Global Investments
International Limited

CRISIS-HIT MARKETS BOTTOMING OUT

Investors are still wary of risk, but they are looking for better returns than they get from bank deposits By Nina Suebsukcharoen

The global economic storm seems to be easing, with key markets, both commodities and equities, widely seen as having bottomed out, says Neil Robbirt, Chief Executive of Global investments (Far East) Limited.

The Hang Seng index two weeks ago posted its biggest one-day gain this year. And while the FTSE and Dow Jones do have negative days, Mr. Robbirt pointed out that there have not been massive declines for the past two months, which means the markets have already stabilized.

“The million-dollar question is when are we going to see a bull turn and a bull run? It will only be a temporary one, but it is going to happen - analysts are saying the third or fourth quarter this year.”

Although some major international banks are still posting losses, the sums are not as bad as many analysts had expected.

“If you had bought Barclays in January, when it was touch-and-go whether it was going to be taken over by another bank, if you had put £100,000 in Barclays in January, today it would be worth £350,000.”

Commodities too are looking good. Mr. Robbirt believes that if the dollar falls gold will rise above US$1,000 an ounce from the present level of about $900.

“I would advise anybody holding cash and getting less than a 1% return to put money on this - they are going to make more by just having it in a gold fund between now and the end of this year.”

“They may not make a double-digit return, but they are probably going to make anywhere between 7% and 10%, which is a lot better than 1%, isn’t it?”

Mr. Robbirt also rejected arguments that inflation will set in after global economic problems ease, as this crisis has hit mature economies such as the US and Europe. Small inflationary pressure, however, is still on the cards.

Despite key markets now appearing to improve, the big issue right now is that people with savings are getting low rates of return from banks. They are actually losing money if they get less than 1% because inflation is higher than that.

Of course, people are also worried about the risk of losing their money.

In trying to address this problem Global Investments is in negotiations with a private fund management group to put together a five-year capital-guaranteed investment. The anticipated return is 5-8% net – not stratospheric because of the capital guarantee, meaning the investor’s principal would be protected. Fund managers would be investing the money in emerging markets, gilts, equities, commodities and bonds.

This global investment fund will be launched by the end of this month, with a minimum investment about £10,000 to £15,000 (525,146 to 782,168 baht), and no ceiling. The first version will be in Sterling, the second in Dollars and the third in Euros.

Mr. Robbirt sees no reason why Thais shouldn’t invest in this fund, pointing out that they have paid tax on their money and therefore should be allowed to invest provided the fund is approved by local regulators.

Global Investments is also gearing up to help Britons and Europeans with their pension problems. Big companies such as British Airways and British Telecom are weighed down by pension liabilities. If these giants go out of business the British government is supposed to pick up the tab - but it does not have enough money to do so.

Mr. Robbirt explained that the way out of this potential problem is to transfer half of a UK pension to a facility called a Self-Invested Personal Pension (SIPP). However, he said, companies don’t want you to move pensions because it’s taking funds away from them. But he pointed out that an EU law that came into effect in 2006 allows all European citizens residing permanently outside their country to transfer pensions out of their country tax-free under Qualifying Recognised Overseas Pension Schemes (QROPS)

“We had one client whose only asset was his pension - no house, divorced, two children. He has moved to Chiang Mai from England purely so that he can have a tax-free pension and he can have a better lifestyle.”

Mr. Robbirt said retirement is very attractive here despite the current exchange rate of 51-52 baht to the pound, compared with 65 to 67 baht a year ago. Because there is such a big QROPS market among British people, Global Investments is in the process of launching its own QROPS website by the end of this month.