Investment Articles

As a very important role of world economy, China has made a tremendous achievement of utilizing foreign investment since the reform and opening up. China’s agriculture began to utilize foreign investment in the end of 70’s, when the reform and opening up just started. Agriculture is one of the earliest industries to utilize foreign investments. The new government has been paying unprecedented attention to agriculture due to its strategic position in the development of economy in China. Then Documents about agriculture has been issued again by the authorities in 2005. Solving the problems facing agriculture, rural areas and farmers has been the most important task for the government. Therefore, under the background that more and more attention has been paid to agriculture, it has both theoretical and practical significance to study how to expand, introduce and utilize foreign-investment effectively and efficiently to promote agricultural modernization, industrialization and internationalization.

This article is composed of four parts to discuss the central topic “Utilization of Foreign Investments in Agriculture of China”.

1. The background, purpose, significance, content and methodology of this study are introduced and an overview of the past and current studies and researches is presented. Besides, the basic theories of agriculture utilizing foreign investments are summarized.

2. The characteristics of agriculture utilizing foreign investments in China are summarized according to its development, status quo and problems existing in the developing process. Moreover, the model of FDI’s contribution to agriculture economic growth is set up to analyze relations between agricultural GDP and FDI in agriculture. Also, we sets up a multivariate regression model of FDI and its influence factors such as the level of agriculture economic development, human capital, the extent of agricultural internationalization and investment climate, etc. The quantitative analysis can provide the data support for government policy.

3. Through introducing the international experiences and lessons of agriculture utilizing investment in developed countries (America and Korea) and in developing countries (Thailand, India, Brazil and Indonesia), some inspirations have been drawn for investment utilization in our agriculture.

4. Based on the theoretical and empirical analysis of the status quo, problems and the influence factors of agriculture utilizing foreign investments, learning its international experiences and lessons, we comes up with some concluding remarks and policy suggestions as follows: agriculture in China should further strengthen the development and exploit market potential; improve agricultural investment climate and upgrade the superiority of introducing foreign capital; intensify high-quality foreign investments introduction and increase the utilizing efficiency; enhance the supervision and control of both domestic and foreign markets as well as establish and consummate rules and regulations.

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Making a foreign investment might seem like Greek to you, but if you are into stock investing, going international could be a great investment strategy. For the past 10 years the best investment strategy has NOT been BUY AND HOLD American stocks, equities. In fact, the U.S. stock market has been a loser.

Even going back before the crash of 1929, the past 10 years have been the worst 10 year period for stock investing in the USA. Every investment strategy aimed at growth involves equities. So, what’s the average investor to do? How about a foreign investment or two to add diversification and growth prospects to your bleeding portfolio?

The U.S. economy and stock market may recover and lead the world as in the good old days. In case it takes a few more years, you should get into foreign investment now rather than later. Making an international investment is easier than you think, and only makes sense in today’s world. The USA does not dominate the investing scene as it once did. The rest of the world has played catch up; and played it well.

The best investment opportunities may be in China, India, or in South America or Europe. You’ll never know, but that’s OK. You don’t need to sift through all the data when you make an international investment. Let the professional money managers do the heavy work for you by investing in international funds. You have several types of mutual funds to choose from in the international investment category, but I suggest you keep it simple.

For most people the best investment would simply be diversified equity international funds. These international funds invest in stocks in numerous countries, usually concentrating on equities (stocks) of developed nations. You might want to invest a smaller amount in an emerging markets fund that specializes in equities of smaller or less-developed economies.

If you want to get more adventuresome, some funds invest in foreign bonds; and some specialize in specific regions like China, Japan, or South America. The safest way to go is to diversify broadly with international funds that spread your money around.

Foreign investment is not just for the sophisticated investor anymore, nor is going global a risky speculation. It’s a great way for most people to invest for growth and to diversify their stock investing. You don’t need to pick your own individual securities to invest in. Heaven knows, few of us are capable of analyzing domestic stocks, let alone foreign issues. With mutual funds you can join the international investing community with professionals dealing with the details for you.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

When the going gets tough smart investors concentrate on asset allocation and diversification. The new investor should too. First we will explain these terms; and then tell you how to put these concepts into action as an investment strategy.

