How to Invest in Asia

Bob Howe manages a small fund with $5 million in assets under management called the Akamai/Opera Pan-Asia Fund.  He is the Founder and CEO of the Geomatrix group.  In previous lives, he has worked as a technology analyst for Latin American companies for T. Rowe Price and Chief Investment Office at AIG Global Investment Corporation in Japan.  He concludes that Asian investment is filled with black swan events that jolt the markets.

If the investor is long only in Asia, Bob says the equity investor is better off buying US stocks.  Asian markets have bear markets every five years where 55%-80% losses are experienced.  US markets outperform Asian markets by three percent when comparing US and Asian five year rolling returns over the past twenty years.  Bob says to invest in Asia only when hedged.

He gives views on five Asian markets.  He is long Japan and short Australia, China, India and Korea.  The country is more important than individual sectors or stocks.  In emerging markets, they are affected by large scale events such as foreign investment flows and liquidity.

The full article is here.