FALLS CHURCH, Va.–This is what I love about Asia; the opportunities can be very exciting in such dynamic developing markets.

Earlier this week, a colleague asked me to give him a momentum stock to play in China. He said, “I have some spare cash and want to get into something exciting.” Immediately I said, “Alibaba.com.”

I explained that this was the most anticipated initial public offering (IPO) of an Internet company since Google, yet this time around the IPO will happen in Hong Kong in early November. While this isn’t my usual style investment, this opportunity is worth sharing with you as well.

Alibaba’s business is simple. Companies can post products for sale or purchase from Alibaba’s Web site for free. It charges suppliers from China and Hong Kong an annual fee of as much as USD8,027 to become premium members. A similar service is offered to suppliers from other regions for an annual fee of USD589. The company has forecast that 2007 profit may almost triple.

Now in his early forties, Chairman Jack Ma–an English teacher–and a team of 18, founded Alibaba in his apartment nine years ago with USD60,000. In 2000, Softbank Corp, Japan’s third-biggest mobile-phone carrier, bought a stake in the company and now owns 29.3 percent.

A friend of Yahoo’s! co-founder Jerry Yang, Mr. Ma was able to receive a USD1 billion investment in 2005 while taking over the operation of Yahoo! China. Yahoo owns 39 percent of the parent company now. Cisco Systems is also an investor.

Alibaba.com is the flagship company of the Alibaba Group that includes, Taobao that operates an online shopping marketplace for consumers in China; Alipay, China’s leading online payment service; Yahoo! China and Alisoft, an Internet-based business management software company targeting small and medium enterprises in China.

It goes without saying that there’s been a lot of interest for this IPO. Investors have sought more than 180 times the number of shares on offer. Of the offered shares, 85 percent are being sold to institutional investors and 15 percent to retail investors.

According to the latest statistics, China was home to 162 million Internet users at the end of June, second only to the US. The country is expected to surpass the US as the world’s largest Web market by users next year.

The Mechanics

In order to buy this stock, and I’m talking after it starts trading in Hong Kong on Nov. 6, you have to gain access to the market. I know that www.etrade.com and www.interactivebrokers.com offer easy access to the Hong Kong market. Others may as well.

Make sure that you obtain a trading permission for Hong Kong with the broker–an easy process that can be done online. Once you decide how much money you would like to put on the trade simply execute the transaction as you would with any other trade.

The shares will be very volatile the first day, and therefore if you decide to get it you will be a price taker, in other words in order to set a limit order you should follow the market that day very closely, or wait for the price action to settle. The Hong Kong market opens from 10:00 to 16:00 local time, you can find the time difference to your area using any search engine.

Happy trading.

Alibaba.com (Hong Kong: 1688 HK) is the new addition to the Alternative Holdings Portfolio.

Seasonality

With October out of the way, the Asian markets are now entering a stronger period (November to January) and should finish the year higher. True valuations are not as compelling as they were earlier in the year, but this is a period that you do not want to bet against Asia. Furthermore, investor interest is strong and there’s a lot of money around that can be funneled to the markets.

Asia has produced positive returns in 13 of the past 16 years, with 1992, 1994, and 1997 being the exceptions. In the past seven years, the region has returned an average of 11 percent in these three months, which compares very favorably to the S&P500 return of 4.6 percent during the same period. True, the US is a mature market and such a return is very respectable, but the Asian outperformance is such that it commands attention.

In terms of sectors, technology, industrials, financials, consumer, and healthcare have performed better during this three month span. Hong Kong remains the hottest market right now, and this won’t change until the end of the year.

Positioning for this usually strong season–as far as the Silk portfolios are concerned–isn’t based on making a quick profit. The factors supporting seasonal strength also support my bullish long-term view of the future of Asian economies and markets.

The Silk portfolios (the main portfolio as well as the Alternative Holdings) are well positioned for this period of strength, and, most important, there’s no need to materially alter our positions to fit the season.

Fresh Money Buys

Because 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 (consult the Portfolio for details), in order (for both countries and sectors):

• Singapore (banking, telecommunications, industrial)


• South Korea (electric power, banking)


• Hong Kong (banking, real estate, infrastructure,
  publishing)


• India (pharmaceuticals)


• China (consumer, coal, power, oil, water)


• Russia (telecommunications, energy)


• The Philippines (Telecommunications, Real Estate)


• Malaysia (ETF)


• Taiwan (technology, telecommunications)


• Europe (pharmaceuticals, industrials, communications equipment, oil)


• Japan (banking, industrials)


• Macau