"Probably the Best Investment Opportunity..."
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In a recent interview, investing legend Jim Rogers stated that, "Probably the best investment opportunity in the world right now is Myanmar. In 1962, Myanmar was the richest country in Asia. They closed off in 1962, and now it's the poorest country in Asia. I see enormous opportunities there because they're now opening up. It's like when China opened up in 1978. There were unbelievable opportunities going forward. The same is true in Myanmar now in my view. North Korea, I expect to see the same sorts of developments."
While the financial markets have not developed publicly traded financial instruments for Myanmar companies, there are stocks that will benefit directly from the development of the Asian country of over 60 million people, also referred to as Burma. At present, these companies include Coca-Cola (NYSE: KO), PepsiCola (NYSE: PEP), ExxonMobil (NYSE: XOM), Volkswagen (NASDAQOTH: VLKAY) and Caterpillar (NYSE: CAT).
Each of these businesses has done very well in other countries in the early stages of economic growth, particularly China. The market in China is now one of the most important for Caterpillar and Volkswagen. Both PepsiCo and Coca-Cola have substantial operations in the People's Republic, both stand alone and though restaurant chains such as McDonald's, Taco Bell, Pizza Hut and KFC.
Both PepsiCola and Coca-Cola have each recently announced agreements to begin operations in Burma. Coca-Cola is now enjoyed by citizens of every country in the world, except Cuba and North Korea (if Rogers is right, that could be down to just one little, backward island nation off the coast of Florida). For PepsiCo, more than 200 countries and territories around the world feast on its beverages and snacks.
Burma is a land of tremendous oil and natural gas reserves. ExxonMobil, the largest oil company in the world, has recently visited the country, along with other Big Oil companies such as Chevron and ConocoPhillips. Rex Tillerson, the Chief Executive Officer of ExxonMobil, has commented favorably on the energy potential of Myanmar.
Like China, Myanmar will need to be developed. The biggest manufacturer of heavy machinery in the world is Caterpillar. The Big Cat has a huge presence in China. There is no doubt that China will be a major actor in Burma, as it is in every Asian nation. That will bode well for Caterpillar to profit from the building of a modern infrastructure of roads, power grids and buildings in Myanmar due to its established relationships with Beijing. Caterpillar already sells equipment in Myanmar through an independent deal. But now, according to company spokesman Jim Dugan, "The opening up of opportunities with the decision on sanctions is something that will allow us to have a more traditional relationship with the dealer there."
Not every vehicle moving in Burma will need to be an earth mover or tractor, however. Volkswagen, the largest seller of motor vehicles in the world, offers a compete array of cars and trucks to meet the needs of the drivers. Like Caterpillar, Volkswagen also has a formidable presence in China.
Obviously, these will not be the only companies to benefit from developing the economy of Burma. But these firms will be among the first to enter. There is certainly no rival to Coca-Cola or Pepsi Cola: the profit margins of each are testament to that. ExxonMobil, Caterpillar and Volkswagen did not reach the top position in each's industry from misreading the direction and the need of local markets around the world.
With about 60 million people, Burma will not be the next China or India in terms of global impact or redirection of corporate strategy for the decades ahead. But it is an important new emerging market. This growth in the emerging market consumer class now provides so much of the revenue growth today and for the future. Operations will obviously benefit Coca-Cola, PepsiCo, Volkswagen, Caterpillar and ExxonMobil or each would not be pursuing business in the country. As with all economic development around the world, the companies that get into Burma early and stay late will profit the most.
Fool blogger Jonathan Yates does not own any of the stocks mentioned in this article. The Motley Fool owns shares of The Coca-Cola Company, PepsiCo, and ExxonMobil. Motley Fool newsletter services recommend PepsiCo and The Coca-Cola Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.