Asset allocation is the process of deciding where to invest and in what proportion. In other words, how do you allocate the money that makes up your total investment portfolio (a fancy word for your list of investments)? For example, you might have an asset allocation of 60% stocks and 40% bonds.

Diversification means spreading your money out across various different investments. For example, the 60% you have allocated to stocks might be diversified or divided among 6 or 60 different stocks. Or, you could get stock diversification by investing in just one stock mutual fund which holds 100 different stocks.

In tough times even the new investor needs to incorporate both financial concepts into their investment strategy to avoid heavy losses in any one area. I suggest you get more conservative in both areas, and at the same time broaden your horizons. Let me explain. Let’s say that at present you are 60% in stocks and 40% in bonds, with emphasis on growth stocks and longer term corporate bonds.

Get more conservative by replacing some of your aggressive stocks with some that are more defensive and pay higher dividends. Cut your bond risk by moving some money into intermediate-term high quality government bonds. Then broaden your asset allocation to include safer and short-term debt obligations like bank CDs and short-term bonds. And expand into alternative investments like real estate, oil, foreign investments and precious metals.

In other words, when uncertainty is high as in 2008-2009, cover all the asset classes and diversify like crazy. Don’t get caught standing flat-footed with a portfolio heavily invested in just one or two areas. Sound pretty challenging for a new investor? Now we simplify.

The new investor can easily solve the diversification issue by simply investing in mutual funds. For example, a conservative value stock fund might invest in over 100 different stocks, and pay dividends of 2% or more. Mutual funds are also the ideal way for a new investor to broaden asset allocation by holding just a handful of different funds vs. a long list of individual securities.

For illustrative purposes, you might put together an investment portfolio that looks something like the following. First, the types of mutual funds are listed, and then the asset allocation percentage.

Money market fund: 10%

Short-term bond fund: 10%

Intermediate-term bond fund: 30%

Diversified domestic stock fund: 20%

International stock fund: 10%

Real estate fund: 10%

Energy fund: 5%

Gold fund: 5%

Total asset allocation percentages must total 100%. In our above sample portfolio you cover a lot of bases with lots of diversification by holding just 8 different investments – all of which are professionally managed for you.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

Emerging markets refer to countries, which have opened up their doors to international trade in the interest of developing their own economies. To understand this better, one has to understand the difference between a developed and an undeveloped economy. A developed economy is one, which is able to support itself in entirety, with the possibility of continuous growth due to the development of its own technology. An undeveloped one, of course, is its opposite. Thus, an emerging market economy is one, which is in transition from being an undeveloped/developing economy to a developed one.

For this purpose, emerging markets accept the inflow of foreign influence to enhance their business methods and their technology. This influence comes in the form of business relations and agreements between investors and the emerging market. By allowing foreign investors to establish businesses within the country, these markets gain part of its income, adding to its gross capital income, and in effect allow it allocate more resources. A well-established local business, in the same way, may also opt for expansion in other nations. This chain of trade practices improves the overall capacity of a country to do business, with its goal being able to become at par with already developed countries. This is what also determines the value of a country’s currency is in the world market.

An emerging market is characterized by the increase in both local and foreign investment. Increase in the local perspective signifies that business practices have improved. Foreign investments prove that the global community believes that a country has promise. Neither of these, however, is possible without effective economic reforms. These reforms differ from one country to the other, and these depend mostly on culture and resources. When the culture of a nation is highly conservative (like that of Japan in its early years), the inflow of foreign technology is resisted so change is highly improbable. Japan, in itself however, was a pioneer in many technological feats so it never got left behind. The resources of a country also limit its ability to do business. In history, Russia led the global community in trade before 19th century due to its large population and its vast resources. With the tide of the century, however, there came World War I, and Russia was it’s biggest casualty. To this day, however, Russia is still one of biggest emerging markets there is. The same applies to other emerging markets in the world today, including China, India, Indonesia, Brazil, Mexico, Argentina, South Africa, Poland, Turkey, and South Korea.

Each of these countries plays an important role as an individual market. Eventually studies have been made to develop these markets by coordinating their efforts, and so evolved terms such as BRIC, BRICS, BRICET and BRIMC. BRIC stands for the countries of Brazil, Russia, India, and China. The other terms were derived form BRIC, with the addition of South Africa (S), Eastern Europe (E), Turkey (T), and Mexico (M). The original BRIC thesis proposed that these four countries would eventually become the most dominant countries by the year 2050. This is because of the business network that exists between these countries even in the present day. China and India specialize in manufactured goods and services, while Brazil and Russia are vital suppliers of raw materials. An example of this working relationship is the production and distribution of IBM products.

