Conserative Investment Biased?
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A quick thought after the Long Weekend. For those members that have a Conservative Investment approach to clients. Just finished the book - Meltdown - Asia’s Boom , Bust and Beyond.
For those who remember those " Asian Tigers " and how this was to be the absolute market of the future and you would be by passed by if you were not participating. Ten years later 2008.....good read and in particular where will China really be in ten years? My proxy in those markets will still be with the current Blue Chip Companies ie. P & G , Boeing etc. despite the lack of " sex appeal " to these emerging markets. Interesting review of history and how it applies to today.China will grow for decades, no doubt about it. But as far as investing directly in them (and other emerging markets), I prefer the idea of investing in the companies that do business WITH China (et.al.), not IN China, necessarily. This mitigates some of the economic and political risk. The only fund that (I know of) does this is American New World. They try to do business with the SUPPLIERS of emerging markets, not necessarily the companies located in the markets directly. I am sure other funds do this, I just happen to know their story about the fund.
So your comment about the multinationals holds water. Those multinationals are able to mitigate risk, and at the same time, they are the ones with enough $$ to gain access to those markets.
Absolutely my proxy to those markets. In the Asian market/s the risks ie. currency , political and real economics make direct investments per se very risky.
The corruption or better put the " connection " process is to say the least very much behind the scenes and thus lacks transperency by our measured standards. I suspect within the next XX years we will see that direct investment/s in China may well pose some serious problems for Funds that have invested insome of these companies. If you get a chance check out the book , the authors are two Business Week journalists.B24 - check out Peregrine Investment Holdings but just one of many from the " go-go " Asian Tiger Era.