You'll go further with a Tiger in your tank

Investment tourists: South-east Asian markets could eclipse the financial centres of the West

As the sun rises over the river, groups of people appear, blinking in the smog, to begin their tai ji quan - the daily ritual exercise of body and mind that looks like a balletic slow-motion martial art. But the peace is soon shattered by thousands, if not millions, of cyclists heading to work.

This is Shanghai, a fast-growing city of 13 million that has shaken off both its colonial past and the more recent legacy of Mao's cultural revolution to become the business capital of China.

The legacy of the old can still be found in the fading glory of the Cathay Hotel, now known as the Peace Hotel, where Noel Coward wrote Brief Lives.

The new face of Shanghai is across the river at the Xin Zhong Hua factory, which has two contrasting product lines: refrigerators and space rockets.

It is just one of the Asian cities that, according to Garnet Harrison, of investment manager Newport Capital, is likely to eclipse London and New York as a centre of world trade and business during the next century.

"The figures speak for themselves," says Mr Harrison, as he reels off an impressive battery of statistics on the fast-growing economies of south- east Asia. "Economic growth and prosperity are driven by demographics. It doesn't matter how clever you are, or how much tradition and culture are on your side. If the numbers are against you, you lose.

"Start with this simple thought: 75 per cent of the world's population lives within four hours' flying time of Hong Kong or Shanghai."

Within any population, the most active economic group consists of men aged between 18 and 44. In western Europe today, that group numbers 69 million. By 2050 it will be down to 45 million. But in Asia, the figures are going in the opposite direction. In Indonesia, for example, the number will grow from 48 million today to 63 million over the same period.

Recently, the World Bank forecast that by the end of the century the Chinese economy would be bigger than western Europe and five years later would have overtaken the US.

Mr Harrison says faster growth has already prompted higher stock-market returns. Over the past 10 or 15 years stock markets in Europe and the US have given real returns (after inflation) averaging less than 10 per cent a year, compared with 15 per cent-plus from Hong Kong, Korea and Taiwan.

Newport, a London-based fund manager whose major shareholder is the $45bn (pounds 29bn) Liberty group of the US, specialises in the so-called Tiger economies of Asia, and Mr Harrison is convinced that these countries should feature in every investor's portfolio. He has strong words for those who see investing in the Tigers as a high-risk strategy.

"The problem is that the investment culture in the UK has become one of risk aversion. The investment market, which funded the growth of the world's great trading names, built railways across South America, and in fact financed the development of whole continents, has become frightened of anything beyond its own backyard."

Hong Kong accounts for a hefty slice of Newport's funds, and Mr Harrison shrugs off fears about the impact on business of next year's handover of the Crown Colony to Peking. "It is difficult for British investors to be objective about Hong Kong because they have a lot of emotional capital tied up in it," he says. "We take a more objective view, partly because of our American origins, and partly because of our close involvement in the region.

"The truth is that, in commercial terms, the two have already merged - and the marriage works. Hong Kong companies have invested heavily in the mainland and Chinese companies have invested equally heavily in Hong Kong."

But, Mr Harrison adds, Asian markets are known for their volatility. He emphasises that investment in the region must be for the long term. And the way in? That is through the range of unit and investment trusts specialising in the region and offered by most big-name London investment managers. Schroder and Flemings are two of the most well-known with reputations in Asian investment.

q For investors looking at Far Eastern markets, a useful starting place is "Asia's Investment Prophets" (pounds 20, Century Business Books) by Claire Barnes.

A Tale of Two Chinas

MORE cyclists are killed on China's roads than motorists - 372 last year in Shanghai alone - but the gap is narrowing fast since the number of cars in private ownership doubles every three years.

The Chinese economy is growing at 11 per cent annually. But GDP per head remains low, at about pounds 350. By contrast, economic growth in Taiwan, 100 miles offshore, is slower, at about 6.6 per cent, but GDP per head has already passed pounds 7,000. The "two Chinas" remain at loggerheads, but the government in Taipei is now trying to mend fences with Peking after harsh words earlier this year.

An upsurge of Western investment in the Taipei stock market is expected next year when the exchange introduces a late-afternoon trading session. Since there is an eight-hour time difference, this means that early-bird stockbrokers in London will be able to execute trades in Taipei before the market there closes.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?