Although August has historically been a weak month for the Asian markets, there’s plenty of activity in the region right now. First, Asia is the cheapest emerging market to buy into in terms of valuation.

Furthermore, the price of oil continues to drop, benefiting oil-dependent regions throughout Asia. (See Silk, 11 June 2008, The Oil Factor). Oil is currently trading below USD122 per barrel, coming down from the recent high of USD145 per barrel. More importantly, if oil drops below USD100–even if it’s just a short-term correction–Asia will be off to the races.

As I wrote here last month, Asia is in the doghouse. Investors have sold more than USD60 billion worth of stock (see Silk, 18 June 2008, Asia in the Doghouse). If this rally has further to run than what the majority believes, fund managers can’t afford to miss out on this buying opportunity.

I’m reiterating my recommendation to allocate new funds to the Silk Portfolio recommendations. Don’t forget to use the Fresh Money Buys, and hedge your portfolio using the Permanent Hedges in Silk’s Alternative Holdings Portfolio.

When I vacation in the Greek Isles each summer, I remember bitter comments readers have made in the past, such as: “Give up the investing business, and go on vacation in the Greek islands.”

These words resonated in my mind as I was swimming in the crystal clear Aegean Sea. And I smile as I contemplate where these naysayers are as I’m rejuvenating myself and preparing for the tough winter months ahead.

I’ve been fortunate this summer to spend some of my time abroad with a few interesting individuals: an investment banker and a bond fund manager based in London, a successful entrepreneur based in the US, a stock analyst for a big Swiss bank and two hedge fund managers.

Our conversations often turn to the markets, and our views remain diverse amid the short-term volatility. But there’s been an interesting change in the world of investment banking, and these folks agree the system is headed for a shift. It may not immediately affect the individual investor, but it will have a serious impact on the big guys. And the vibrations will be felt sooner rather than later.

The change involves the way institutional investors are served. Previously, banks were setting up their own research teams in places such as India, where analysts worked at each client’s beck and call.

The new set-up follows this scenario: The bank sets up an office where analysts are hired locally and paid local salaries, which are relatively high for local standards but much lower compared to New York or London. The analysts are thus freed from the investment bank’s obligations to publicly traded companies.

It’s important that these analysts are assigned to a particular client, whether through a hedge fund or a private equity firm. The client can request as many analysts as he desires and use them on an as needed basis.

Analysts can be required to investigate a private company seeking funding, a firm planning to go public or an obscure company that has great growth potential in a remote part of the world such as Africa. There are no limits to this unbiased research, which is what investors enjoy most.

There have always been boutique research firms that catered to few, but now the practice is gaining momentum and spreading throughout the world. Most believe this change will result in more reliable, independent research. The standards will change and individual investors will finally have access to valuable information.

All of this may seem insignificant now because the global economy isn’t in the best shape, but it indicates that the investment process never ends, and money continues to exchange hands on the global markets. As is the norm throughout life, changes will come about, and a new cycle will begin. Enjoy the rest of your summer.

The investment process is constant. If you’d like to add to your positions in portfolio recommendations or allocate new funds in a diversified way, focus on the following markets, in order (for both countries and sectors). Consult the Portfolio tables for details.

• Russia (energy, telecommunications)
• Hong Kong (banking, real estate, infrastructure)
• India (banking, pharmaceuticals)
• Japan (banking, insurance)
• China (consumer, telecommunications, port, machinery, oil, e-commerce, coal)
• Taiwan (ETF)
• Philippines (telecommunications, real estate)
• South Korea (banking)
• Singapore (banking, telecommunications, industrial)
• Vietnam (ETF)
• Cambodia (casino/hotels)
• Macau (casino/hotels)