We are delighted that Brown Shipley’s Chief Investment Officer, Peter Botham has contributed to our latest blog.  Peter comments on the driving force of wealth in 2013:





Central to our investment strategy for 2013 is the belief that there will be modest growth in global GDP and that America will not only provide the main stimulus, but that it will surprise many with the degree of upturn as the year progresses.

However, many of the developed countries of western Europe, including the UK, will see little or no growth this year and it will be economies in the Far East and Russia that demonstrate the continuing structural shift in global wealth.

Many economists and commentators spent a considerable amount of time last year speculating whether China would have a ‘hard’ or a ‘soft’ landing; in other words, would the Chinese economy slow down gradually from the rapid expansionary rates of the past ten years or would it fall back sharply and thus have a severe negative impact on the rest of the world, particularly on countries who relied on exports of raw materials to China.

It now seems apparent that the inevitable slow down is not only gradual but is being effectively managed by the Chinese Government. China is one of the few economic powers in the world which still has the full array of tools available for managing their economy. Western central banks are now unable to wield interest rates as part of their strategy for controlling demand but there is no such problem in China, where the latest Five Year Program has identified interest rates as a key tool for managing the economy by moving the focus away from saving and more towards spending.

This one notion is key to investment trends for the next decade and beyond. China and Russia are the new generators of personal wealth and every consumer goods company in the world is focusing an increasing proportion of its marketing and advertising budget towards these markets. Already the biggest export market for luxury cars from the likes of BMW, Daimler and Rolls Royce is China, as domestic consumption takes over from infrastructure expansion as the next driver of the Chinese economy.


A similar trend has been witnessed in Russia where, despite the common perception of oil being the major determinant of economic prosperity, the consumer related sectors account for two thirds of gross domestic product and have driven more than 80% of this GDP growth since 2004. (Source: Sperbank). Not only does this mean that Russian consumer stocks are too cheap when viewed on the basis of an international comparison but this creation of wealth benefits not just those companies based within Russia.

One only has to look at shops in the West End of London to appreciate that most of the buyers for their luxury goods emanate from the Far East, Middle East and Russia and our advice to our clients has been that their portfolios should reflect this global shift in wealth by selecting those economies with the best growth prospects and also those companies which are able to benefit from this new wave of consumer prosperity.



Please note:
The information contained in this commentary is provided by Brown Shipley for information purposes only. It does not constitute investment advice and should not be treated as a recommendation for investment. The past performance of an investment or market is no guarantee of future results. Any forecasts provided herein are based upon opinion of the market as at this date and are subject to change, depending on future changes in the market. Any prediction, projection or forecast on the economy, stock market or the economic trends of the markets is not necessarily indicative of the future or likely performance. Moreover, the information set forth herein speaks only as of the date indicated; it was not revised to take account of events which have occurred subsequent to the date indicated. The views expressed in this document constitute Brown Shipley’s judgment at the time of issue and are subject to change. Copyright Brown Shipley February 2013. Brown Shipley is a trading name of Brown Shipley & Co Limited, which is authorised and regulated by the Financial Services authority. Registered in England & Wales No. 398426. Registered office: Founders Court, Lothbury, London, EC2R 7HE. Brown Shipley’s parent company is KBL European Private Bankers which, from Luxembourg, heads a major European network of private bankers. read more →

 

Two Days at the Opal European Family Office Winter Symposium

Welcome to our brand new blog!  To kick off proceedings, we would like to update you on our interesting and busy two days at the Opal Winter European Family Office Symposium, held at the Park Lane Hilton (London) 11-12 February 2013.  Communications and Brand Director, Anna White attended this annual event with Red Square London Co-Founder Tatiana Nevard, who was honoured to be invited on the panel for the BRICs Region round table discussion; but more about that later.

Conference Day 1: Monday, 11 February 2013

The first day kicked off with sessions covering ‘Private Wealth Strategies’, ‘Investing Styles’, ‘Governance’ and ‘Risk’.  The discussions covering ‘Hidden Risks In Real Estate Investing’, ’Pitfalls and Illusions’ were of particular interest as Red Square London is becoming increasingly involved in property and this is a fast moving, dog eat dog industry.  Keeping up with internal developments is vital, and this was a hub of information, delivered by some very focused, qualified minds notably input from Anis Ashgar from RDS Capital Limited.

 

 

Conference Day 2: Tuesday, 12 February 2013

 

After a packed first day, we started the second day discussing how to ‘save the world and feel good about it’ AKA ‘Family Philanthropy’. We heard from top consultants, Plum Lomax of New Philanthropy Capital and Harin Thaker of the Akshaya Patra Foundation, on how they think outside the box to create really meaningful ‘giving relationships’ for clients. 

Notably, a fierce debate with Jake Hayman on what constitutes effective philanthropy made the morning coffee go down nicely.  This has certainly given us food for thought, and we are now looking at this area as a service we can offer our clients, as it isn’t currently something we do. 

Danladi Verheijn of Verod Capital argued enthusiastically for greater investment in smart projects in Africa and that was followed by Africa again but from an infrastructure investment perspective, investigating the efficiency of big investment projects, mostly PPP.

Lunch was taken with a number of interesting individuals with substantial wealth to invest.  What a joy it was to debate strategies for success in these challenging times with masterminds of industry.  It certainly put Tatiana Nevard in the right place mentally before she made her excuses to join fellow panellists for the BRICs Region roundtable discussion.

BRIC Region Roundtable

Tushar Patel of HFIM was the Moderator and controlled the debate on the future of the BRICs region, and potential for looking outside the region to MIST, or new frontier markets like the Balkans.  Our focus quite naturally was on Russia and the challenges to investing there, coupled with our experience that clients from the region can be reluctant to maintain or reinvest there. 

The audience was very responsive to our line of discussion and we took the majority of questions from the floor. We will be publishing a selection of these in our next blog. Our roundtable was followed by a similar discussion but focusing on the MENA region, which had some contradictory points of view over the safety of investing in the Middle Eastern Region.

….and Relax!?

Winding down, the Champagne Roundtable, hosted by Fusion Investments, Montreux Capital Management, Texas Coastal Energy and Nixon Peabody, gave Tatiana and Anna a chance to talk to  many of the other delegates attending and, due to high demand, continue the BRICs discussion in a more relaxed surroundings. Lastly, and perhaps most importantly for Red Square London, ’Key Personal Skills for Family Office Advisers’ rounded off a very full two days.

After the closing cocktail reception, we capped the Opal European Family Office Winter Symposium with a very enjoyable (and delicious) Sponsors’ Dinner at Nobu, Park Lane, hosted by Texas Coastal Energy.  Finally exhaustion won the day and led the Red Square London team home. Both Tatiana and Anna were booked into a very early marketing meeting the next morning in Pall Mall.  Business as usual!

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