IQI Global chief economist Shan Saeed
Contributed by SHAN SAEED (Economist)
Alchemy of financial markets is changing every day. First world countries [US, Japan, Europe] are facing headwinds to restore confidence back into their economies. In the last ten years, central bankers in the advanced economies have used QE to borrow future economic growth rate. Never worked. From 2008 to 2017, estimated growth in China 7.5%, in USA 2%, Europe 1.6% and Japan 1.4%.
Printing money is like financial protectionism and has not worked in the recorded history. Europe and Japan are struggling to spur economic growth. Asia is emerging as the growth region for the global economy. China is leading from the front and becomes the new economic and social power. Belt and Road is the only winning infra-structure investment strategy to rejuvenate the global economy. BRI is the strategic vision/brain child of President Xi Jinping from China. If you are part of Belt and Road, you are relevant [ Indonesia, Malaysia, Pakistan, Kazakhstan, Philippines, Russia, Mongolia, Egypt, Turkey]. If you are not part of Belt and Road, you are IRRELEVANT and can enjoy ice cream on your way home. Total investment in BRI is tantamount to $1.4 trillion which is 12 times the investment size of the Marshall plan in 1952. High-Speed Train has become the new obsession for many countries to spur growth and to keep the economic momentum trajectory on the upsurge.
Financial markets are manipulated and distorted by FED/ BOJ/ ECB/ BOE, creating asset price inflation and bubbles. Valuations of bond, equity, real estate are measured on the economic principle named NPV which is based on future earnings. Markets are not based on true valuations and are sleepwalking at the present moment. Markets are behaving like a sheep, ready to be slaughtered.
Few noticeable appreciation in asset classes are:
- Real estate is up 10 to 25% in various region
- Gold is up 28% since Dec 2015
- Oil is up 169% since Jan 2016
- Cobalt is up 109% since Jan 2016.
- Yuan is up 30% against Japanese Yen since Jan 2017.
Refined and sophisticated investors are taking a long position in asset classes [ Real Estate, Gold, Silver, Agriculture, Cobalt, Oil and Gas, Arts and Chinese Yuan] that are giving them peace of mind with solid returns in these tempestuous times. Refined and cultured investors are revisiting their asset portfolio to make sustainable profits to stay ahead of the crowd in the global financial markets. Sophisticated investors are sagacious and make smart moves for their benefit in the long run.
