Friday, 8 January 2010


China overtook Germany to become the world's top exporter in 2009, the Wall Street Journal reported, citing data compiled by Global Trade Information Services. China exported goods worth USD957bn in the first 10 months of the year, while Germany exported USD917bn, the newspaper said. The rankings are not expected to change after including November and December data, trade experts say.
China's central bank has pledged to curb volatility in lending, manage inflation expectations and monitor the property market in 2010 as a credit boom poses risks for the world's third-biggest economy. China's policy makers are trying to cement an economic rebound while preventing excessive liquidity in the financial system from leading to asset bubbles, resurgent inflation and bad debts for banks.

Thursday, 7 January 2010

QROPS ADVICE: Investment News: Is Britain emerging from the recession?

A U.K. index of service industries from insurance to property brokers showed faster expansion in December, a sign Britain is emerging from the recession. The gauge, based on a survey of purchasing managers, rose to 56.8 from 56.6 in November, Markit Economics and the Chartered Institute of Purchasing and Supply said on Tuesday. Chancellor of the Exchequer Alistair Darling said yesterday that he expects economic growth to have resumed "at the turn of the year," in time for an election which the government must fight by June. The Bank of England may hold its bond purchase program at UKS200bn (USD321bn) on Wednesday as officials assess the economy's recovery.


The International Monetary Fund's predictions for global economic growth will almost certainly be revised upward as the world embarks on a quicker-than-expected recovery from its worst recession in generations, the IMF's deputy head said on Monday. John Lipsky, the IMF's first deputy managing director, said the greater optimism would be reflected in a January update of the IMF's World Economic Outlook (WEO).

Wednesday, 6 January 2010

QROPS ADVICE: Investment News: Spotlight on Latin America Equity

Emerging Market-themed funds finished 2009 as the undoubted success story of last year, with China certainly being the most talked about of the many apparently 'new' emerging economies. Although perhaps one of the most surprising investment stories of 2009 was the collective success of the Latin America economies.
Along with the rest of the world, Latin America suffered from the fall-out of the global recession heading into 2009. However, unlike its European and Western counterparts Latin America has never been driven nor as heavily underpinned by its financial stock market, and as such didn't suffer the same damaging consequences to its respective economies.
Latin America's fortunes have historically been very much dependent on the demand of its core resource - commodities. The second half of 2009 brought a demand for commodities that fuelled the regions impressive growth from two major areas; emerging markets (particularly China), and investors.
China is keen to source commodities such as oil, soyabeans and copper from Latin America in order to fuel its high rates of economic growth, so much so that China now does more than USD100bn in trade with Central and South American countries, twenty times more than it did just a decade ago. Indeed, Chile was the first non-Asian country to sign a Free Trade Agreement with China in 2005. Furthermore, China is also making substantial sovereign wealth investments in the region's energy resources, as well as other infrastructure.
In addition to the direct purchase of commodities from other countries, investors have been very quick to capitalise on the increase in activity in Latin America economies. Collective investment funds focussed on the Latin America region enjoyed extremely impressive returns, buoyed in the main by commodity-related assets. The MSCI Latin American equity index jumped roughly 97% from the end of 2008, stocks in Brazil more than doubled, while stocks in Argentina almost doubled. The performance of such funds was also assisted by much more active Latin American domestic economies, stimulated by local government tax cuts and reductions in central bank interest rates.
With demand for its commodities looking set to continue, as with China, it is now the subsequent growth of the domestic markets in Latin America that many investment experts see as key to the future of the region in 2010. As the biggest region, Brazil will play a fundamental role in this, as Will Landers, a senior portfolio manager at BlackRock who manage the Hansard Latin America Fund (C08, available in both HIL and HEL) comments, "You have the secular story that we've been working on the last six years plus the growth in Brazil's middle class and the fact there's an 8.75 percent nominal interest rate, the lowest rate in my lifetime," he said. "This is a much different environment than we've had in a long time, and our belief is that it still hasn't been fully priced into the equity markets yet."
"We believe that the regions resilience during the crisis and its ongoing recovery ahead of most regions in the world mean that it should continue to enjoy forward multiple appreciation. In addition, earnings revisions should also be positive and supportive for Latin American equity markets as we enter 2010."

Tuesday, 5 January 2010

QROPS ADVICE: Investment News: How to win in China

The China bulls are in full charge again. News that China's economy had accelerated ahead of expectations in the second quarter was greeted with rapture. Talk abounds that China will lead the world out of recession, that it will eclipse the US, and that its currency will replace the dollar as the world's reserve

Goldman Sachs has suggested that China's economy will be bigger than America's by 2027, and nearly twice as large by 2050. Tim Bond, head of asset allocation at investment bank Barclays Capital, believes that China "is going to be responsible for easily more than half global growth on her own".

"This is going to be the new centre of the world, not just the financial but the political world," investment guru Jim Rogers told the Asian Financial Forum in Hong Kong earlier this year. Economics professor Burton Malkiel has suggested that no investor can afford to ignore the China story – or omit it from their portfolio.

China's economic expansion has indeed been incredible, and so many amazing statistics relating to its growth are available in so many other places that it's pointless repeating them here.

What is worth noting, though, is that all these superlatives don't mean that China is an open-and-shut case for the investor.