Frank Collins is an traveler and an editor for Exploring Abroad.com

Sovereign Wealth Funds (SWF) are owned and managed by governments or central banks of various countries around the world to invest their trade surplus globally, usually on a long term basis. They are funded by trade surplus of international trade, foreign currency deposit, International Monetary Fund reserves and other national funds like pension funds and oil funds. With subprime crisis haunting the global financial sectors, several SWFs are being criticized for investing heavily in Citigroup, Morgan Stanley and Merill Lynch which left them gasping for cash infusion. Nevertheless, from $500 million in 1990 to $3.8 trillion in assets today, SWFs have their presence now spread across 27 countries.

Around two-third of SWFs are held by the commodity and oil exporting and gulf countries like Qatar Investment Authority, primarily with the objective of diversifying their revenue streams and reduce oil-related risk and their dependence on oil export revenue.

Over the last decade, large current account surplus enabled Russia and China to build up their sovereign funds. They seemed to have realized (after Asian financial crisis of 1997-98) that it is better to build up their own reserves instead of depending on IMF to bail them out at the time of crisis. Russia and China now manage around $450 million and $1.44 trillion in SWF assets respectively.

Industry experts predict that assets under SWFs’ control could reach $12 trillion by the end of 2015.

The two main purposes of SWFs are short term foreign currency stabilization and liquidity management. The Global Financial Stability Report (2007) classified SMFs into five groups depending on investment objectives of their respective governments. They are:

(i) Stabilization Funds

(ii) Saving Funds for Future Generation

(iii) Reserve Investment Corporate

(iv) Development Funds; and

(v) Contingent Pension Reserve Fund.

During the period of rising oil prices, SWFs of oil exporting nations drastically due to increase in their foreign exchange reserves which are then used to make strategic acquisitions across the world. On the other hand, SWFs of emerging economies like China, Singapore, Malaysia and South Korea tend to grow steadily.

Another point of difference is the SWF to Foreign Reserve Exchange ratio which is used to determine the proportion of reserves which are invested using SWFs. It has been observed that OPEC have higher ratio compared to emerging economies. Last year, ratio for Qatar Investment Authority was 5.9 times compared to China Investment Corporation’s 0.12 times.

For more information, please refer to http://understandingbasicsoffinance.blogspot.com

Geetika

Several countries are keeping their economies away from SWFs due to the concern that some investments are being diverted for political objective to acquire control of strategically important assets. It has been observed that OPECs have been diverting large pool of funds in acquiring strategic assets and investing in important sectors like infrastructure, telecom, energy and media across developed countries. After much opposition from US Congress, Abu Dhabi’s Investment Authority had to withdraw from its ADIA Dubai Port after 9/11 terror attacks.

China Investment Corporation’s $5 billion stake in Morgan Stanley and acquisition of Citigroup by Abu Dhabi Investment Authority for $7.5 billion was severely criticized after the recent subprime crisis.

Lack of transparency continues to be a major concern for nations that are experiencing increasing SWF funding in their economies. SWFs are being criticized for inadequate disclosures regarding size and source of funds, investment objectives and their holding in private equity funds. While in the U.S., these concerns are addressed by the Exon-Florio Amendment to the Omnibus Trade and Competitiveness Act of 1988, European Union preferred to avoid SWF funding. Some experts opine that such a fear is unwarranted if we compare the size of SWFs assets ($2 trillion) with the size of global investment funds assets ($20 trillion) and securities traded in dollars ($50 trillion).

IMG tried to address this concern of transparency and governance by issuing the Santiago Principles in 2007, a set of 24 voluntary principles to ensure transparency and sound governance by sovereign wealth funds (SWFs). However, very few SWFs have been following these principles seriously.

Geetika

Sovereign wealth funds are state owned collections of stocks, bonds and other assets. They are often funds which come about as a result of a significant amount of surplus cash held by the country in question. Not every country has such funds, but those that do are often saving for the future, giving future generations some form of security.

