Investment opportunities to consider in 2012

By Pauline Chiou ,Special to The China Post

When you ask investors where the smart money is going in 2012, it’s no surprise “Asia” is the word you here in their first breath. Peel back the layers and you get different reasons: China, urbanization, emerging market potential. At the recent Asian Financial Forum in Hong Kong, a panelist of experts talked about where they believe the best opportunities lie. Rona Yircali of the World Chambers Federation — an organization of chambers of commerce — has been studying the urbanization trend. Yircali predicts 67 percent of global growth will be created in emerging markets by 2015. “Urbanization is very important in this (financial) crisis,” he said. “In 2008, the urban population was 50 percent of the global population.

Today in emerging market economies, there are 717 cities with a population of more than half a million. By 2030, there will be another 371 cities that will reach this size. By comparison, there are only 240 cities of this size in the developed world.” Case in point: China. The Chinese government says more than half of its population now lives in cities rather than rural areas. A first in the country’s history. Urbanization requires infrastructure building. That’s where John Rice, president of GE Global Growth & Operations, narrows his focus. He visits between 30 to 40 countries a year scouting out investment opportunities. “We have to look at the business … like aviation vs. energy vs. health care in a region. We find a lot to like about Southeast Asia. We think those economies will continue to grow. There’s a lot of interest in building out the infrastructure.” China is the big player in infrastructure investment even though Beijing is trying to gradually slow down its growth in a controlled fashion. With China’s growth goal set at around 8 percent, there are plenty of opportunities for different sectors. HSBC Group Chairman Douglas Flint says part of the attraction to China is that Beijing does what it says. The central government follows through on its stated plans. “They have a financial system which has the capacity to expand credit supply. There’s a tremendous amount that can be done,” Flint told the audience. “There’s been a lot of tightening over the last two years in terms of taking money out of the system to deal with inflation and bubbles in the property market. But unlike the Western financial system, there’s an underlent financial market where there’s credit capacity available if it can be released and it’s beginning to be released again. So I think China has many of the monetary tools available to support investments in its own economy.”