About twice a year, Hamilton Financial, Independent Financial Advisors invites some investment luminaries to discuss the current global economic situation and make some predictions for the future.
I am pleased to set out below the bi-annual thoughts of our investment panel, Alex Hammond-Chambers (Chairman) (AH-C), Keith Falconer (KF), Robert Hunter (RH) and Max Ward (MW) with additional observations by me (AH) on the Chinese economy - gleaned from Archie Hamilton, a resident of Shanghai since 2005.
AH-C: Good morning gentlemen. I would like to start off by congratulating Chile! The Chilean stock market has gone up by nearly +50% this year; compare this with Germany +8.4%, Japan +7.4%, the UK +6.7%, Brazil +1.1%, France -9.7%, China -11.1% and Spain -23.5%. OK, Chile has wonderful natural resources (particularly copper) but they have a government that exercises strict controls over state finances; compare this with America and most of Europe. So Keith how would you summarise 2010?
KF: The pressures on the Euro were predictable. And when it comes to inflection points, China is surely at one. There is mammoth change afoot – for instance, she has the biggest blue water fleet in the world. Most importantly, I would say you must now go short of bonds and be long of gold.
MW: We saw some really very good company results in 2010 – there were some truly fine business performances and these drove up share prices independently of macro developments. The big issue for me in 2011 will be whether I can continue to concentrate on corporate progress or whether I need to pay more attention to macro factors.
AH-C: I believe good investment performance comes from the combination of getting the macro scenario right and good stock picking. Finlay Park is a firm good at both these skills – that’s Jamie Finlay, who was at Foreign & Colonial, and Charlie Park.
Now, even though there have been some welcome surprises in 2010, what about the problems with the Euro? Personally, I don’t believe that the Euro will break up – it’s the politics you understand! Economics are just not in charge of this. And here’s a further development: after France being “top dog” for years, Germany is now “in charge” and this will mean that the EU is much more disciplined.
KF: Yes, Germany is doing well. But I think the feeble members of the EU are still…