1. The largest of the sovereign wealth funds is called the Abu Dhabi Investment Authority – owned by Abu Dhabi, United Arab Emirates. Much of this country’s wealth is based on oil, a resource they still have a large quantity of. They are saving for the future however, as the oil supplies will eventually run out. The current estimated size of the fund is 627 billion dollars.

2. Saudi Arabia comes in at 431 billion dollars, with the Saudi Arabian Monetary Agency (SAMA), which was formed in 1952. The fund was set up at a time when Saudi Arabia did not have a currency of its own. It is another example of sovereign wealth funds being at the center of very forward thinking in terms of getting a country into a western way of operating as well as planning for a future where oil wealth dries up and other industries have to be developed so the people and state has a way to make money.

3. The third largest of all sovereign wealth funds is that of the Government Pension Fund of Norway, which comes in at 395 billion dollars. Again, this fund takes the nation’s considerable wealth (for a nation of 4.8 million people, this fund is truly massive) and makes investments that will see a return over a number of years. As the name suggests, this fund will provide a comfortable pension for the hard working members of the Norwegian state.

4. State Administration of Foreign Exchange, or SAFE, is owned by the People’s Republic of China and manages the country’s foreign exchange reserves, as well as regulating the foreign exchange market in that state. 347.1 billion dollars is the current value of the fund, which, like the other sovereign wealth funds, aims to solidify China’s position as a financial powerhouse and general global power.

5. The China Investment Company comes in at number 5, currently thought to be worth around 298 billion dollars. The wealth of the Chinese state is considerable and is demonstrated by the fact that there are 2 huge investment funds from this country in the top 5.

Sovereign wealth funds provide nations with a huge surplus to capitalize on this wealth – and ultimately become more wealthy.

Gino Hitshopi is highly experienced in the realm of sovereign wealth funds, having worked in the investment industry for many years. For more information please visit: http://www.preqin.com/section/infrastructure/4

Understanding your investment options may be simpler than you think. All investment opportunities can be placed into one of four categories. Where you should invest money to make money depends on your financial objectives. Do you want to save money or do you want to invest it? Here are your four choices, starting with the safest.

SAVE MONEY: If you are not in a position to invest money and accept even a moderate level of risk stick with cash equivalents and savings plans. Examples include T-bills, money market accounts, money market funds, Savings Bonds, CDs, and the fixed or stable account in 401k and similar retirement plans. All of these investment options pay interest and your principal (the money you invested) is safe.

BONDS: The financial objective when you invest money here is to earn more interest than you normally do in savings plans or in cash equivalents. Risk is at least moderate since bond values are not fixed and the price of bonds fluctuates. Examples include T-bonds, corporate bonds, municipals, and bond funds.

STOCKS: Investment opportunities in stocks involve more risk than the two general investment options above. Stocks are the primary growth investment for most investors, and stock prices can be volatile at times. But if you want to make money over the long term and stay ahead of inflation and income taxes, you should invest money here. Examples include domestic (U.S.) equities (stocks), foreign equities, growth stocks and value stocks.

ALTERNATIVE INVESTMENTS: If you are looking for growth investment opportunities outside of the stock market and/or want to offset the risk of owning equities consider other (alternative) investments. Examples include real estate, precious metals, foreign investments, and natural resources like oil. When you invest money here risk can be significant and so can the profit potential.

That’s it. Those are your four basic choices if you want to save money or make money investing. Don’t expect to make big profits in savings plans or in bonds under normal circumstances. And don’t expect to get safety if you pursue bigger profits in stocks or alternative investments.

Smart investors take advantage of investment opportunities and are willing to accept a moderate level of risk. They invest in all four of the above investment options. 

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

Diversifying your investments is one way to strengthen your overall portfolio, and it’s one of the most popular in today’s economic climate. Aside from varying your investments between stocks, bonds, and cash accounts, however, another popular option is to invest in one of the 21 major stock markets that exist outside of the United States. Foreign investments can yield good return for an investor who is willing to put the time and effort to properly research a foreign market investment opportunity.

Basic Foreign Market Investment Principles

U.S. and foreign markets lack correlation (i.e., if one market is up, they other may be down). However, this does not mean that because one market is up the other is always down. Academic studies have shown that over the long term, diversification via foreign investing is a smart way to help ensure a strong portfolio.

