Most of the time, backdoor plays offer the largest profits in growth industries like this one. Sometimes, however, a straightforward approach is your best chance at the quickest gains. This is one of those times.

Take China Mobile (NYSE:CHL), for instance. This telecom behemoth is the most obvious play in the region. In the last three years, the company doubled the number of subscribers and grew its bottom line 107%. That’s a rare feat for a $230 billion company.

China Mobile’s growth is impressive, but it’s nothing compared with what a small-cap player can do in this field. And with the telecom industry in Asia predicted to almost double by 2013, there’s plenty of room for other players to grow too.

That’s why we’ve been looking for under-the-radar Internet providers in Asia. And we just we found the only place worth looking at…

The Forgotten Power in Asia: Investing in Hong Kong

Most people think of China, India and Japan when you bring up Asia. The place most often left out of the conversation is Hong Kong — a Chinese territory that in 1997 ended 156 years of British rule.

Other than the small island nation of Brunei, Hong Kong has the largest GDP per capita in the entire region. In fact, the small territory is No. 14 in the whole world, and it’s only four spots behind the U.S.

Most are writing Hong Kong off these days, however. With the recent global financial collapse, Hong Kong’s large financial services industry was slaughtered. Even so, the world can’t just forget about this tiny-but-affluent region.

The Hong Kong Stock Exchange, for instance, is host to companies worth a total $2.7 trillion. That’s 10 times larger than the American Stock Exchange!

Another surprising tidbit about Hong Kong is the resilience of its tourism industry. While nearly every country in the world saw a decline in number of tourists, as well as income from its tourism industry, Hong Kong actually saw its tourism grow. Last year, the number of visitors to Hong Kong grew 5%, and average spending per overnight visitor grew 6.2%.

Needless to say, this is an overlooked region, but it shouldn’t be. Hong Kong is very capable of producing winners.

Right now, there is a small handful of exciting Hong Kong telecom plays that are worth looking at, but unfortunately, at this stage, it’s a case of look but don’t touch. Many of them are too speculative to mention here right now.

Watch the region — we’ll let you know when that changes.

Sincerely,
Jim Nelson

Source: How to Profit from the Asian Internet Boom

Overnight, gold has continued upward.

Platinum took off in Europe and never quit, rising steadily to end barely off its intraday high at $2021/oz., up $60. Overnight, platinum is sharply higher.

Silver was up sharply following its bottom below $16.50 in Hong Kong, moving steadily higher and easing only in the afternoon to close at $16.80, up 20 cents. Overnight, silver is trending higher.
(Click here for charts)

It was a welcome day for metals fanciers, as the objects of their affection fought off the negative effects of a strengthening dollar and rode the rising oil tide higher.

Despite recent dollar strength, “I am seeing [it] catch a new wave of selling, which [will] push gold higher,” said Zachary Oxman, of Wisdom Financial. “I also think we can’t discount the strong moves in crude and their staying power so far.”

Indeed, the oil bull run has persisted in the face of deteriorating fundamentals, and the longer it continues, the higher it will push inflation. Which, needless to say, is gold-positive.

The oil moon shot has another effect, as well. “Gold is undervalued,” said Nick Ruggiero, a trader at Eagle Futures in New York, in that it “is cheaper to buy than crude right now.”

Also, despite some early returns that were downbeat, the “Akshaya Tritiya celebration in India should see physical buying and provide background support,” wrote James Moore, of TheBullionDesk.com.

However, Moore doesn’t believe it’s time to break out the noisemakers as yet. From a technical viewpoint, he says, gold appears to be capped by a downtrend-line resistance around $879.50, which is preventing the metal from making a move to retake the $900/ounce level. Since gold did break through that resistance level yesterday, then presumably we’re on our way to $900.

Meanwhile, streetTRACKS Gold Trust backed yesterday’s action by elevating the amount of bullion it holds in its vaults by 1%. The fund was forced to sell 9.6% of its stockpile in April.

