The Best Growth Story

It's easy to gloss over the headlines and not really understand how amazing the growth in Asia has been -- and how much potential there still is.

This is true even if you take China and India, the main headline-grabbers, out of the equation.

This might surprise some readers, but in the past three years, per-capita GDP growth has been higher in South Korea and Singapore than in India. And, as the following table shows, countries like Thailand and Vietnam are also growing quickly and have plenty of room to expand before becoming as mature as South Korea. Check out the per capita GDPs and compound annual growth rates (CAGR) of these countries:

2003

2006

CAGR

China

$5,000

$7,800

16.0%

South Korea

$17,800

$24,500

11.2%

Singapore

$23,700

$31,400

9.8%

India

$2,900

$3,800

9.4%

Thailand

$7,400

$9,200

7.5%

Vietnam

$2,500

$3,100

7.4%

United States

$37,800

$43,800

5.0%

Germany

$27,600

$31,900

4.9%

United Kingdom

$27,700

$31,800

4.7%

France

$27,600

$31,200

4.2%

Source: CIA: The World Factbook

Just as striking as the great growth in Asia is the slow growth of some of the mature countries of the Western world. That's not a sign of weakness; it's just a byproduct of having more mature economies.

It's where the growth is
U.S.-based companies Brown-Forman (NYSE: BF-B  ) and UAL (Nasdaq: UAUA  ) are actively pursuing this Asian growth opportunity. For Brown-Forman, this means building its own distribution network in China; for UAL, it means more direct flights into the region. Global giants like Unilever (NYSE: UL  ) are also heavily invested in Asia, and some Japanese consumer companies have also gotten into the act.

But intuitively, we know that some of the best opportunities to capture this economic growth will come directly from Asia. Some companies, like Singaporean financial giant DBS Group (OTC BB: DBSDY.PK), come from the more established economies and have more established bases to build from. But emerging economies like China provide their share of established firms like China Life Insurance (NYSE: LFC  ) , and these established firms should only continue to grow as the economy expands.

Small caps offer more volatility and risk, but they also have the potential for greater reward. Consider, for example, E-House Holdings (NYSE: EJ  ) . E-House doesn't have the long history of operations or size that gives investors comfort, but with real estate operations in Shanghai and Hong Kong, it does provide a promising long-term opportunity in an attractive market.

Foolish final thoughts
The recent growth in Asia is stunning, and in many countries, the growth can continue for another decade or more. Good investments can always be found, but such broad growth comes along far less frequently.

Fortunately, there are many ways to invest in the exploding Asian economies. There are the local service companies that benefit from the domestic growth in their economy, exporters that benefit from their lower costs, and companies from the more established economies of Japan, Singapore, and South Korea that benefit from the region's growth, too.

Each type brings different levels of risk and potential reward, and we've tried to bring you some of each in our new report, Asia Rising: 5 Pacific Rim Stocks You Can't Afford to Miss, where Fool analysts identify five promising investments from throughout Asia, beyond just China and India. To learn more, click here.

Nathan Parmelee is a Global Gains analyst. He has no ownership stake in any of the companies mentioned. Unilever is an Income Investor recommendation. The Fool has a disclosure policy.


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