southeast Asian country of Vietnam. Along with apartments, townhouses, and other residential units whose sales have been going gangbusters all over the country, so to have villas located within the confines of a five star hotel. Vietnam has a huge choice of incredible such luxury resorts; for instance, the Amanoi Spa Hotel and luxury resort offers villas for sale to investors looking for incredible value for their investment.

Buyers of villas at Amanoi reap the benefits of this high-end vacation getaway located along the southeastern coast of Vietnam on the Vinh Hy Bay. Villa owners have access to the pristine and privately owned beach. They can use the resorts exceptionally appointed facilities, including a spa situated on the banks of a lotus-filled lake. There are several highly-acclaimed eating venues located at the highest point of the resort, affording spectacular views of the boulder outcrops and the coastline of the Nui Chua National Park.

Other five-star hotels in Vietnam are joining the boom. In the Khanh Hoa Province where the Nha Trang Bay is, upwards of 2,800 four and five-star hotel rooms are in the building stages, with the expectation that they will be open this coming year.

The ONYX Hospitality Group of Thailand recently signed a deal with the HB Group of Vietnam to manage a resort valued at over $1.5 billion which is now under construction in Hoi An.

“Vietnam is one of the region’s fastest growing travel destinations, and we are excited to have OZO Hoi An as part of our continuing expansion plan,” Peter Henley, CEO of ONYX Hospitality Group, said.

Those looking for the next big opportunity in real estate should consider luxury resort five-star hotels in Vietnam.