Looking for the Next Hot Spot
Thursday, September 8th, 2005
By George Leong, B.Comm. for Profit Confidential
So what region in Asia do you think is the next hot area? China? Japan? If you that’s what you’re thinking, you may want to read ahead. A few weeks back, I talked about the rebound in the Nikkei 225 — Japan’s benchmark barometer of the 225 largest companies in Japan.
Japan has always been a region in the Asia Pacific where people have looked to invest capital, but, over the least two decades, it has been underperforming many other regions in Asia.
Now, some of you speculators are probably trading highflying Chinese stocks, but if you are thinking about trading the Shanghai Composite index, you should take a step back and rethink this risky strategy. If you want to trade Chinese stocks, I advise trading the Hang Seng Index.
That said, a region that is exploding but still unknown to many investors is South Korea. The country has become a key cog in the Asia Pacific wheel, trading along the lines of China and Japan.
Just go to any electronics store and take a glance at the next generation televisions and computer LCD monitors. You will find Korea-based Samsung Electronics Co. In the auto sector, a Korean company that is quickly becoming mainstream in North America is Hyundai Motor Co.
The key Korea Composite Stock Price Index is up 28% this year and is currently trading at its highest level since November 1994. The price trend is positive as the index is trading at well above its 200-day moving average, which it broke above in mid-2003. As far as the short-term outlook, the index is also trading above its 20-day and 50-day moving averages.
Going forward, I believe the Asia Pacific region continues to offer excellent investing opportunities for investors looking to diversify outside of the United States. Never mind Japan and China, the place to be is South Korea, up 28% this year, versus a 1% rise in the S&P 500.
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Tags: china, China's Growth, chinese stocks
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George is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. His trading advice on stocks and options is also found on his daily trading site, Daily Profits. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services.



