A quick thought that has been formulating in my mind no doubt encouraged by the posts about the Indian Ocean that I’ve put up time and time again. We’ve all heard of BRICS and some of us have heard of N-11 (I’ll actually be hearing Jim O’Neil speak for the second time next week so I guess this may have primed me as well) however as someone who is fairly active in the Frontier Markets Afrasian space I’ve come up with the seeds of a new investment focus.

I term it IOS, essentially the Indian Ocean Strategy. The idea of BRICS was essentially to link the world’s largest countries with the fastest growing economies and N-11 is extending that one step further.

However IOS is all about a new twist to the “Atlantic Century”, which is what the 19th & 20th centuries were about, and the Pacific Century, which I guess is what the latter half of the 20th century & 21st century was about.

What is interesting is that from an investing perspective most of the extraordinarily exciting investing destination, from a consumer market perspective (ergo those involve growing population with increased spending power) are pretty much arranged around the Indian Ocean. China, Japan and Korean and other such markets (even in South East Asia) are developing so rapidly that it’s difficult to actually gain investing clout there unless a firm already has an “in” (in the form of connections, different thresholds of capital). Latin American, from a European (ex-Iberian) perspective also seems to be fairly closed off toward North American investors.

It’s really the IOS region that provides ex-commonwealth nations, that for most part have squandered their post-colonial legacies (thereby losing a generation or two of economic prosperity to their East Asian/Pacific counterparts) but are now pursuing more rigorous economic policies. It’s not about being feel-good or optimistic (throughout much of the region electoral transition remain extraordinarily turbulent) but a simple fact that a large growing population, with some basic and even advanced literacy, is going to rapidly demand the same sort of products and services as their more affluent counterparts elsewhere in the world except at more preferential pricing, bulk discounts and basic services.

This ties in perfectly with the India Inside post that I had excerpted whereby Indian consumers are the prototypical consumers of this region (ergo why the IOS is such an apt name) since their primary purchasing consideration remain value for money as opposed to a Pacific or Atlantic preferences (which may or may not be different but it seem East Asia is characterised by tech-preference and the West by an emphasis on aesthetic and style; IOS is about functionality value for money).

It’s an investing strategy that hasn’t yet been articulated or formulated rather it’s a running trend that I’ve begun to notice about which sovereign markets stir excitement (will you get multiples back on your investment) or are now rapidly being treated as emerging market safe havens (tier 2 economies like Eastern Europe and much of East Asia).

Facts and figures to follow (but anecdotally as a Frontier Markets chap much of my inbox is filled with deal flow that is either Sub-saharan Africa or Indian Ocean Rim). I’m quite excited by this and I think a new investment philosophy that squarely put benevolent (and dominant) India (or rather the idea of India the omnipresent secular soft power constantly spreading her many arms through trading networks, cultural diasporas and now capital transfers) is well overdue to what is a natural hyperpower in the region.

I’m mixing business and political ideals and I’m guilty of that but sometimes we have to imagine our world to come and I’d much rather see a revitalisation of the IOS trading and consumer networks than the harsh and austere demands of an infrastructural dependent and ideologically rigid PakAsia (not that the two are mutually exclusive but IOS makes much better sense from an investing perspective, it really doesn’t do well for your investment or potential exit when a country shoots 14yr old school girls).