Investment & Financial Articles
Title: Offshore Markets - Looking Better All The Time!
Author: Dave Laforge
Article:
The World's Market Capitalization is Shifting
Emphasis in major market capitalization is shifting away from
established industrialized countries toward emerging markets.
US market dominance has dramatically declined. The present
tendency in the US to excess equity market valuation will
accelerate the movement of capital to more attractive emerging
markets. Share valuations in Asia, often at 1 1/2 times book
value, compare most favorably with characteristic multiples of 6
for similar companies on the US market. Major US pension funds,
e.g., CALPERS, are in high gear to diversify internationally by
direct investment in emerging market growth companies.
It will be some time before confidence in the Japanese capital
market fully returns.
The less liquid European equity markets, compounded by economic
Uncertainties, remain unattractive.
The move of investment capital will clearly be toward the
emerging economies of Asia, Eastern Europe, and Latin America.
World Economic Opportunities are Moving Too.
Prior to 1970, the US represented half of the world's Gross
National Product (GNP). By 1995 it's share of world GNP had
dropped to one third. Estimates are that by 2010 the US share of
world GNP will have dropped to one quarter.
The European economies are faced with an endemic problem of
rapidly aging populations increasingly burdening their producers
with taxes to cover the escalating costs of state-funded
retirement benefits as fewer wage earners have to pay for
growing numbers of retired persons. The net effect inevitably is
declining competitiveness in a world market increasingly
dominated by lower cost producers in countries with abundant
young labor resources. The current political swing in Europe
toward more socialistically inclined governments can only
exacerbate growing unemployment and declining productivity
problems.
Any serious investor has to think in global terms!
Wise institutional and private investors are responding to these
trends by diversifying their portfolios internationally.
Considering the inherent investment risks in emerging markets
where some degree of disorder is present, private investors
without the necessary research capacity to make sound investment
decisions independently, take refuge in collective investment
schemes, including partnerships, unit trusts, and funds.
Domestic security dealers in countries with substantial capital
markets, such as the US, are not necessarily well equipped to
comfortably manage the transition from local trades to
international ones.
European brokers with stronger international orientation may
find it easier, thanks in part to the access they have had to
offshore funds which have taken the lead in emerging market
investing. Hence, the growth in offshore funds has been
phenomenal. As the economies of Eastern Europe, Asia and South
America expand further, this growth will accelerate.
The fundamentals are in favor of emerging economies with
abundant workforces and a national desire to succeed. Until they
reach the stage of maturity where their savings rates begin to
satisfy their capital needs, these countries will continue
eagerly to invite foreign investment.
Under circumstances requiring cross-border investment on an
unprecedented scale, the offshore financial services industry
offers opportunities of a lifetime.
The question is whether it can systematically rise to the
occasion to retain the initiative without becoming bureaucratic
in itself and so lose its principal regulatory advantage over
domestic financial centers.
Offshore finance is no longer the exclusive domain of the very
wealthy, and as its clientele becomes more mainstream, the
nature of its services and their means of delivery are changing
dramatically.
The ability to securely communicate complex information around
the world in a flash, profoundly affects the way in which
business is conducted.
Offshore finance is a prime candidate for electronic delivery of
services on a grand scale.
For more information on the world of offshore business go to
http://www.valtechservices.com
and click on Offshore Special Report. Between the manual that is
provided, and the four special reports on four of the world's
best financial districts, this is a great information source.
About the author:
Dave Laforge webmaster@valtechservices.com Webmaster of the
Valtech Services Group
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