A final word from steadfast gold pessimist Dennis Gartman, editor of the Gartman Letter. He asks what will happen to gold “when crude oil does eventually top out and head lower?” And answers the question by saying, “The trend for gold remains down.”

I am racking up the frequent flyer miles this year. My travels in 2008 have taken me to exotic locales like Singapore, Hong Kong and Dubai, as well as somewhat less exotic locales like the American Midwest. But guess what, the Midwest is the place that’s making the headlines in Singapore, Hong Kong and Dubai. The soaring price of agricultural commodities like wheat, corn and soybeans is one of the biggest news stories on the planet right now.

But ag commodities aren’t just a huge news story, they are also one of the most exciting trading opportunities of 2008 and beyond.

Whether my travels take me to the Middle East or the Midwest of the U.S., the stories are very similar. Most people are concerned about the rising costs of agricultural commodities. And they should be. The commodity boom is real. It is not a bubble, no matter how many folks wish that it were.

In fact, now you have all of these dollar bulls coming out and saying that the worst is over for the dollar and that the commodity bubble will soon burst. They say that the commodities markets are simply speculator-driven. I disagree. Do you remember as a child wishing for something, wishing so hard, yet it didn’t come true? Wishing for something to happen does not mean it will be so. (I never did get that red bike.)

The dollar will probably bounce a little higher, but the same problems that drove the dollar into the basement will persist, and even worsen. The Fed can’t just snap its fingers and wipe away a credit crisis with some stimulus checks. Too many folks are subscribing to the idea that the consumer will somehow come to the rescue and spend our way out of recession. That’s pure fantasy.

The hope that the commodity bubble will burst is also a fantasy. The fact of the matter is that we are in a new paradigm for commodities and the old-school thinking about how commodities used to be traded has to be changed. And this is true of most commodities – none more so than the agricultural ones. Sure, speculation is a part of this puzzle, but to say it’s all speculators and hedge funds that are causing the run-up is a sad mistake.

As I sit here writing this column, I am watching CNN out of the corner of my eye, and on the air is Jonathan Stevens, a baker from a Massachusetts company called Hungry Ghost Bread. He is starting to grow his own wheat and encouraging his customers to do the same. Not a bad idea. For a 50-pound bag of organic flour, he used to pay $25, but now pays around $60. So in back of the store, the bakers are now growing their own wheat. Now, while farming in your backyard may not seem very practical, it’s becoming part of a new reality: If you want to be sure you have the food you need – absolutely sure – you’ll want to grow it where you live.

Most of the world’s inhabitants already understand this essential reality. America’s are just starting to re-discover it. In fact, we’ve even made up a new word to describe this ancient necessity of growing food where you live. The word is “locavore” and it means someone who eats food grown locally. Wow! Very trendy!

Demand for ag commodities is real and it is worldwide. Meanwhile, supplies are stretched thin. So any “supply shock” has the potential to cause prices to soar even higher. A new supply shock might be developing right under our noses. The planting season here in the U.S. is getting off to a very bad start, as the weather has been awful. Torrential rains have flooded many fields, making planting impossible. The U.S. Department of Agriculture reports that only 10% of the corn crop west of the Mississippi has been planted, compared to a five-year average of 35% for this time of year.

Plantings for soybeans, spring-wheat and rice are also trailing behind their five-year averages.

Therefore, this year’s corn crop could be extremely disappointing. Some of the other crops might also disappoint. In my trading service, Resource Trader Alert , we are betting on much higher prices in soybeans and corn, and we are using option spreads to take advantage of this.

My annual meetings with Midwest farmers are always helpful. But my recent meetings with farmers in Minnesota were particularly helpful. Not only did I gain some insights about this year’s crops, I also learned a great deal about the soaring prices of fertilizers and other farming “inputs.” The long and short of it is that input costs are rising about as fast as commodity prices. So many farmers are getting squeezed.

And these rising input costs are here to stay, which probably means that rising grain prices are also here to stay. Yes, prices will fluctuate dramatically. But the bull market in agricultural commodities is very, very real.

Why deny it? Why not trade it?

