I’ve traveled all over Asia, so people often want to know my favorite part of this huge continent.
I can answer the question several ways. Japan will always have a special place in my heart. I was born in Japan and have family there.
As a tourist, I have many favorites. I love the history and charm of Beijing … Taiwan’s beautiful mountains and beaches … the vibrant bustle of Shanghai … the stunning views of Hong Kong’s Victoria Harbor … and the colorful culture of Thailand.
From a business and investment perspective, one country definitely stands out from the rest: Singapore.
Singapore’s Shining Past — and Even Brighter Future
Traders traveling between the Indian Ocean and South China have long sailed through the Straits of Singapore. Its unique position as one of the primary commercial gateways to Asia makes Singapore a key crossroad for global trade.
By the late 1800s, three developments made Singapore one of the world’s most important ports of call:
- The advent of the steamship
- The 1869 opening of the Suez Canal
- The widespread adoption of rubber
The way these factors bolstered Singapore’s position is a story in itself. By the beginning of the 20th century, Singapore was enjoying unprecedented prosperity.
The next major stepping-stone came in 1965 when Singapore, by mutual agreement, separated from Malaysia. Its new status as an independent republic only furthered its powerful growth, which continues to this day.
With a population around 6.9 million, the country generates $60,688 in per-capita gross domestic product. That’s the third highest in Asia, behind only Hong Kong and Japan. Singapore also has a sky-high 95% literacy rate and the highest standard of living in Asia.
The World Bank calls Singapore "the world’s easiest place to do business." The country earned that moniker by concentrating on growth industries like financial services, biomedical research, technology and oil refining.
Don’t get blindsided by
This looming currency crisis …
One nation is quickly becoming the Titanic of the global marketplace. And those who are betting on this sinking ship have already started banking gains because of it!
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American Express, AIG, Boeing, Cargill, Dell, ExxonMobil, Ford, General Electric, Hewlett-Packard, Merck … they all have significant operations in Singapore.
Singapore is an economic juggernaut with an unmatched combination of modern comforts, sophistication, cleanliness, and an energetic enthusiasm for commerce.
Those values explain why …
- Singapore’s GDP is surging,
- The Singapore Straits Times stock index is up by 13% so far this year, and
- The country’s economy is one of the fastest-growing in the world!
Earlier this week, the Singapore Ministry of Trade & Industry reported GDP rose 3.8% in the second quarter, above the 3.7% estimate and sharply higher that the 0.2% Q1 gain.
Furthermore, the Singapore MTI upped its full-year 2013 growth forecast to 3.0% and the 2014 outlook from 2.5% to 3.5%.
The Singaporean government expects big things — and so do I.
How Can You Profit from Singapore’s Strength?
You can share in Singapore’s growth through an Exchange-Traded Fund (ETF) specifically indexed to Singapore.
One choice: the iShares MSCI Singapore Index (NYSE: EWS).
This ETF is essentially the Singaporean equivalent of the Dow Jones Industrial Average. I say that because it is a basket of the country’s largest publicly traded "blue chip" stocks.
A deeper look into this ETF reveals something else interesting. Although EWS contains 43 stocks, 70% of its portfolio is concentrated in the top 10 holdings … and those top 10 are mainly financial and banking shares.
In fact, three of EWS’ biggest constituents are financial companies:
United Overseas Bank is a one-stop shop for the wealthy. It offers private banking, trust services, venture capital investment, merchant banking, brokerage services, insurance, fund management, derivatives and precious metals trading, along with life insurance.
DBS Group Holdings is the largest bank in Singapore. It provides mortgage financing, funds management and brokerage services. It is also the primary dealer of the country’s government securities.
Oversea-Chinese Banking Corp. provides banking, brokerage, corporate banking, asset management, venture capital and trustee services.
Given the recent credit crunch, you might wonder whether a heavy financial weighting is bad. In the case of Singapore, I think it’s actually a good thing. That’s because …
Singapore is Rapidly Becoming
The Switzerland of Asia!
Singapore’s private banks currently manage about $1.63 trillion, a 22% increase in just the last year.
To put that amount in perspective, the total amount of all the wealth in Swiss private accounts is $2.99 trillion.
While Singapore is in second place for now, I expect it to overtake Switzerland by 2015 and become the world’s No. 1 private banking center.
FACT: Credit Suisse recently moved its world private banking headquarters from Zurich to Singapore.
A view from Singapore’s financial district
It sure doesn’t hurt that Singapore is close to India and China, the two fastest-growing economies in Asia. However, the real attraction for investors is that Singapore levies NO TAXES on capital gains!
With money pouring into Singapore so fast, there is an acute shortage of private bankers. The business-friendly Singaporean government came up with a solution: In 2004, it funded the establishment of a Master of Science in private banking at Singapore Management University (SMU)!
Singapore’s privacy laws are also very strict. Divulging private financial information is punishable by a fine of up to $78,000 and a prison sentence of three years.
That secrecy isn’t lost on China’s newly minted multimillionaires. Think about it: Would you keep all your wealth in China, where the Communist Party is still firmly in control?
Now, I’m not suggesting you rush out and invest in Singapore tomorrow morning. As always, timing is everything so I recommend that you wait for the next pullback or until I return from my next trip there. Who knows what opportunities I might find?
Always remember: China is not the only Asia story. Plenty of other booming countries are worth your attention, too.
One of those stories is Australia, but instead of a boom, the country is bracing itself for an economic and potentially even a banking collapse! The more-immediate and, perhaps, more-imminent problem is a breakdown in its formerly strong currency, the Aussie.
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