Tags: asia | federal reserve | ben bernanke

Asia on Sale, Layer in Investments

By    |   Wednesday, 24 November 2010 08:06 AM

I have been writing to you for a few months about Asia and how the Asian countries will be a major driving force and the growth engine for the world in the next many years.
Today I want to announce that Asia is now beginning to look like a solid buy and you should prepare to invest a serious portion of your investment dollars in Asia.
I have given you examples of phenomenal growth that has recently been seen in Singapore, Malaysia, India, China, Taiwan, South Korea, and a few more such countries. But I had also been cautioning you about a potential slowdown in this region. And that is exactly what is occurring now.
I gave you examples of growth rates that were being achieved across Asia. Singapore had achieved 19 percent GDP growth, China hit 10 percent, and India announced 8.5 percent, South Korea 8.1 percent and the list continues.  
Beginning the third quarter, I started noticing some levels of slowdown in the growth. And I believe that we are now seeing a full blown case of a slowdown in Asia.
For all those Chicken Little’s who will claim that the sky is falling, that is not the case. Through the history of mankind, there have been no cases of any market moving in a single direction. A pause is very healthy in a market and it is almost a necessary pressure-release valve to ensure that the cooker does not blow its lid off.
The main cause of the slowdown across Asia is due to the soaring inflation. All across Asia, we are seeing higher-than-acceptable inflation. And as a result, the Central Banks have had to increase the internal interest rates to soak back the excess liquidity in the market and cool of the red-hot growth rates. This is normal folks. This is how policy is supposed to work.
The problem is that the slowdown that has been seen across Asia is directly related to the U.S. Federal Reserve’s policies. Yes, once again, I lay the blame at the feet of Ben Bernanke. Due to the excessively loose monetary policy in the United States and the duration of the time it has lasted, the capital is flowing into the Asian markets and has caused asset-price inflation in the countries. It has now begun to creep into secondary stage inflation and is rearing its ugly head in food prices and energy prices across Asia. And this is troubling for Asia.
Asia has a level of dependence on the United States for its well being. And this reliance has been declining. But it is still in existence and will continue for another decade or so. In the past, when the U.S. sneezed, the world caught a cold. This reliance on exports to the U.S. is declining rapidly. While countries such as China are still heavily reliant on exports, they are relying less on exports to the U.S. and more to Asia and Europe. And countries such as India had low reliance on exports to begin with.
And yet these industrious nations have had to suffer body blows to their economies for no fault of theirs. Wall Street got drunk and greedy. The banks led us to near financial ruin. The Central Bank is leading us down a very dangerous slope of debt from which we may not recover. And yet the price of onions (a major staple in Indian food) and pork (a prime ingredient in the Chinese diet) are skyrocketing in Asia.
With QE1, Bailout 1, Bailout 2, Cash for Clunkers, QE2, and who knows how many more such wasteful programs, the Federal Reserve has been busy printing dollars. With the world now an international trading village, this cash flows into countries like India, China, and Singapore as hot money seeks yield. And with excess cash sloshing around in the local markets, the law of demand and supply has raised the prices of assets (real estate) as well as consumable goods. Consequently, the Central Banks are reigning in cash and slowing down their economies. 
So this slowdown is temporary and will last a few months at best. And this is great news for us. This slowdown is giving us a great entry price (for those not yet invested in Asia) to layer in investments or to add on to open positions and a good price.
Make sure you use prudence and layer in the investment-to-dollar cost average to your buys. Also, the principle of diversification will stand you in good stead in your holdings across Asia.
This sale will not last for too long! Get in now and get ready to participate in some phenomenal growth opportunities.

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I have been writing to you for a few months about Asia and how the Asian countries will be a major driving force and the growth engine for the world in the next many years. Today I want to announce that Asia is now beginning to look like a solid buy and you should prepare...
asia,federal reserve,ben bernanke
Wednesday, 24 November 2010 08:06 AM
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