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Growth geographies / sectors

Discussion in 'Investing Strategies' started by Simon Hampel, 21st Nov, 2006.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

    9th Jun, 2005
    Sydney, Australia
    Just wanted some thoughts that people might have on geographies and/or market sectors that they think should perform well (or at least better than everything else) over the next 12 months ?

    At the moment Europe and Asia are performing best for me, along with listed property securities.

    Resources are very volatile at the moment - but I suspect there will be a bit of money to be made over the next couple of years still (if you can cope with the ups and downs based on the seemingly random movements in commodity prices).

    I'm thinking Asia (ex Japan) will continue to do well over the next couple of years (particularly China and India).

    The US is looking a little doubtful.

    I have no real grasp on the issues facing Europe.

    I suspect that global rising interest rates may have a negative impact on the real estate sector pretty much everywhere.

    Private Equity, which seems to rely heavily on highly leveraged deals may well suffer with higher interest rates too ?

    My biggest concern locally in Aus is that higher oil prices, a booming resources sector, and drought inflated grocery prices will conspire to put too much upwards pressure on inflation, forcing the RBA to quickly increase interest rates. The more quickly they need to raise rates, the more difficult I think it may be to avoid "putting on the brakes" too much leading to negative growth.

    I'm all for higher rates to shake up the residential real estate market - but I'd rather not see a significant contraction in our local economy.
  2. Tropo

    Tropo Well-Known Member

    17th Aug, 2005
    The deflation threat facing Europe ;)
    Economic briefing by Anatole Kaletsky

    When I ask businessmen or investors about their biggest economic worry at present, they almost invariably put the housing-related slowdown in the American economy at the top of their lists. More recently, there has also been concern about the unexpected weakness of consumer demand in Japan. Much less widely noticed, but arguably more important, especially for British business, are newly published European statistics that show growth slowing sharply in Germany and coming to a standstill in France. The first official “guesstimate” for the whole eurozone for the third quarter, issued last Wednesday, showed a slowdown to 0.5 per cent from 0.9 per cent reported the quarter before. Forward-looking indicators of economic activity have been falling even faster. France has suffered a precipitous decline in consumption; in Italy consumer confidence is plunging and Germany has seen the steepest fall on record in the ZEW financial expectations index, now at its lowest level since 1993.

    None of this seems to have made much impression on financial markets or politicians, who keep repeating the mantra that Europe can now feel confident about a healthy and robust economic expansion, which is more soundly based and sustainable than the debt-driven booms in America and Britain. By 2007, however, the business and financial world may be facing a very different reality. In January, the German Government will impose the country’s biggest-ever consumer tax increase, while Italy will implement an even bigger fiscal tightening, if the Prodi Government can push through its budget. The steady tightening of monetary policy since last December, operating with the usual one to two-year lag, should start to have a noticeable effect on the eurozone about the same time, as will the malignant hardness of the euro. Under these circumstances — and with the US, Asian and Middle Eastern economies also slowing — it is easy to understand why the expectations of European businessmen and financiers are in sharp decline.

    The deflation threat facing Europe - Analysis - Times Online