Tuesday, July 24, 2012

Jim Rogers: 'Myanmar Best Investment Opportunity In The World' - Seeking Alpha

by Steven Orlowski

In an exclusive interview with OilPrice.com, Jim Rogers declared Myanmar to be the best investment opportunity in the world, with North Korea not far behind. His exact words were:

"Probably the best investment opportunity in the world right now is Myanmar. In 1962, Myanmar was the richest country in Asia. They closed off in 1962, and now it's the poorest country in Asia. I see enormous opportunities there because they're now opening up. It's like when China opened up in 1978. There were unbelievable opportunities going forward. The same is true in Myanmar now in my view. North Korea, I expect to see the same sorts of developments."

Both countries are difficult to access. There are no ETFs dedicated to Myanmar, and certainly not North Korea. As we reported in April, one way to access Myanmar is through Thailand. "Thailand is Myanmar's largest export market and second largest import market, the latter of which is set to boom with an easing of import restrictions and a progressively freer Myanmar market."

The way to invest in Thailand is through the MSCI Thailand Investable Market Index Fund (THD). This allows you to indirectly profit from Myanmar, and directly benefit from Thailand's business relationship with the country.

Another way to access Myanmar is by investing in the entire region, known as the Association of Southeast Asian Nations (ASEAN). Formed on August 8, 1967 the Association of Southeast Asian Nations is a geo-political and economic organization of ten countries located in Southeast Asia. The original membership included Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then additional countries include Brunei, Myanmar (Burma), Cambodia, Laos, and Vietnam.

The opportunity in the region is great, and Myanmar is certainly in a position to benefit. Until it becomes more accessible we have to be satisfied investing in the entire region or specific countries like Thailand. Here are a few data points regarding the ASEAN region:

According to the Financial Times, by 2015 economists expect the ASEAN region to consist of a middle class of 300 million people driving consumption and economic growth.The World Federation of Exchanges states that ASEAN countries have a combined market larger than India, Brazil and Russia – that's a stock market capitalization of approximately $2.09 trillion.China Daily reports that in 2011, the ASEAN region overtook Japan as China's third largest trading partner. Trade increased 24% to $362.3 billion in 2011 and is expected to exceed $500 billion by 2015. The ASEAN region is expected to become China's top trading partner.

With all this great activity and Mr. Rogers' proclamation that Myanmar is the "best investment opportunity in the world", I suggest taking a look at the Global X FTSE ASEAN 40 ETF (ASEA). "The Global X FTSE ASEAN 40 ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE/ASEAN 40 Index." This fund is a great way to invest in the ASEAN region but it has its shortcomings. It only invests in the five original members: Singapore, Thailand, Indonesia, the Philippines and Malaysia. Not unlike THD, you will be receiving indirect benefit from Myanmar. But this is as good as it gets for now.

If the prognostications are correct and Myanmar is able to successfully continue its path toward freer trade and capitalistic growth, I would expect ASEA and more funds to come will expand their country diversification and become even more targeted.

Ultimately it is obvious that any investor looking toward future growth needs exposure to the ASEAN region. I think Mr. Rogers may be correct about Myanmar. Now, what did he say about North Korea?

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