April 27 1997 by David Elias
The expansion of investment BY opportunities beyond the DAVID domestic front requires constant observation of what’s going on around the globe. And, at the moment, a careful analysis of the global marketplace offers some surprising results.
For example, while Japan has been having serious problems, China looms as an attractive emerging growth market in the Pacific Rim, thanks to the way it has corralled inflation, kept growth to between 9 and 11 percent, and successfully addressed some thorny economic challenges, according to John R.H. Bond, group chief executive of HSBC Holdings plc, a $368 billion-asset financial institution.
And Bond should know, having worked in
Eastern economies, he adds, “feed off one another” to keep fuel flowing to their economic engines.
The barometer of economic growth—stable inflation and low interest rates—remains favorable throughout much of the world, which opens the door to investment opportunities in multinational companies that are leaders in their fields. Strong multinational companies that have the attractive fundamentals of seasoned management, global position, and solid balance sheets, stand above competitors by providing low-cost products and services to their customers, and more easily weather market-share battles or commodity-type competition.
One of the most efficient methods for an investor to enter that arena involves finding a field of multinationals that stand to perform best under the global economic conditions experts expect. Financial institutions come readily to mind. Low interest rates and low inflation encourage corporate borrowing, which translates into consistent and profitable returns for lenders. Likewise, consumers have more confidence in the economy in periods of low interest rates and steady inflation, and that further enlarges the market of borrowers.
Creating a mini-portfolio of multinational companies focused in the financial area minimizes risk while enhancing the participation in the overall growth of the industry. Given the global economic outlook, particularly in the
Recently, Citibank and Hongkong Bank among others became licensed to handle business in Chinese yuan, the local currency.
Plans to increase exposure in the Chinese markets were essentially a vote of confidence for the continued economic stability of the region. By providing local currency transactions loans, credit, savings, and financing these institutions are able to participate in the growth and expansion of one of the world’s most dynamic economies.
Now, which companies to invest in? Bond’s HSBC Holdings stands out, along with Bangkok Bank plc in Thailand, National Westminster Bank, A.G. in the
David Elias is president and chief investment officer of Elias Asset Management, a I Williamsville, NY-based investment firm.