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It’s Not Too Late to Hop Aboard Asian Express

By Ashish Advani   |   Wednesday, 01 Dec 2010 10:13 AM

I love it when a plan comes together.

It was just last week that I had announced to you that Asia was on sale.

Since then, we have seen a fantastic rally in the Asian markets. Boy, have they taken off again.

After a couple of weeks of a slight pullback (which prompted my article last week about Asia being on sale), we are again seeing surges across most regions.

Dalal Street (India’s Wall Street) has rallied for the past two days. Similar moves, albeit smaller, have been observed on the Hang Sang (Hong Kong), TWSE (Taiwan) and other regional stock exchanges.

The reason is the searing-hot growth in the countries that seems to continue unabated. Let’s see what has occurred in the past couple of days in Asia.

The first shot out of the cannon yesterday was the GDP growth announcement in India. The Indian economy grew by 8.9 percent in the last quarter. Yes, that's not a typo: 8.9 percent.

And what is delightful is the combination of growth components that led to this number. The three pillars of the Indian economy are agriculture, industry and service. The three sectors expanded by 4.4 percent year-over-year, 9 percent year-over-year and 9.7 percent year-over-year, respectively.

When comparing the sectors to last quarter, the only sector that didn’t expand relative to the previous quarter was industry, which is undergoing an expected postrecovery normalization.

On the other side of this important data is the state of affairs related to expenditures or consumption. India has had a strong internal-consumption pattern. And this was evident by the increase in expenditure of 10 percent year-over-year. Internal demand growth was 11 percent but this didn’t slow down exports in any significant way. The icing on the cake was the revision of last quarter GDP to 8.9 percent from 8.8 percent.

But that isn’t all. The Indian exports grew by 21.3 percent in October year-over-year while the imports grew by 6.8 percent. The combination of these two has led to a sharp decline in the trade deficit in India. Yes, once again, no typo: a reduction in deficits.

India has cemented its position as the second fastest-growing economy in the world. The fastest-growing economy is China. China announced its quarterly GDP growth of 9.6 percent. And once again, the growth there remains unabated. There has been resurfacing of the China naysayers who have claimed that China can’t continue to grow as such. They have also claimed that the property bubble in China will make the economy implode.

My answer to them is simple: That is your hope, and hope isn’t a strategy.

Moving along to South Korea. Korean exports grew by 25 percent year-over-year for the month of November. While this wasn't a surprise for me, I am concerned about the next couple of months due to the political and war tensions that cast a cloud over Korea.

I want to talk about the mounting war clouds there. While this isn’t economy related, I believe it has underpinnings in the world’s largest trade dispute.

There has been a lot of tension that has arisen around the globe about the skirmishes between North and South Korea. Frankly, it does worry me a bit. But not for the reasons you would imagine.

In my conspiracy-driven mind, this is another example of China’s attempt at tripping up the United States. In my opinion, this is nothing but another attempt by China to instigate and humiliate the United States.

China’s buddy, Kim Jung IL must have been given some major incentive to start this action. China must have done this, so that it can pressure the United States to drop its pressure on Beijing to raise its currency value in exchange for making North Korea back down.

Of course, this is my theory, and I am sticking to my story.

I leave you with the hopes that you had taken heed to my call last week to increase your investments in Asia. While the markets have already started rallying again, it isn’t too late to get in.

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I love it when a plan comes together. It was just last week that I had announced to you that Asia was on sale. Since then, we have seen a fantastic rally in the Asian markets. Boy, have they taken off again. After a couple of weeks of a slight pullback (which prompted...
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2010-13-01
 

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