As European markets continue to fall... Asia is bracing itself for a tidal wave of investment.
The higher oil goes... the more money Opec makes... the more ‘petrodollars’ they have to invest.
And they’re moving their money East.
Right now, two plucky little companies are standing at the forefront to take the brunt.
I’d like to show you how to position yourself to potentially profit from it.
First, here’s the background...
Why the money is moving to Asia
Despite gloomy predictions of an economic slowdown in the West, the emerging markets are continuing their path of growth – and that’s fuelling demand for oil.
China leads the charge – they’ve just released trade figures showing crude oil imports rose above 4 million barrels a day in March – up 25% compared with the same period last year.
But as demand continues to spike, supply is still falling... and I can’t see this dynamic changing any time soon...
You see, while Opec ministers assure the world they’re keeping oil output steady, they’ve actually been cutting production on the quiet, keeping prices high, despite calls from the U.S. and Europe to increase production.
On Friday the International Energy Agency issued its monthly report showing oil production in the cartel’s core members fell to 27.3 million barrels per day last month - that’s half a million barrels fewer available each day than the 27.8million barrels per day that they were producing in January.
Understandably, it’s been bothering Western leaders…
On the eve of Opec’s meeting in Vienna last month, President George Bush publicly accused the cartel of worsening the U.S. economic slowdown by keeping oil prices at record highs.
“No question the high price of gasoline has hurt economic growth here,” Bush declared, warning Opec that it was a “mistake to have its biggest customer's economy slow down... as a result of high energy prices”.
But the Arabs weren’t really impressed by Bush’s whining. Clearly, they don’t see bailing the U.S. out from the consequences of its own excesses as part of their job description.
Opec president Chakib Khelil’s response to Bush was about as close to a put-down as you could get. He announced that no cartel member had raised the prospect of increasing production and that even if ministers left production levels unchanged, a reduction was still possible in the next few months. “Cutting may not be easy, or appear to be the right thing to do” he declared, “but for the medium term it may be the right thing to do”.
Well, we’ve seen Opec cut production since then, and that matters because rising energy prices are adding to inflationary pressure which makes it harder for central banks to cut interest rates to stimulate their own faltering economies.
So here’s a simple fact: the global oil producers aren’t interested in bailing-out the West...
They’re going to ride this energy boom for every debased dollar that it is worth...
And as those petrodollars continue to pile-up, we’re seeing more evidence that a large part of that new money is going to flow into emerging markets investments.
I believe now is the time to position yourself to take advantage.
Two ‘tidal wave’ stocks to buy now
Global consultancy McKinsey estimates that even if oil prices fall to $50 per barrel, the oil-exporting countries would still invest some $387 billion a year abroad through 2012 — an influx of more than $1 billion of capital a day into global financial markets. They estimate that if oil prices remain at $70 per barrel over the period, foreign assets purchased with petrodollars would grow to $6.9 trillion by 2012.
That would mean an infusion of almost $2 billion a day into global financial markets.
But if oil stays at over $100 a barrel between now and 2012 – as I think it will - those figures will look like a joke.
What we’re seeing now is quite probably the greatest transfer of wealth in history – a global realignment of financial power. Positioning our portfolio to profit from this tidal wave of petrodollars should be a key element of your investment strategy going forward.
Here at Profit Hunter, we’ve nailed our colours firmly to the mast on $100 oil. Now the markets seem to be catching-up...
On the 6th of March, oil futures for 2016, the longest-dated contract for US crude, rose above $100 for the first time, underscoring the belief among investors that the recent record prices are here to stay.
This weekend, representatives of the oil producing and consuming countries will gather in Rome for a conference to discuss the global economy and energy situation. The consumers will probably gnash their teeth over Opec’s oil cuts, but I doubt the cartel is going to back down.
For a taste of what is to come, just listen to Saudi Arabia’s energy minister, Ali Naimi – right now, with his hand on the Saudi oil tap, he probably wields as much influence over the global economy as Ben Bernanke does at the Federal Reserve. Last week Naimi said “I am not going to pull back. I’m not going to dump crude on the market.”
What this means is that we are going to see a rapid acceleration in the transfer of wealth to the Middle East.
My Profit Hunter subscribers already hold two investments, which should be big beneficiaries of this. Both plays are still under their ‘buy limits’. One I expect to be the primary vehicle for rich Persian Gulf investors to invest in international markets.
The other, you can read more about by clicking here.
You can get all the details of both if you’d like to take a trial subscription to my service. If you don’t think it’s for you, simply cancel within three months, no questions asked. These investment ideas are yours to keep no matter what you decide.
But mark my words: We’re about to see a fresh tide of money pour into emerging Asia. And it’s one you won’t want to miss.
Regards,
Manraaj Singh
Editor Profit Hunter
