The Georgian - Russian Conflict Opens Up an Investment Opportunity

Last Saturday Russian tanks rolled across the border into Georgia…

Its planes have bombed strategic targets across the tiny Caucasian country…

Panicky investors have dumped the shares of Georgian companies…

Most investors have been fleeing. But we’ve spotted a remarkable investment opportunity…

It’s a small Georgian company that is growing at phenomenal rate. And it has hardly been affected by this conflict.

It has the all the prospects of a fantastic growth company. But the recent conflict with Russia has driven down its price to the point where we see it as a value play as well.

Investing in this company now could give us a 139% profit on this share.

Best of all, you can buy into it while keeping your money right here in London.

But you need to act quickly in order to maximise your profits.

With the Russians having declared an end to military operations, I believe that the time to get in is now.

Ignore the media hype: Georgia is a great investment

Investors have dumped this share. And you can understand why. All you have to do is switch on your television or read the headlines. Things look pretty grim for Georgia.

But you should ignore the media headlines. Because they aren’t giving you a clear picture of what is really happening.

This conflict didn’t happen out of the blue. Tension between Georgia and Russia has been growing. I even mentioned it in a previous issue of Profit Hunter.

The Kremlin had repeatedly warned that it would fight if Georgia invaded South Ossetia. Georgia and its Western friends thought that Russia was bluffing. It wasn’t.

And that’s what you really have to grasp. The Russians haven’t started a war of aggression or conquest. They’re defending their strategic interests.

The Russians want to preserve the status quo. It works in their favour.

So ignore the hysterical rhetoric from Georgia’s leaders. This country isn’t about to be obliterated or bombed back to the Stone Age. This is a small territorial skirmish. And it is being blown out of proportion by the Western media.

It gives them something more exciting to report on than Michael Phelps’ medal tally.

What this conflict is really about

To understand what’s really going on here, we have to go back almost a century.

Georgia declared independence from Russia twice in the last century. On both occasions, that led the Ossetians to revolt against Georgian rule. They first rose up in 1918. And they rebelled again after the collapse of the Soviet Union.

The majority of South Ossetians look to Russia rather than Georgia. They hold Russian passports and they use Russian banknotes. And they want to unite with Russian North Ossetia. But the Georgians consider South Ossetia a legal part of their national territory. So they refuse to accept this.

Russian troops have maintained a cease-fire between Georgia and the rebellious region since 1992. They guaranteed the region’s de facto independence.

So, when the Georgian government sent in troops to retake South Ossetia at the start of this month, the Russians responded exactly like they had said they would. They struck back hard.

This isn’t an international crisis. It’s a local scuffle.

But Western politicians are getting very nervous. Because Georgia is a crucial link between the Western countries and the vast energy resources of Central Asia.

In fact, Georgia is so important to their energy strategy that the Americans proposed admitting them to NATO membership in April.

That might have been a costly mistake. Because that sense of security seems to have inspired the Georgian president to gamble on retaking Ossetia without Russian opposition.

Why you should invest in Georgia

Georgia rarely got a mention in the press before this conflict broke out. But it’s been one of the hottest growth stories over the last five years.

The country declared independence from the Soviet Union in April 1991. From 1995 to 2003, Georgia was led by the former Soviet Foreign Minister, Eduard Shevardnadze as President. He introduced democratic reforms. But he failed to tackle widespread corruption.

In November 2003, he was replaced by the U.S.-educated current president, Mikheil Saakashvili at the head of a coalition of reformers and democrats. Under him, Georgia has made huge strides in tackling corruption. Large swathes of the economy have been privatised. And he has taken a strong pro-Western stance.

The reforms have had a huge impact.

The economy grew by 12.4% in real terms last year. And it is expected to grow by 9% cent this year and next. The average Georgian had an annual income of just $686 at the start of the decade. That could reach $3120 by the end of this year. People in this tiny country are getting richer very, very fast.

And foreign investment has been pouring in. The country received $1.4 billion in foreign direct investment last year. That was 30% higher than the $1.1 billion the year before.

Georgia’s business-friendly, pro-Western stance has made it a darling among international investors. In April, the government carried out a $500 million Eurobond issue with a five year maturity. There was so much demand for this country’s debt that the issue was three times over-subscribed.

And the World Bank ranked Georgia as the 18th globally for “ease of doing business” this year. That puts it ahead of countries like Belgium, Germany and The Netherlands.

Agriculture is still a big part of Georgia's economy. But there is also a robust mining sector that exploits the country’s manganese and copper deposits. And the country has a small but vibrant manufacturing sector. It produces metals, machinery, aircraft, chemicals and alcoholic and non-alcoholic beverages.

But the country’s economic importance goes well beyond that.

Georgia is the gateway to Central Asia’s riches

You see Georgia’s biggest economic asset is its strategic location between Europe and Central Asia. That makes it a vital link in the “New Silk Road”. This is the emerging overland trade and transport network that links Central and East Asia with Europe.

By 2011, it will be possible to travel from London to Shanghai by train. And a key segment of the trans-Eurasian railway will run through Georgia.

This is a huge story…

The railways already carry a huge amount of trade between Asia and Europe. About $75 billion worth of goods each year. But the volume of goods and passengers carried could soar once the new rail network is completed.

Because the new railway will open direct access for the Central Asian countries to European Union territory for the first time. And they plan a massive increase in commodity exports to Europe, including grains.

