Trading is not a game of exacts. Perfectionists need not apply. Markets are made up of many irration...
Global Gains, By George!
02/13/2004 12:00 am EST
Neil George gains a true global perspective by living and working in the US, where he leads the editorial team at Personal Finance, and in China, where he is a noted lecturer. Here, he offers his insights on currencies, and his top global picks.
"I want to talk about currencies and how that is impacting our investment markets, and potentially dispel some of the myths that are being perpetrated in the market right now. One is the myth that the dollar is a doomed currency, that it is becoming worthless, and that our financial markets are in jeopardy. The problem is that when they look for an alternative, they are not necessarily finding a currency that is potentially competitive. The US dollar remains the currency of the planet. It is how contracts get done. You can be in Mainland China, in Taiwan, or in Europe, and you can do a contract in US dollars. It is the currency of choice for the majority of the world. And unless that can be replaced by something else, there will be an ongoing holding of dollars.
"From my perspective, the US dollar is not collapsing. One currency now on the front burner is the Euro. My position is that what we are now seeing is just a correction or a recovery of the Euro against the US dollar. I think the Chinese currency is pretty well valued right where it is. Relative to the other currencies that we care about–the Mexican peso and the Canadian dollar–we’re either steady or improving. This is far from being a crisis. We continue to see a surge of foreign investment into the US, and for the past decade, this has been on an upward bias. The US is not a nation in crisis from an investor’s standpoint. Meanwhile, here are some of my favorite stocks:
"Hutchinson Whampoa (HUWHY Other OTC) is one of the great long-haul investment plays you can make on global growth, specifically benefiting from the ongoing evolution of the economy in China. A fellow by the name of Li Ching knows how to make money. He has his own money on the line and he knows how to take care of shareholders. The company has a vast network of shipping ports. Virtually nothing moves around the world without paying something to this company. They have vast real estate holdings, retail, and oil and gas interests in Asia. It is an all-in-one company.
"Legend Holdings (LGHLY NASDAQ) is the Dell Computer of Asia, particularly China. While sales have been relatively anemic, they have started to improve in the US and Europe, and Asia, particularly in China. Think of it as the 1980s in the US in terms of PCs beginning to move very rapidly into the home and in the workplace. Legend may be a brand that you may have never heard of, but it is considered like IBM as far as name recognition in China and other Asian markets.
"NEC Corp. (NIPNY NASDAQ) is a relative newcomer to our portfolio. This is a recovering Japanese industrial firms. It is a very nice collection of electronics goods and components–everything from industrial equipment to PCs to flat screens, to wireless technologies, to the latest in Voice-over Internet Protocol services. This is a beneficiary of the turnaround in the Japanese marketplace and they have an ample and improving presence in the Chinese marketplace. This stock also trades easily in the US market.
"We also like Korea Fund (KF NYSE). One of its major holdings is Samsung, which is one of the world's most profitable tech companies. However, it is difficult to buy through domestic brokers and Samsung's shares just don’t seem to trade well in the US. The Korea Fund has an ownership interest that represents more than 12% of the fund. It helps to drive and yet Korea Fund trades at a discount to its net asset value. So you can buy a collection of very interesting companies–such as Pohang Steel and Korean Electric Power–and it throws off a nice little dividend."
The key risk-on and off drivers today are the same – U.S. politics, global growth, other centr...