International investments do best if they are tuned to new events as they unfold. We for example have been looking at risks in international investments made with loans in a strengthened Japanese yen. This is a real international investments risk. The yen has been rising in recent trading sessions as concerns grow that G7 countries will act to make the yen rise. Jyske Bank’s expectations that the yen will strengthen has prompted the bank to change its recommendation on Australian and New Zealand dollar denominated bonds to sell.
Yet after 15 years of making international investments with borrowed weak yen this is hard to believe. We are so familiar with the state of being that our mindsets resist change.
Sometimes it is even harder to realize that the greatest safety is in international investments in emerging markets. They may seem less safe because they are volatile but international investments in emerging markets have outperformed the majors for 6 years and are supported by fundamentals of lower labor costs.
For example an international investments recommendation to invest in Brazil, Egypt and Iceland may sound risky because each country has had economic troubles.
Yet real value comes when troubles have been solved but most of the market is thinking in the past!
This is true of international investments in equities and bonds. Fitch, the rating agency for example has just upgraded the outlook on Brazil from stable to positive (BB rating), on the country’s foreign- and local-currency debt. S&P increased Brazil’s rating to BB November 2006.
Egypt is another country where the bonds pay a high yield but is quite safe. Jyske Bank has a buy recommendation on bonds denominated in the Egyptian currency. Egypt has lowered has lowered import duties by 25% which is expected to bring stronger economic activity.
Iceland after moving through a sticky patch also offers opportunity. The trade balance is improving. The country’s last trade deficit ISK 6.5bn in January against ISK 9.0bn in December and ISK 8.4bn in January last year. However the international investments market has not reacted so interest rates on short term bonds are still in the 14% range. Jyske Bank recommends buying short term Iceland kroner denominated bonds.
One way to have a more flexible mind and in a position to adjust to change more readily is to be in truly good health. Our minds, bodies and souls are connected. When we are in poor health, our bodies struggle just to maintain physical balance. This creates a state where our being we resists change.
Healthy investors are better investors.
You can lean more about this by continuing this message at https://www.garyascott.com/international_investments/212.html
Until then may all your international investments be good.
Feb. 20 – 25, Tues.-Sun. Import-Export Expedition.
Mar. 9 – 15, Fri.-Thurs. Ecuador Spanish lessons. Expanded Super Thinking + Spanish.
Mar. 16 -18, Fri.-Sun. International Business and Investing Made EZ.
Mar. 19 – 21, Mon.-Wed. Andes Extension & Real Estate Tour.
March 23 – 25, Fri. –Sun. Shamanic Mingo Tour.
You can enroll for our March Andean 4 course adventure at www.garyascott.com/catalog/4course/