Regards,

Kevin Kerr
for The Daily Reckoning

From November through March U.S. stocks (and most global equity markets) suffered a string of five-straight monthly declines. That’s a very rare occurrence that has only happened on a handful of occasions in the past 40 years.

Sure enough, April saw a sharp reversal of the five-month downtrend. The Dow Jones Industrial Average had fallen over 11% at the March low. But the Dow got up off the mat in April and rose 4.5%. The Dow wasn’t alone. In fact, international stock markets pulled off much more dramatic reversals.

Japan is perhaps the most striking turnaround. I’ve been bullish on Japan since last year… and had been proven way too early through March. But Japan rallied strongly last month – soaring 11% in April alone – it’s biggest single-month gain since 1995! In spite of this rally, Japan remains one of the world’s most undervalued major markets, but now it looks like global investors are catching on.

Hong Kong, another one of my favorite overseas markets, also pulled off a major turnaround in April. After dropping -18% in the first quarter of 2008, the Hang Seng Index jumped 13% last month.

Taiwan, another favorite, rose 4% in April. Mainland China bounced back too – 6.3% last month. But Shanghai shares still have lots of “heavy lifting” ahead -they’re still down 30% year to date.

Perhaps the biggest surprise was commodities. Gold and crude oil rallied pretty much in tandem through the end of 2007 and early 2008. Oil was up another 12% in April – adding to gains of nearly 20% year to date.

The yellow metal however declined nearly 6% last month. That’s gold’s second consecutive monthly decline – perhaps this precious metal will go for five in a row too!

Of course last month’s market action could prove very fleeting indeed. And I doubt that the ultimate “bottom” of this bear market has yet been reached. However, with such broad-based strength in equity markets around the world, we may be in for a decent rally that has some legs.

On Wednesday, the Fed cut rates again as I expected to 2%. The financial media seems convinced that the Fed intends to “pause” sometime soon. That has helped the beleaguered U.S. dollar (talk about a bear market!) to stabilize somewhat.

If the buck can stage a more convincing reversal of fortune at this point, I would expect commodities to correct further, while global stocks (particularly emerging markets) should continue to get a boost. Stay tuned…MIKE BURNICK, Senior Editor & Global Markets Analyst

Platinum plunged in early Hong Kong trading and, although it was mostly up from there, it failed to escape the red, ending at $1973/oz., down $35. Overnight, platinum is sharply higher.

Silver pretty much mirrored gold, bouncing off a $17.30 low to regain positive territory around noon, only to give it back in the afternoon as it closed at $17.71, down 3 cents. Overnight, silver is trending higher.
(Click here for charts)

A second lackluster day in a row had to be a very disappointing one for gold bulls, especially given that the usual suspects—a dollar that weakened through the session, and rising oil—had both lined up in the metal’s favor.

The Hightower Report pretty well nailed the day’s action, writing that: “The gold market waffled around both sides of unchanged on Monday, with the initial scheduled reports prompting a decline in gold prices in the wake of a fleeting bounce in the Dollar. However, the gold market quickly shrugged off the post report reaction in the Dollar and instead seemed to gain favor in the wake of a recovery in oil prices. In fact, the action Monday highlighted the gold market’s recent tight correlation with the energy complex. In the end, seeing a slightly weaker US Dollar and a better than expected US retail sales report was the ‘best of two world’s’ for the gold bulls.”

But there are signs that gold may be preparing for an up move.

“Gold is forming a nice base here,” said Walter Otstott, of Dallas Commodity Co. “The dollar fell apart, and gold is coming back.”

The G7 meeting, held in Washington over the weekend, also factored in.

“Gold is stronger as the dollar has weakened, despite leaders of the G7 and IMF governing council saying they would do all in their powers to provide market stability,” wrote Mark O’Byrne, of Gold and Silver Investments Ltd.

“Continuing worries about the health of the international financial sector has led to declines in stock markets internationally and renewed risk aversion,” which will likely lead to a flight to quality, O’Byrne added.

Short term, “gold seems set to spend more time consolidating in its current range as cash generating liquidation caps the metal, while strong support is found back towards $900 an ounce,” wrote James Moore, of TheBullionDesk.com.

