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Adding a Global Edge to Your Portfolio
08/09/2008 12:00 am EST
Investors heard a variety of strategies and recommendations to help boost their portfolio gains.
John Christy, founding editor, Forbes International Investment Report, shared his borderless strategy for international investing, which takes an open architecture approach to finding opportunities in a wide range of companies and in various instruments.
Christy discussed the drawbacks of the EAFE index, which doesn't include any investment from the BRIC region (Brazil, Russia, India, and China).
He noted that there are currently 20 emerging markets around the world where stocks are outperforming the US, and which are trading at compelling values. Lastly, Christy offered a number of recommendations in companies, including telecom, aerospace, medical, media, and technology.
Allan Nichols, editor, Morningstar InternationalInvestor, discussed the American Depository Receipt (ADR) markets, focusing on telecom markets around the world.
He noted that while wireless is expanding phenomenally in emerging markets, the fixed line business is still attractive and continues to offer opportunities.
Nichols shared the key elements that signal investment potential in both sectors, defining their 'moats', or competitive advantages.
He discussed inflation, particularly in the Asian economies, saying that this specter may lead to slowdowns in those markets. Nichols also cautioned investors to reduce their commodity exposure. Then he wrapped up his segment of the workshop by sharing some of his current favorite stocks.
Robert Hsu, editor, China Strategy and Asia Edge, told attendees he remains bullish on China, due to its economic emergence, its young population (74% of its citizens are under the age of 45), and its relatively low stock valuations.
He believes that the foundation is in place for increased spending by the Chinese, although he does expect that their demand for commodities-across the board-will weaken, short-term.
Hsu also addressed the investment potential in India, but finds it less compelling due to protectionism, bureaucratic red tape, and limited education opportunities for its populace.
In closing, Hsu told attendees that it is now the time to be aggressive and buy Chinese stocks, and shared a few of his current recommendations.
Pratik Sharma, principal, Atyant Capital Partners, had a different view on investing in India, saying that what makes it appealing is the depth of its markets, demographics, and domestic demand. Additionally, the transparency of its market, quick settlement, and totally electronic trading are advantageous.
With the oldest stock exchange in the world, covering more than 9,000 equities, the Indian population has a well-developed interest in equities.
The biggest challenge for US investors is limited access to Indian companies. Currently, there are 11 or 12 ADRs, three-to-four mutual funds, and two-to-three ETFs. And he added that most investors are probably best-suited to a low-cost fund or ETF.
Sharma told attendees that with only some 300 companies currently receiving analyst coverage, there were plenty of opportunities to find value.
John Dessauer, editor, John Dessauer's Investor's World commented on the volatility of oil prices, noting that one advantage of higher prices has been the return to exploration and development which had been discouraged by the years of low prices.
Dessauer then moved on to why international investing is now more important than ever. He noted that in his early days as a global investor, diversification was the primary driver. But today, the impetus for international investing is to take advantage of growth opportunities around the world.
He sees those opportunities as being fueled by the vast expansion of the middle class in many countries, including China, India, and Malaysia.
However, Dessauer is not a proponent of investing in individual foreign stocks, citing a lack of corporate governance, dearth of management talent, as well as currency manipulation.
Instead, he prefers investing in multinational companies that are benefiting from the expansion of overseas markets, sharing some of his holdings and recommendations with attendees.Both investors concerned about worldwide markets as well as those seeking specific recommendations found plenty to think about from this panel of global experts.
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