The Forgotten Country Where Profits Beckon

Eight hundred years ago, the Mongol warlord Genghis Khan invaded what is today Kazakhstan. In just over 72 hours, I’ll be invading, too.

I leave Friday for a research trip to the largest nation in Central Asia. It’s part of my year-long global tour of countries where prosperity is emerging – often quite rapidly – even as prosperity here at home wanes. The research I am gathering is for a forthcoming book I’m writing on the rise of prosperity in unexpected places, and the investment opportunities you find littered throughout this multi-decade trend.

Kazakhstan is one of those places and one of those opportunities. It quintessentially represents the overarching trend I look for as an investor: A country, a company or an industry moving into a rapid-growth phase that will stretch on for years.

Find that … and you’ll always find huge profits.

Two great investment trends define the world today: the aging of the West, and the emergence of prosperity outside the West.

Both are in the second phase – the fast-growth phase – of a three-phase life cycle that starts small and potentially meaningless, explodes into something massive, and then plateaus as slow and meaningless again. It’s those phase-two opportunities where I go hunting for investments in my personal life and for readers of my Profit Seeker investment newsletter.

Kazakhstan serves as a good example.

In the 1991 fall of the Soviet Union, Kazakhstan – like all the former Soviet “stan” states – emerged as a basket case, the world’s largest landlocked country all but forgotten by Moscow when the walls of socialism came crumbling down. The economy crashed. GDP collapsed. Inflation shot up past 3,000%. The country at one point ran out of physical cash, and workers’ wages were distributed on pieces of paper or as loaves of bread and other food items. At the time, bettors wagered that neighboring Uzbekistan would ultimately rise up as the Central Asian darling.

Unexpectedly, Kazakhstan took off, led by President Nursultan Nazarbayev, who recognized in the early days of his country’s freedom that Kazakhstan’s road to success, and his own political livelihood, lay in creating a middle class.

To foster prosperity, he instituted policies that have resulted in national wealth produced through oil and other domestic resources. In many other nations – including those in the West – national wealth often ends wasted in bloated government agencies and programs. But under Nazarbayev, government explicitly encouraged, rather than hindered, prosperity.

Thanks to the trickle-down, per-capita income in Kazakhstan, it has exploded to the equivalent of more than $11,400 – the Central Asian leader by a long shot. And Kazakhstan has emerged as the symbol of success in the region.

It has also emerged as a destination for one of the world’s most important economies: Germany.

Investing in the World’s Fastest-Growing Markets

In my travels through Eastern and Southeastern Europe over the last couple of years, I’ve heard time and again about the Germans. They’re everywhere. In Hungary. In Turkey. In Slovakia. In Romania. They’re all over Poland. And like Genghis Khan, they’re invading Kazakhstan in search of oil and gas and other natural resources the Germans need to power the great German manufacturing machine.

Germany has signed a $4 billion agreement to pull rare-earth minerals out of Kazakhstan for the German auto and solar-panel industries, among others. German industrial giant Siemens has signed on to modernize Kazakhstan’s antique, Soviet-era rail network. Linde Group, a German industrial-gases expert, is building a large air-separation plant in Kazakhstan. Flag carrier Lufthansa has increased cargo capacity in Kazakhstan’s two primary cities, Almaty and the capital, Astana. While visiting Almaty, Germany’s consul general to Kazakhstan said that for German business, Kazakhstan is “of the utmost importance.”

Honestly, you could do a lot worse as an investor than following Germany around the world. Unlike the U.S., the Germans are flooding into some of the fastest-growth markets in the world – Mongolia, Eastern Europe and Kazakhstan.

As an investor, I see that the reign of the West is drawing to a close. Sure, we still have some very fine companies making some very fine products the world wants, and that’s not going to end. But the U.S. and other Western economies are in the late-autumn of their years; GDP will never grow on a consistent basis much faster than 2% to 4% a year. Countries like Kazakhstan are in the early spring of theirs. They’re early in the second phase of growth – that explosive-growth phase in which economies, depending on the country, will grow at 7% to 12% a year.

That’s where I want my money. That’s where I already have a lot of money.

And that’s where I am steering my Profit Seeker investors to put some of their money. In fact, I’ve identified a London-traded company that’s a big beneficiary of the trends taking shape in Kazakhstan and Central Asia. It’s benefiting from the resource boom in the region, and it’s growing its business 10% to 15% a year. I’m giving it to my Profit Seeker readers next Thursday while I’m in Kazakhstan.

Until next time, stay Sovereign …

Jeff D. Opdyke