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17/08/2017

WHY INVEST IN ASIA?

When it comes to Asia’s growth outlook, there are various dimensions where investors can focus. Firstly, it can be said that investing in Asia simply means investing in the World. Let us define “Asia” – a broad definition – not just East and Southeast Asia. The continent includes India, the Middle East, most of the former Soviet Union and Turkey, among other places. Asia is the most populous region by far with over 4.4 billion people. In fact, more people live in Asia than outside Asia. The world’s population is less than 8 billion. In other words, Asia is most of the world as humans know it. By investing in Asia, you’re investing in the bulk of humanity. “That’s fine, but how does having a lot of people help Asia’s growth?” you might ask. At first glance, having a higher population isn’t necessarily a boon for investment. But it helps a lot.  Countries like China, India, and Indonesia have massive populations. Even places like Thailand, Vietnam, and the Philippines are no slouches. Having large market sizes mean international firms want to expand into them first. After all, why spend time selling to 5 million people in Costa Rica when you can sell to 70 million in Thailand?

Foreign businesses are simply more interested in Asia because of its larger size and influence, leading to higher growth. Global investment from other regions has jumpstarted Asia’s bigger economies. In turn, smaller countries in Asia benefit from the larger country’s investment. Normally, places like Cambodia or Mongolia might be ignored – if it weren’t for the behemoths nearby.

The large number of tourists and investment coming from China and India has helped their smaller neighbors. Large, growing countries in Asia aid the smaller ones by generating a demand for industry and services which otherwise wouldn’t exist.

Simply put, Asia is helped by its size and density. And then, Asia has everything you want!

You have a wider range of investment options in Asia. Its economies have a type of diversity which can’t be found elsewhere. For example, you don’t have access to some types of markets if you’re investing in Africa or South America. There’s no developed nations on these continents which compare to places like Japan, Hong Kong, or Singapore.

Africa has lots of frontier markets, a few emerging markets, but no developed countries. Developed economies are important in a region because they help feed investment, infrastructure, and employment opportunities into their neighbours. Similarly, there’s almost no frontier markets to be found in Europe or North America.

Asia is the only continent where you can find markets of all types. Their strengths complement each other, developed financial hubs side-by-side with more populous, less-costly, faster-growing economies. Furthermore, the infrastructure which allows investment is better in Asia. Property funds, private placements, mutual funds, and other types of assets are simply harder to find in South America, for example, when compared to Asia.

To summarize, it’s not just easier to invest in Asia. There’s more options, greater opportunity, and better catalysts for higher growth.

by Humneet KAUR

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