A New Opportunity for Offshore Investments

Could China's Silk Road be your next offshore investment?

The last time I gave any serious thought to Minsk was back in the mid-‘90s, when an episode of Seinfeld made reference to the city in a faux movie Rochelle, Rochelle, with the tagline, “A young girl’s erotic journey from Milan to Minsk.”

For the record, Minsk is the capital of Belarus, once a former Soviet state, now a seemingly overlooked piece of the dismantled Soviet empire wedged between Russia, Poland, Ukraine and the Baltic states.

It stands out for no significant reason these days other than one small fact: China is spending close to $16 billion there.

That speaks to the very reason I am a fan of European offshore investments today, and why my Sovereign Investor monthly newsletter readers are already up nearly 35% in just six months on a stock that is benefiting from the trend that China’s $16 billion outlay represents.

China is spending big in Belarus — 20% of the Eastern European country’s entire annual GDP — because it envisions Belarus as a key hub for the New Silk Road that China is in the process of rebuilding.

Silk Road 2.0, as I termed it in a report to my subscribers last year, defines what will emerge as the most significant trade route in the world over the next decade or two — a transcontinental link that reconnects the heart of China with the heart of Europe, just as the old Silk Road did centuries before the U.S. even existed.

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In the new iteration, China is taking over as the world’s dominant merchant and buyer.

In doing so, it is redrawing trade routes that it sees as most beneficial to its needs. In that, America is a decided loser.

That’s not saying the West — i.e., America — is dead. We will always play a role in global trade. But American politicians and economists are underestimating the tidal shift that’s now rolling over the world.

The Silk Road 2.0 is just one (monumentally large) example of it. China has also begun the Asia Infrastructure Investment Bank that has pulled in a host of U.S. allies as founding members. And it’s a founding member of a new version of the International Monetary Fund that will serve emerging nations absent the often-unwanted influence exerted by America. (It’s all a well-constructed effort by China to push back against the U.S. in Asia).

Countries and leaderships from southern Africa to northern Europe to the Levant — many already annoyed at Washington’s continual meddling and strong-arm tactics — are turning to face the East. Companies in those economies see nearly 2 billion largely untapped consumers from Central Asia to India, China and Southeast Asia, who are coming into their own wealth.

And they all want a piece of that explosive growth, since the Western consumer base, at just shy of 1 billion people, is about as large as it will ever be. The emerging economies still have decades of expansion in front of them.

China sees this, too, and wants to build the bridge that brings it all together, since Chinese manufacturers benefit — particularly those in interior cities where China is now pushing for economic growth to match the growth seen on the Eastern coast from Beijing to Shanghai to Guangzhou.

Thus it is that China is making it rain renminbi in Belarus.

Opportunity on the Silk Road

Consider for a moment the longest train route in the world — a run of more than 6,200 miles, unbroken, that begins on China’s eastern coast, just south of Shanghai, and ends … in Madrid, Spain.

Along with Kazakhstan, Russia, Poland, Germany and France, the route cuts through the heart of Belarus on its three-week journey.

This is the future.

This is the reason I’ve put my Sovereign Investor newsletter readers into a European retailer (up about 35% in about six months) that is now expanding all along the new Silk Road … and why my Profit Seeker readers are in a European telecom (up 25% in eight months) following the same strategy. Both companies realize the West had its day in the sun, and that a new day is already dawning in the East.

You don’t have to have all your offshore investments focused on China or Asia or even the Silk Road.

But to have none of your offshore investments exposed to one of the greatest trade trends in modern history will prove to be the kind of mistake that, 10 or 20 years from now, you’ll wish you hadn’t made.

There are scores of ways to play this trend — from Chinese rail companies to European retailers and infrastructure-development firms.

Oh, and don’t overlook the seas. As with the ancient Silk Road, the new version also has a component that will see ocean-going traffic ramp higher between Asia and Europe — and I have a great way to play that, too, through a Chinese port company listed in Hong Kong.

Like I said, the new Silk Road — and offshore investments — are the future. It’s up to you to be a part of it.

Until next time, stay Sovereign…

Jeff D. Opdyke
Editor, Profit Seeker