There was more volume on the Comex on Wednesday than there had been in a while, but still nothing major. It’s interesting to note that the price rallies in both metals appeared to have been capped before the 50-day and 20-day moving averages were violated to the up-side. As I mentioned earlier this week, these are the magic moving averages that the tech funds like to use as long-side buy signals.

We also had a key reversal day to the up-side in both metals. The boys have never allowed this technical indicator to stand….squashing the price of both metals during the following trading session. Let’s see if that happens again this time. If it doesn’t, and prices continue to rise, then the tech funds will certainly show up…and the trading day could get real interesting.

As far as Tuesday’s open interest numbers, gold was up a scant 534 contracts and silver o.i. fell 761 contracts…both on very low volume. With more activity on yesterday’s strong rise in both metals, it’s pretty much a given that both o.i. numbers for Wednesday will be positive…and much larger. I’m sure there was a tech fund or two on the prowl yesterday as well.

A couple of stories today. During the last week, rice has been in the news a lot, and I have a bunch of them in my in-box. Seems like the price of rice have been climbing quite a bit…to the point where riots and strikes are breaking out in some third-world countries. Governments are becoming concerned…and some are taking action. Here’s a story out of London’s Financial Times entitled “Rice jumps as Africa joins race for supplies.” Click here.

The main feature is commentary from Michael Kosares over at usagold.com. MK puts a very positive spin on gold’s future. I’m sure his comments would encompass silver was well. The essay is entitled “Golden Gut Check” and it’s linked here.

Today should be another interesting day. Equities should continue to levitate. Now that the PPT is stalking the land, it’s hard to know what’s real and not real, as they’ve done everything in their power to thwart the pricing mechanism of our supposedly free markets. But they can’t do it forever.

Anyway, if you’re like me, you probably have some sort of music playing in the background at points during the day.  For me, in the office, XM Radio’s Deep Tracks (I am still a Deadhead) or Bluesville are always on, 7 a.m. to eight at night.

Usually, the music stays in the background.  But there are stopping points.  Pieces that just sneak through.  Any of the three Kings – Albert, B.B., or Freddie – always makes me pause.

You guitar players will instantly know why.  Worshipping at the Alter of the Three Kings is one of the fastest ways to guitar-chop Nirvana.  And if I listened to more country music, Vince Gill would have the same effect on me.  I’ve always wondered if country fans recognize what a total freekin’ monster he is on guitar.

Now lyrics don’t generally give me pause.  But Angel from Montgomery always makes me stop – whether it’s John Prine’s version or Bonnie Raitt’s.

Prine’s song is perfect … not a wasted word… every image stunning.

The chorus is:

Make me an angel that flies from Montgomery
Make me a poster of an old rodeo
Just give me one thing that I can hold on to
To believe in this living is just a hard way to go.

I just heard Bonnie Raitt’s version on Deep Tracks and it got me thinking.

Investor’s Daily Edge is a great two-way street.  Who else makes it so easy for you to respond?

So here’s your weekend challenge.  It’s an easy one.  Think about it for a minute (or come back later tonight if you need to get in the “mood’), and use the response button down at the bottom here and send me your favorite song, or lyrics, or even symphonic movement.

All genres welcome … even Klezmer, which sometimes I “get” and sometimes not.

Add your first name and town or city and I’ll publish your favorite next Tuesday.  Don’t add your name and town and I’ll publish your favorite anyway.

And if you want, you can go ahead and tell us why the music is important to you.  You know, the who, what, when, and where.

Think of it as a way of getting to know your neighbors.

Now Back To Our Regularly Scheduled Programming

The IPO market in Hong Kong is beginning to slow down a bit.  That’s a good thing.  And certainly not cause for alarm.

Because drying up some equity means crappola companies such as Guangzhou, China-based Evergrande Real Estate has to stick its tail between its legs and limp home penniless.

More on this in a second, but I want to thank IDE editor Jon Herring for sending me a blog whose author considers Evergrande’s non-IPO as a sign of the biggest financial story not being told by the media today.

