This merger underscores what should be clear to most investors, and now must become embedded in investment strategy. Asia's importance becomes even more significant for portfolios as accessibility and credibility grow throughout the global investment community. What were once thought to be obscure companies in Asia, are now gaining more prominence as exchanges seek to tap into global capital while investors seek to ride the Asia growth story. What was once hidden is now becoming apparent. Who knows which is the next big companies or opportunities in the Asia Pacific region. Perhaps this is why Warren Buffet's Berkshire Hathaway invested in Chinese car maker, BYD Co. Ltd,; he realizes that global investing is the key to future success.
The same holds true for you as well as Buffet; understanding emerging economies is critical like never before. Developed economies have their place in portfolios; one should not underestimate the strength of the United States and European economies despite recent troubles. But it is clear as emerging markets continue to expand their presence and accessibility, investment strategies must reflect broad diversification by geography. The merger of two regional exchanges announced today underscores the emerging power of Asia in the global economic theatre. The Asian Development bank recently raised its forecast for the region’s growth to 8.2 % compared with a previous projection of 7.5% growth and maintained its 9.6% growth projection for China, the world’s second-largest economy. The ADB also revised upward growth forecasts for Hong Kong, Singapore and South Korea.
The last time I was in Singapore, it was clear to me that this is a country seeking to take a great leap forward by playing a key role in the growth of emerging Asia. In fact, CNBC Asia's new flagship studio in Singapore is located at the Singapore Stock Exchange. Perhaps this is just another indication that the region is looking towards the future and to compete successfully with other global exchanges. And today's merger adds to the theme; Asia's role in the next century of expansion will be a strong one and shows no signs of easing anytime soon.
Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). He oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. Michael and YCMNET were ranked as one of the top 100 investment advisors in the United States for 2009 and 2010 by Barrons. He appears regularly on CNBC and CNBC Asia and can be reached directly at firstname.lastname@example.org.