China’s industrial output also grew 12.3% Yoy, the fastest rate of growth yet in the last 12 months, showing that it was well on track to its official target forecast growth of 8% for the economy for the year of 2009. Asia is well on track to recovery, and while there are lots of detractors and people who refuse to believe that Asia can recover so fast. They fail to look at history.
Asia has always bounced back and recovered quickly from slumps. And the bigger the slump, the stronger the eventual recovery. For 2008, we are talking about one of the biggest slumps in history, something that will be written in history books. A mega slump of massive proportions. Such global massive slumps where literally all markets fall by 40% to 50% are once in a lifetime occurrence. While the drop is very painful, the rebound is usually equally spectacular. The rise in stock markets over the last 6 months was not a freak event, and the trend will continue. It is backed by economic data that is starting to show that gradually, the developed countries are picking themselves up from their feet, and Asia economies are leading the way out of this recession.
I am in no hurry to sell. This rising trend based on the full global economic recovery has not been played out. Lately, I have been monitoring laggards as well. Europe for example, as the region is paying catch up. Many European funds have shown up on the top performing funds list over the last one month. I already hold Parvest Europe Alpha and FLF Eq Europe Emerging both of which have also surged recently. I will be monitoring Europe markets for bargains. I also have to admit I probably have too much in Asia at this point, and while it has certainly rewarded me over the last 6 months as Asian markets have outperformed most other markets quite conclusively. But from a diversification point of view, at some stage, I will need to rebalance away from Asia even though I remain very bullish on it. As always, it’s extremely difficult to follow what you tell others, and striving to remain diversified is probably the hardest task for many an investor, especially those with a high level of conviction in their views like me.
Gold has also surged, pushing the DWS Noor Precious metals fund higher. For me though, this fund, which I hold, and the FLF equity Russia fund which is an oil play are hedges against rising inflation. I would be perfectly happy though if gold, oil prices do not surge and these two funds which I hold creep along over the next two years. Because that would mean that inflation is kept under control, and if it happens, Asia’s economies will benefit the most from this and continue to surge forward. There is a reason why these two funds are less than 10% of my total portfolio.
Asia is showing great resilience in the face of this time’s recession and I am confident that we will experience a V- shaped recovery coming out of it. The coming 6 to 12 months are going to be very exciting ones.
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