Georgia is also a critical part of America’s strategy of gaining access to Central Asia’s oil and gas resources while bypassing Russia and Iran. Two separate pipelines now run from the neighbouring energy-rich country of Azerbaijan, across Georgia and into eastern Turkey. One carries oil and the other gas. And from there, it flows onwards to Europe and the US.

And then there is Kazakhstan. About a tenth of its oil exports now flow through the Georgian Black Sea port of Batumi. Russia currently transports about 80% of Kazakhstan’s oil through its pipeline network. And the Kazakhs want to break that dependence. The Georgian port is central to that aim.

In fact, Kazakhstan’s national oil company, KazMunaiGas acquired the companies that manage Batumi Sea Port and its oil terminals in February this year. The Central Asian giant has made a clear long-term commitment to Georgia. The port already employs about 2000 people. And transporting Kazakh oil and gas across Georgia is predicted to create a further 20,000 jobs along the transport routes.

Georgia’s strategic location has made it a transit hub for the region’s gas, oil and other goods. And this little country’s economy is closely tied to the Western countries’ plans to tap Central Asia’s vast natural resources.

This close alliance between Georgia and the West has helped stoke tensions with the regional giant, Russia. But the recent conflict with Russia isn’t going to undermine Georgia’s growth story.

The country has huge strategic value to the West. Georgia is America’s key ally in the Caucasus. So we are betting that it will receive huge amounts of aid to speed its recovery.

The combination of economic reforms, strategic location and strong backing from the West looks likely to keep Georgia’s economic boom going well into the next decade.

The Georgian Financial Industry offers huge opportunities

Finance is the lifeblood of any economy. And the share that I am recommending operates in Georgia’s financial sector. Its share price has taken a plunge since Russia invaded. So it’s a fantastic value investment. But you’ve got to look at Georgia’s financial industry to see why it has such fantastic growth prospects as well.

You see, despite the economic boom of the last five years, Georgia’s banking sector is still tiny. The country now has 22 banks. And they have all been privately owned since the government began economic reforms in 1995.

The scope for growth in the country’s banking industry is enormous.

Let’s just look at some of the figures…

At the end of 2007, the ratio of banking assets to GDP in Georgia was just 43%. It was 50% in Russia and 75.7% in Ukraine. But that figure was 90% to 100% in Hungary, the Czech Republic and Slovakia.

All these countries have seen similar transitions. They have moved from state-run to market-driven economies. We expect that Georgia will follow the same trend. Which means massive growth in the banking sector.

Georgians are getting richer very fast. But the banks still haven’t fully tapped this opportunity.

Georgia had one of the lowest percentages of retail loans to GDP in 2007. It stood at just 5% of GDP. The average for its Central and Eastern European country peers was 15-20%. The country’s banking industry would have to triple in size just to catch-up with the regional average.

And that could just be the beginning. Because in developed markets the figure was over 60%.

Of course, Georgia still has a long way to go before it catches-up. But that is why this is such an exciting opportunity. Because this story still has a long, long way to run…

Here is a figure that may really bring home how much scope for development there still is in the banking industry. The number of outstanding mortgages in Georgia currently stands at just about 10,000! And that’s out of a population of 4.6 million.

And the country has one of the lowest figures for consumer debt per capita – only US$215. The scope for growth here is huge. And so is the profit potential for the company I’m recommending… and for those smart enough to invest in it.

Get into this share now

The conflict with Russia has scared investors off for the time being. But I believe that as the dust settles, investors will begin to value the company based on its incredible growth story. Getting in right now leaves you well-placed to ride the bounce in its share price as investors buy back in.

I have sent my readers a detailed report on this remarkable company. But the price has not started moving yet. I believe it’s only a matter of time before the smart money starts piling in and driving the price up. I recommend that you buy into this company as soon as you can to ride the rebound in its share price.

This is actually our second bite of the cherry. Profit Hunter readers invested in this company in January last year. And we closed out our position with a very healthy gain in ten months. And that was despite the sharp fall in global stock markets!

Since then, the company’s shares have seen a sharp slide – in line with general global stock market weakness. But there really isn’t anything wrong with this company. It has delivered stellar financial results.

This company has been riding Georgia’s economic boom to the bank. It more than doubled in size last year. And its profits were up by 203%!

However, as markets tanked around the world, investors stayed out of its shares.

But this company has remained on the Profit Hunter investment watch-list. And now we have a great opportunity to get in.

It already looked like a good investment before the conflict with Russia began last Thursday. It looks even better now.

You could double your money on this investment

You see, the start of the conflict sent its shares crashing by 23% on Friday. By buying in on this weakness now, I expect investors to make a 139% profit on this share.

But that is a conservative figure compared to what some international analysts are saying. If the share hits their target, we could make 213% - that’s a tripling of your money.

But you have to act now

But to have any chance of doing that, you have to act now. Because once the dust settles on the Georgian crisis, I expect international investors to come storming back in.

Click the link to download your report on this incredible investment opportunity right now and get in ahead of the crowd.

Please Note: This promotion contains forecasts. Forecasts are not a reliable indicator of future results.

P.S. If you enjoyed this article then we encourage you to sign up for Profit Hunter. Track down exciting opportunities in the worlds’ emerging markets and always stay ahead of the curve.

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The Georgian - Russian Conflict Opens Up an Investment Opportunity

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