To this lone blogger, Evergrande signifies the impending collapse of China’s entire real estate market.  In fact, this one blogger took the Wall Street Journal to task for burying a story – on page C-10 – about a current softness in the Chinese real estate market.

In the blogger’s mind and blog, “How the Journal’s front-page editors missed breaking the greatest new story of 2008 is beyond us.”

On top of that, had this hysterical blogger been in charge of the WSJ, “the story would have been the entire front page, under a banner headline on par with the Apollo Moon Landing, Dewey Defeats Truman, and Hillary Dodges Bullets in Bosnia.”

Hillary Died Jan. 11

Sadly, because he made fun of Sen. Hillary Clinton, many people will take that blog’s entire message as truth.

Kinda like if, in a purely hypothetical situation, I wrote “Hilary Clinton is the greatest American ever,” a bunch of readers would flash to red (or stroke out) so fast they’d miss my instructions for claiming a free $1,000 bill.

Hell, you probably can’t innocently use the word bill these days without angering someone.  And I can’t imagine how many people were thrilled to read headlines that proclaimed Sir Edmond HILLARY died on January 11, as in Hillary Dead at 89.

But back to the above-mentioned blogger.  He is clearly confused by the normal ebb and flow of business.  And he’s obsessed with turning the slightest financial fart into a cataclysmic hurricane that will destroy mankind even before a killer asteroid from outer space has the honor.

Cool Breeze

So first, let me admit that yes, the Chinese real estate market is softer than it was when I was over there last spring.  It’s very soft in Shanghai and in Guangdong Province, which is home to the boomtowns (cities) of Guangzhou and Shenzhen.  But it’s not too bad in Beijing and Xi’an.

The reason for the softness is that the Chinese central government has been trying to curb the real estate market, because – as the hysterical blogger fails to realize – the Chinese are some of the world’s most aggressive gamblers.

Open up a new way for them to speculate – like stock markets or real estate – and they’ll jump in, double down, and then double down again.

So on most counts, Beijing was right to raise interest rates on home loans and to make the barriers to entry higher.  Real estate prices were adding to inflation.  And the prices were rising faster than most Chinese citizens and businesses could afford.

That doesn’t mean that households and businesses were going to stop buying and renting.

There is also an additional reason why Beijing has tried to cool the market.  Unlike some governments, it is committed to affordable housing not only for the poor, but also for the lower rungs of the middle class.

Beijing knows that stifling upward mobility would eventually stifle the Chinese economy.

Crazy, them commies, huh?

Bubbles Blow on Hot Air

Now, let’s get back to Evergrande and the Hong Kong IPO it just postponed.  Because there is no better sign of a bubble than investors who blindly buy crappy issues just because a stock market, region, or sector is hot.

The converse, then, must be true.  So what happened to Evergrande is a great sign.

Also, I am not totally suggesting that Evergrande is a lousy company.  It’s just not a great investment.

I am not alone.

The reason Evergrande pulled its scheduled IPO was that it failed to receive enough orders from retail and institutional investors by the time its subscriptions closed on March 19 – despite extending the application period by one day.

Or as the Wall Street Journal (cited by the hysterical sky-is-falling blogger) noted, Evergrande “was so weighed down by debt it had no choice but to take a crack at an IPO: More than half the funds Evergrande was hoping to raise were set aside to pay for plots it accumulated during a furious land grab last year.”

So a heretofore honorable real estate developer is in big trouble … AND INVESTORS WON’T BUY ITS IPO… as in, investors with money to burn didn’t buy a crappy IPO. And that’s bad news?

Evergrande will figure a way out of its mess, even if it has to sell its inventory.  Then someone else will develop that land, because unless you live in Florida, the old real estate cliché applies – they aren’t making any more land.  Sadly, we can’t say the same for the blogosphere.

That reminds me … don’t forget to read my blog.  It’s called Verge Asia.

Have a great weekend.

Andy

P.S.  To let me know what you thought of today’s article, send an e-mail to: feedback@investorsdailyedge.com.