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
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm today
News
people
Arts and Entertainment
Bianca Miller and Katie Bulmer-Cooke are scrutinised by Lord Sugar's aide Nick Hewer on The Apprentice final
tvBut Bianca Miller has taken on board his comments over pricing
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
PROMOTED VIDEO
News
Elton John and David Furnish exchange marriage vows
peopleSinger posts pictures of nuptials throughout the day
News
in picturesWounded and mangy husky puppy rescued from dump
News
newsAstonishing moment a kangaroo takes down a drone
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

SThree: Graduate Recruitment Consultant

£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'