On the back of a 110% gain in 2006, China's Shanghai Exchange has risen another 145% (in dollar terms) this year! Similarly, India's Bombay Exchange has had a nice run this year -- it's up 52%.
Investors the world over have wondered whether this type of outsized growth is sustainable. Nowhere, perhaps, is the debate livelier than on Motley Fool CAPS, the Fool's investing community, where more than 76,000 investors rate their favorite -- and least favorite -- stocks.
Despite the red-hot growth on the other side of the Pacific, only five Asian stocks or exchange-traded funds (ETFs) placed among the top 100 that CAPS investors rated this month.
Moving westward?
While Asian stocks are still generally favored among CAPS investors, stocks from other regions, including Europe and South America, have become more common in the top 100. Investor sentiment may be shifting westward for now, but the growth potential in Asia is still too great to ignore.
Without further ado, here are the top five Asian stocks, according to CAPS.
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Company
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Country
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iShares MSCI Singapore Index Fund
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Singapore
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iShares MSCI Pacific ex-Japan Fund
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Asia-General
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Chunghwa Telecom (NYSE: CHT )
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Taiwan
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Silicon Motion (Nasdaq: SIMO )
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Taiwan
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The Singapore Fund
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Singapore
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Please bear in mind that these stocks are not formal recommendations. Instead, they're offered as jumping-off points for further research. What's more, researching five-star CAPS stocks such as these has proven to be an effective tool for investors.
Getting hot in the kitchen
"If you can't take the heat, buy an ETF." That seems to be the current trend among CAPS investors regarding the spicy Asian markets. Apparently investors are feeling more comfortable with the general trend of the Asian markets than in doubling down on individual stocks.
For the second month in a row, there are two ETFs in the top five: The iShares Singapore ETF (discussed here) retained the top spot, but another iShares product, the Pacific ex-Japan fund, has also joined the party this month. Moreover, The Singapore Fund (a closed-end fund) managed to beat out individual five-star CAPS Asian stocks like NetEase.com (Nasdaq: NTES ) and CNOOC (NYSE: CEO ) -- and by a wide margin.
CAPS investors are not only spreading their bets across the Asian markets, they are looking at markets other than China and India. Taiwan and Singapore are two countries that have been receiving a lot of attention in recent months, and perhaps for good reason. In 2007, both countries were ranked in the top 30 of The Heritage Foundation's annual "Index of Economic Freedom." Singapore ranked No. 2, ahead of the United States.
Among the few Singaporean and Taiwanese stocks listed on U.S. exchanges are Flextronics (Nasdaq: FLEX ) , STATS ChipPAC (Nasdaq: STTS ) , and Taiwan Semiconductor (NYSE: TSM ) .
What do you think? Are investors better off betting on the general Asian sector, or hand-picking only its finest stocks? To make your voice heard, join the CAPS community. It's 100% free, and we want to hear from everyone.
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