Weekly Thoughts 31 July 2015

I spent a couple of hours on Wednesday listening to the clever people from Coronation who manage their offshore funds. Then yesterday I spent some time with my Foord consultant. In all talks I was listening for thoughts on what’s happening in China and the effects, if any, on investment portfolios.

Coronation said that the Chinese economy has already shifted from infrastructure based to consumer based, which supports their investments in China being in consumer and internet type industries. They said that the banking system worries them a bit. On this point, Foord was showing the same concern by having small holding in banks in Hong Kong, but purposely not in China.

I then thought about Marriott’s offshore global equity exposure. They do not own any companies domiciled in China or highly exposed to the economics or politics of region. This is because they run their global fund as a First World Equity Fund, thus being exposed to first world countries and not emerging markets, where reliable dividends are harder to find.

In many ways, many companies around the world make profits from almost all regions and countries. So the effects of one country’s political or economic issues does not always translate into big issues for the company. They can simply choose to no longer trade there.