The World’s Best Performing Small-Cap Stock

(Drum roll please…) And the winner for the world’s best performing small-cap stock of the year is…Iskandar Waterfront City Bhd [MK:IWCB].

That’s a name that might not immediately come to mind. But nonetheless, Iskander is the world’s best small-cap stock according to the S&P Global SmallCap Index of more than 8,500 companies.

It’s not surprising Iskandar is primarily a land owner. A rent collector.

Here’s the chart:

Source: Bloomberg

Click to enlarge

Iskandar Waterfront City has significant land holdings in the Iskandar region of Johor Bahru, in Malaysia, better known locally simply as ‘JB’. It’s just across the border from Singapore.

Johor Bahru is one of the fastest-growing cities in Malaysia after Kuala Lumpur, and is located in the Indonesia-Malaysia-Singapore growth triangle.

Thousands of Singaporeans, Indonesians and other international tourists visit the city.

Many Singaporeans frequently visit for shopping, entertainment and dining, which increases the region’s income even more.

A lot of Singaporeans have also chosen to buy there and live in the city. Land is cheaper there.

But maybe not for long.

Iskandar is set to become Malaysia’s most developed region.

Chinese developers are building like there’s no tomorrow. As growth slows at home, Chinese builders have come to Malaysia to keep erecting the giant complexes that sprouted across China during the boom years.

They’ve found a prime spot in this special economic zone, three times the size of Singapore, on the southern tip of the Asian mainland.

And once the Chinese build this city, they’ll build another, just like back in China.

And then they’ll do another, and another…

A colleague of mine tells me you really do have to see what’s going on there to believe it. They are attempting to build another Singapore.

High rise apartments are everywhere. This could go on for years and years, maybe even for the rest of the century. The region has a beautiful coastline, with a vast amount of undeveloped land.

And then there is the rail line connecting Kuala Lumpur with Singapore, which will run right through — and stop at — Johor Bahru.

Bloomberg reports:

Investors have made a beeline for Johor in recent years after Malaysia decided to leverage on Singapore’s success by building the Iskandar Malaysia special economic zone across the causeway that connects the two countries.

Shares of Iskandar Waterfront have jumped more than 270% this year, after plans were made public to create an entity with land assets worth billions of dollars.

The company has 7,400 acres of land in and around Johor Bahru — something like almost 10 times the size of New York’s Central Park.

The company has also teamed up with the Sultan of the state of Johor to do more developments.

This is the Economic Rent and the real estate cycle in action for you, right before your very eyes.

The gains of all this development will be taken by the land owner. This is why the site owner must get richer and the renter, poorer.

Look to get familiar with the region and what’s happening more broadly in Southeast Asia.

Construction is booming as Southeast Asian governments embark on programs to boost roads, rail, ports and power plants.

The Philippine President Rodrigo Duterte is pledging $160 billion of spending over his six-year term.

Thailand is soon to launch a $2.85 billion infrastructure fund this year.

Indonesia has set aside almost 10% more to spend on projects this year.

Malaysia is pushing ahead with the plans for a high speed rail link from Kuala Lumpur to Singapore.

The development going on in the region is huge.

At Cycles, Trends and Forecasts this is just what we expect at this stage of the real estate cycle. This could all get ugly at some point as investors buy up all the developments at the wrong time in the cycle. You can learnthe timing of that by going here.

Regards,

Terence Duffy,
Lead Researcher, Cycles, Trends & Forecasts

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Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come.


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