EUROPE IS DOING VERY WELL AND THEIR RISING STOCK MARKETS REFLECT THE GOOD NEWS
A great deal of new liquidity is finding its way into European stock markets, leading to strong demand for stocks throughout Europe.
GERMANY’S EXPORTS BOOMING….MOST ARE HEADING EAST, NOT WEST…..EVEN WITH THE EURO RISING
Germany continues to boom, and most importantly, their exports are not going west they are heading east. Capital goods demand from Eastern Europe, Turkey, Russia and Asia has been a boon. The main reasons that German exports are booming are that 1) they make quality products connected to brand names, and 2) they have enjoyed low inflation and smaller cost increases as labor costs have been quiescent, and many of their raw materials are denominated in the U.S. dollar, which has been falling. The German stock market is being recognized as a good environment, and the country is being rewarded for their rating as the world’s number one exporter for the fourth year in a row.
Sweden is cutting taxes. Cynics wisely point out that the Swedish government will float shares in several government owned businesses later in 2007 and wants to have a good market to sell into.
Norway is benefiting from their energy deposits which are bringing investors to the Norwegian market.
The United Kingdom is enjoying the new leadership of London as a world financial center…perhaps the most important center).
Italy and Netherlands are enjoying a number of takeovers of their companies, further adding to their markets’ liquidity.
We are focusing on Sweden, Germany and Italy, but we also hold positions in several other European countries. Another benefit to investing in Europe for U.S. investors is that the Euro, the British Pound and other European currencies continue to rise in value against the U.S. dollar.
ONE OF OUR MAJOR INVESTMENT THEMES HAS BEEN FINANCIAL SERVICES TO THE WORLD
It is interesting to note, the reason that this theme is developing so well for us, is that there are a number of forces driving investment banks and commercial banks to merge and going global.
1. Most of the fast growth is in Eastern Europe, Asia and Latin America, were the banking competition is weak.
2. Technology allows for big savings, even across borders.
3. The major banks have capital and are getting the best students that business schools have to offer. Historically, top business school grads have wanted to work in consulting and management along with financial services, but now they seem to be focusing on financial services.
OUR OTHER THEMES
Our other themes are: global transportation air and rail, the growth of India and China, the growing demand for base metals and gold, energy, and the rise in currencies other than the U.S. dollar.