{"id":53617,"date":"2014-07-02T23:14:19","date_gmt":"2014-07-03T03:14:19","guid":{"rendered":"http:\/\/countingpips.com\/?p=53617"},"modified":"2014-07-02T23:14:19","modified_gmt":"2014-07-03T03:14:19","slug":"how-you-can-catch-the-new-boom-in-emerging-markets","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/07\/how-you-can-catch-the-new-boom-in-emerging-markets\/","title":{"rendered":"How You Can Catch the New Boom in Emerging Markets"},"content":{"rendered":"
July 2, 2014<\/div>
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By MoneyMorning.com.au<\/u><\/a><\/p>\n

If you wanted to cash in on booming economic growth in other parts of the world, how would you invest your cash?<\/p>\n

Too many investors seem to think there’s only one way to go about it.<\/p>\n

These punters follow the financial headlines about emerging markets<\/strong><\/a>…most notably, China<\/a>…and they draw one simple conclusion.<\/p>\n

Sure, they understand that China’s long journey towards the first world has only just begun. And they get it that China’s journey drives an insatiable thirst for imported resources. <\/p>\n

But here’s the thing. Because the mainstream Aussie financial press love to mimic each other — safety in numbers, I guess — many investors will only ever hear one story about the impact of Chinese growth on our shores. I’m talking about the well-worn story of Chinese steel production and the rocks Aussie miners dig out of the ground to feed it.<\/p>

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It’s a tale that leads these kinds of investors to draw a simple conclusion: to play the rise of China, you’ve got to buy stocks<\/a> in Aussie iron ore exporters.<\/p>\n

I don’t know about you, but I start to get bored at some point between the 100th and 200th time I hear that call.<\/p>\n

Sometimes Aussie business journalism sounds like it comes out of an echo chamber.<\/p>\n

I don’t want to take anything away from iron ore <\/a>exporters. In fact, some of the players in that space that my mate Jason Stevenson has picked for Diggers & Drillers<\/em> look positively fascinating…and their growth prospects are fantastic.<\/p>\n

But I’ve found that the deeper you dig, the more likely you are to uncover a rough gem.<\/p>\n

The beauty of this boom – the rise of China’s middle class – is that exciting, innovative, sometimes peculiar and often unknown Aussie companies will reap huge benefits across a broad range of sectors for decades to come.<\/p>\n

What’s more, the biggest winners from an investor’s point of view won’t necessarily be the companies that have the biggest market cap today.<\/p>\n

Today I’ll show you a useful example of how Aussie companies beyond the mining sector<\/a> could benefit from the rise of China. Firms in this sector don’t explore for exportable rocks. But they’re rushing to meet growing demand…and the growth prospects that they offer investors are compelling.<\/p>\n

Feeding the Emerging World<\/h2>\n<\/p>\n

The vision of Australia as ‘Asia’s foodbowl’ is getting closer to reality. I’ll admit that for a long time that vision had been a pipedream. Farmers and other lobbyists had pushed the idea seeking government assistance and little more. But if you look past the politics, you can see why agricultural exporting is gaining momentum as an investment theme.<\/p>\n

You see, emerging economy diets are becoming more ‘intensive’. This means people in places like China <\/strong>and India are eating fewer cereals and more meat, dairy, sugar and oils. These emerging economies are leading the growth in global demand for satisfying food.<\/p>\n

According to the United Nations Food & Agriculture Organisation, between 2010 and 2040, the world will consume as much protein as it has throughout history until now. That’s an amazing statistic. It demands attention in an agricultural exporting nation like ours.<\/p>\n

But it’s worth noting that that protein won’t just come from beef and chicken.<\/p>\n

I sat up and took notice when I heard that the UN now predicts nearly two thirds of the seafood we eat will be farm-raised by 2030.<\/p>\n

That’s a vast increase from today’s levels of fish farming. Two factors will drive explosive growth in aquaculture: big increases in demand from the emerging middle class, and a levelling-off of catches from wild capture fisheries.<\/p>\n

That’s why I’m certain seafood farming is set to drive the next agricultural boom. Farming seafood is the only way to meet booming Asian demand for protein.<\/p>\n

This goes a long way towards explaining why Perth-based agribusiness company Craig Mostyn Group (CMG) has just paid about $20 million for an abalone farm on Victoria’s Bellarine Peninsula.<\/p>\n

The acquisition will boost CMG’s live abalone exports to about 800 tonnes per year. The molluscs are destined for hungry mouths in Hong Kong, China, Singapore and Japan.<\/p>\n

Both of my brothers have gone diving for abalone off the Bellarine Peninsula. They return time and again because the abalone down there tastes delicious.<\/p>\n

It’s a taste that Asian palates are appreciating more and more. And the quality of the product is a big part of this business model. It has to be, when you consider that a single top-notch abalone can sell at The Star casino in Sydney for as much as $120. It’s a rare luxury.<\/p>\n

David Lock, CEO of CMG, explained why his company is going after this market over others:<\/p>\n

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‘I haven’t seen many fish aquaculture businesses that make sense. They are too expensive to produce and the product is too low value…most of the other aquaculture in Australia struggles because of our cost of production. And that’s why we like the abalone because, firstly, it is an export business and, secondly, it’s high value, so the cost of production plays a lesser part as to whether it’s competitive or not.’<\/em><\/p>\n<\/blockquote>\n

What a breath of fresh air…an Australian export industry that competes on quality, not cost.<\/p>\n<\/p>\n

How you can Benefit<\/h2>\n<\/p>\n

CMG has clearly spotted an attractive opportunity in the abalone market. It’s just a shame that private investors can’t buy shares in CMG just yet.<\/p>\n

But that’s okay. The dynamic that drives the Australian abalone market drives a wide range of related markets.<\/p>\n

Whether it’s prawns, scallops, lobsters or salmon, eventually Asian demand should scoop up the growth in Australian seafood production…and the canny operators stand to make huge profits. <\/p>\n

What I really like about this market is that there’s no clear market leader. That’s because it takes patient capital, operational expertise and business savvy to make an Aussie aquaculture business fly.<\/p>\n

That gives small upstarts a huge chance to crack into this market and make an impact.<\/p>\n

There are several such small companies listed on the Australian Securities Exchange.<\/p>\n

Investing in small-cap companies<\/a> is always risky, and it’s important to view these kinds of stocks as a speculation.<\/p>\n

But if you pick the firm that gets it right and starts shipping huge volumes of product into Asia…the rewards should be fantastic.<\/p>\n

It’s still early days for this industry. This means a lot small agriculture stocks are trading at cheap prices.<\/p>\n

When the potential winners start to emerge, you’ll hear about them first in Australian Small-Cap Investigator<\/em>.<\/p>\n

Tim Dohrmann+<\/a>
\n Small-Cap Analyst, Money Morning<\/em><\/strong><\/p>\n

Join Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au If you wanted to cash in on booming economic growth in other parts of the world, how would you invest your cash? Too many investors seem to think there’s only one way to go about it. These punters follow the financial headlines about emerging markets…most notably, China…and they draw one simple conclusion. Sure, […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-53617","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/53617","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=53617"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/53617\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=53617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=53617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=53617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}