I’m in Asia this week researching and reporting on investment opportunities, and one thought always strikes me when I’m poking around in this part of the world: Asia is alive.
Shanghai, Hong Kong, Singapore, Melbourne … wherever I have alighted in Asia I have felt a certain energy. Business is vibrant. Construction cranes and scaffolding (often fashioned from bamboo poles lashed together) are rampant. Retail shops are busy. Hotels are full. Streets are crowded with businesspeople, tourists and shoppers.
True, you can say the same of New York, London and Paris. And I’ve seen all of these places in the last year. But while the scenes look similar (except for that bamboo scaffolding), my senses react differently.
As an investor in global markets, I pay attention to sensory perceptions because they provide an important reference point that written words can’t always capture.
Western capitals simply don’t exude the same feeling that in Asia says, something more is happening here.
And Im highlighting three Hong Kong blue chips you should own for steady dividend income and stable growth. But first, let’s look at how to safely invest in Asia.
Asia and “Safe” Can Go Together …
It’s no secret that Asia is the place you need to be if you want to participate in the economy of tomorrow.
But it’s also no secret that Asia is chockablock with volatile stocks and companies that are not always the most-concerned with shareholder rights, though that is changing rapidly and drastically for the better.
Too many commentators and investors are unaware of on-the-ground reality.
They see Asia as a punter’s playground. The odds, they contend, favor the house and, as such, you’re gambling with your wealth.
There is some truth to that in certain corners of the market, particularly in some Chinese shares. There, investor irrationality (driven by bipolar media claims about Asia’s risks and opportunities) pushes and pulls excessively at stock prices. You end up with companies that, one month, are belles of the ball everyone wants to own, and then, just as suddenly, they’re pumpkins.
But that is not the sum total of Asia.
And if there is any one fact I can tell you about my years of traveling and investing throughout this region, it’s that Asia is not the gunslingers’ paradise so many Western commentators make it out to be.
It can be a land of stability, if you come at it from the right perspective.[]
The Blue Chips of Hong Kong …
The two cities I’m visiting on this research trip — Hong Kong and Singapore — are key examples of what I’m talking about. Today, I’m reporting from Hong Kong on the opportunities in this “Pearl of the Orient.”
Hong Kong is the financial gateway to China.
It is a big, developed economy. Hong Kong enforces the rule of law, which gives institutional investors peace of mind. Investors rely on the respected securities regulations here. Markets are deep and liquid, and the stock exchange has a long history.
The region is fluent in English, making business easy when attracting nationalities from all over the world trying to cash in on the Asia Century.
And most important to today’s letter, Hong Kong is home to a number of stable blue chip companies — the kind of companies that, if they were in the U.S., you’d load up on in the conservative portion of your retirement plan.
Where to Look for Asian Stability … and Profits
Personally, I think investors should be looking to Hong Kong for stable growth plus steady income. In many ways, it’s “Asia light” for investors who want to be a part of the region, but are too leery of China-proper or places like Indonesia, Thailand and the Philippines.
The city is foreign-investor-friendly, so opening a local brokerage account as a U.S.-based investor is easy.
Moreover, in Hong Kong you find a swarm of large-cap local and multinational behemoths that serve as a good platform to begin building your Asia exposure.
While every stock has its risks, these are blue chips that react to market sentiment and news just like blue chips anywhere else in the world … they ebb and flow with less amplitude than the market as a whole because they are the stocks that local institutional investors own as the bedrock of their clients’ portfolios.
Here are three Hong Kong stocks I recommend buying now and holding for the long haul. You’ll collect some dividend income each year, and your company will continue to grow – and, in turn, the share price will continue to climb — as the region expands.
1.) Swire Pacific (yield: 3.3%). A major conglomerate with stakes in everything from cold-storage to road transport. Swire is also a major stakeholder in Cathay Pacific, one of Asia’s leading air carriers (and a fine Asia Blue Chip in its own right, with a healthy dividend yield).
2.) China Light & Power (yield: 4.1%). Though CLP began life as one of Hong Kong’s major utility providers, its interests today span Australia, Mainland China, Thailand and elsewhere.
3.) Hutchison Whampoa (yield: 3.0%). Another conglomerate, this one owns ports in 25 countries; develops and owns commercial and residential real-estate projects; owns energy infrastructure in Hong Kong, China, Canada, New Zealand and Australia; and has a wide range of retail properties across categories including supermarkets and consumer electronics.
It’s important to recognize that Asia is not only one of the greatest region’s globally for profit potential, it also offers many of the same safe investment options you find in New York or London or Paris. When you look at it from that perspective, you will see the merit in opening your portfolio to the stability that is available in Asia.
Until next time, keep a global view…
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