Here's a fact that may shock you: China and India represent 40% of the world's population and just 8% of the world's economy. Moreover, the South and East Asian middle class is expected to be two billion strong by 2030.
That's a whole lot of growth potential. And it's that potential that led Yiannis Mostrous, Elliott Gue, and Ivan Martchev to declare in their recent book, The Silk Road to Riches, that "the 21st century may well be known as the Asian Century."
We hit the road
Excited about these opportunities, Global Gains advisor Bill Mann, analyst Paul Elliott, and I depart for China, India, and Taiwan on June 2. We've identified a number of promising companies we want to meet, and we're flying around the world because we want to know more.
Here's our tentative itinerary:
June 3-4: Mumbai, India -- WNS (WNS), HDFC Bank (HDB)
June 5: Hyderabad, India -- Satyam Computer Services (SAY)
June 7-8: Beijing, China -- New Oriental Education (EDU), China Fire & Security (CFSG.OB)
June 9: Ulan Bator, Mongolia -- Ivanhoe Mines (IVN)
June 10-11: Shanghai, China -- China Land (CHLN.OB), Shanda Interactive (SNDA), Ctrip.com (CTRP)
June 12: Taipei, Taiwan -- GigaMedia (GIGM)
These are all smallish companies with wide market opportunities -- in outsourcing, finance, education, the Internet, real estate, and even efficient fire safety products. We don't expect every one to be prime for investment dollars, but we do expect to learn a lot about their potential.
To read some of our recaps from this series:
- India, China Get Blitzed
- Are More "Corrections" Coming?
- The Biggest Obstacle to Growth in Asia
- The Key to Investing in the World's Fastest-Growing Economy
The Foolish bottom line
Today's investors simply cannot ignore this coming global economic sea change. And while you can profit from it without investing directly in Asian companies, we believe at our Motley Fool Global Gains international investing service that the investors who will do best in the coming decades will be those who use bottom-up, fundamental analysis to identify the most promising small public companies these fast-growing economies have to offer.
And it can be done. To start determining these values, we assess every stock we're interested in against the following eight-point checklist:
- Quality of earnings and cash flows.
- Business tenor.
- Growth potential.
- Competitive environment.
- Quality of company management.
- Political risk.
- Currency risk.
- Reliability of the rule of law.
A stock that grades well across all eight points isn't necessarily a sure thing, but it's a very good start.
Tim Hanson does not own shares of any company mentioned. New Oriental Education and GigaMedia are Motley Fool Global Gains recommendations. Shanda Interactive is a Rule Breakers pick. Ctrip.com is a Hidden Gems selection. The Motley Fool has a disclosure policy.