Of course, there are risks associated with foreign markets, too. All investment opportunities, domestic or foreign, involve some risk. In foreign market investments, exchange rate is one of the biggest risks, as a U.S. investor’s return is affected by the value of the U.S. dollar versus the value of the other country’s currency.

In addition to the exchange rate, there are other factors that affect foreign market investment, as well. For example, the sociopolitical atmosphere of a country can affect foreign markets; this is called country risk. Also, different countries have different accounting conventions. An understanding of the foreign market’s accounting conventions can also be vital for stock analysis.

How to Invest in Overseas Markets

If you decide that investing in foreign markets makes good sense for your portfolio, there are some very strict rules and requirements for entering into the foreign investment markets. In most cases, you’ll want your financial advisor to handle most of the steps.

- ADR – American depository receipts (ADR) are a way to make foreign markets accessible to American investors. They are stocks of foreign companies listed on both the New York Stock Exchange and the NASDAQ. Companies with ADRs are subject to the same accounting conventions as U.S. based companies. Though they are bought, sold, and held as though they were regular shares of U.S. companies, ADRs act more like the foreign stocks that they are based on.

- U.S. Traded International Stocks – The New York Stock Exchange and NASDAQ do list a few foreign stocks on their exchanges. These stocks meet the U.S. Exchange standards.

- U.S. Multinational Corporations – Another way to enter foreign investment markets is to buy shares of multinational corporations. Though these companies may be based in the United States, many of them generate revenue throughout the world, making them an effective and easy way to gain exposure in the global market.

Foreign investments certainly aren’t for those who prefer low-risk investments. However, they can provide a way to diversify your portfolio beyond the traditional scope. Like all good financial decisions, you should fully research and consider your options before moving forward with any plan.

Questions? Email me at wesley@thewandwgroup.com and visit our website at http://www.thewandwgroup.com

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.

It’s time to invest money and you’re confused by the millions of investment options out there. This money guide will make things simple for you. There are only 4 basic investment options in the world. Buckle your seat belt for this whirlwind tour; we’ve got a lot of ground to cover in a few hundred words.

Investment option #1: SAFE INVESTMENTS that pay interest. There are two ways to invest money here. First, in savings vehicles like bank CDs, fixed annuities, fixed accounts in retirement plans and savings bonds. Your principle is fixed and safe, and your interest rate is also fixed, sometimes for a specified period of time.

The second type of safe investment is cash equivalents, commonly just referred to as “cash”. This investment option includes high quality money market securities like T-bills (short-term), savings and money market accounts, and money market mutual funds. Your principle is fixed and safe, but the interest rate paid is not fixed for long and/or subject to change.

Option #2: BONDS. This does not refer to U.S. Savings Bonds. Included here are treasury bonds, corporate bonds, municipal bonds, and so on. Here the interest rate paid is fixed and does not change. Your principle is not fixed, which means that the value of your bond investment will fluctuate. When you invest money in bonds, you can lose money. The advantage: higher income in the form of interest vs. option #1.

Investment #3: STOCKS are variable investments and fluctuate in value significantly. People invest money in stocks to get growth and to a lesser extent income in the form of dividends. A stock’s price is not fixed, and dividends are subject to change and can be eliminated altogether. The advantage here: higher potential returns as stock prices rise.

Investment option #4: ALTERNATIVE INVESTMENTS. This includes virtually all “other” investments, and here is where you need to think outside the box of traditional investing. Commonly, most folks do not have the time, expertise, or inclination to invest in real estate, natural resources like oil, gold & silver, foreign investments, commodities like soybeans and corn, and the list goes on.

The fact that all “other” investments are lumped into a single category should tell you something. The first 3 are your major investment options, and have traditionally been the kingpins for diversification and investment strategy. More and more financial advisors now believe that alternative investments should get the attention that they deserve. Advantage: they add even more valuable diversification to your portfolio.

This money guide believes that a good sound investment strategy will include investments from all 4 categories. Where can you invest money to offset losses in a bad stock market? The answer: alternative investments.

Now, to wrap things up, is there an easy way to invest money in each of our 4 basic investment options? You bet there is … mutual funds. All within a major fund family you can find the following, from #1 to #4: money market funds, bond funds, stock funds, and specialty funds.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com