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David Kempton: my answers to the big investment questions

Experienced investor David Kempton is clinging onto a big cash holding, but eyes profits from China.

 
David Kempton: my answers to the big investment questions

As we move towards the new year, it is useful to reflect on the achievements of the last one. They seem hard to spot, but times have changed and in some cases even for the better.

Is Europe closer to resolution? Greece and Ireland look slightly better, but what of Spain and France with recently elected president Francois Hollande?

The US election probably got the result investors wanted, but what of the fiscal cliff?

Was the Arab Spring a success? What is next for Libya, Egypt, Syria, Iran and Israel?

Is China still cutting back or have we reached stability?  

There will be reams written in the press through Christmas and into the new year, but I will remain steadfast in my beliefs of what lies ahead.

Europe’s worrying unemployment

Europe is little closer to resolution and could yet divide between the haves and have-nots. But, does it really matter as much as a year ago? I suspect not. Whilst clearly still crucially important to the UK, our exporters are doing brilliantly in their essential efforts to seek other more distant and reliable markets, as did Germany before.

I fear most for the 20 million unemployed in the euro-area, nearly 4 million of them under 25, and expect riots on our streets this winter.  I like Ruth Sunderland's comment in the Daily Mail that the older unemployed get depressed and take to the bottle, the younger get angry and take to the streets.

From fiscal cliff to energy independence

The US looks better and the fiscal cliff will get fixed by being pushed out over time.

Ahead in the US we have the game changer of cheap energy independence, which brings with it great swathes of industry becoming price competitive again. Cheap emerging market-based manufacturing is coming home, with obvious benefits to the labour market, balance of payments and consumer sentiment.

Shale gas is not quite a done deal and talk of US becoming the world's biggest gas exporter by 2015 may be precipitate, but nevertheless Boston Consulting Group estimates that in three years US manufacturing costs will be 15% cheaper than those in Europe, 8% cheaper than Japan and only marginally more expensive than China. Watch the housing index next year; this is always the key barometer.

China growth translates to UK tourism gains

China has reached stability and a recent visit to Hong Kong persuaded me that the new level of Chinese state investment spending is viewed as more comfortable, whilst China’s new leadership appears keen to address the difficult and pressing social issues. 

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3 comments so far. Why not have your say?

antigricer

Dec 04, 2012 at 15:03

David,

As the Ecofin Water & Power Opportunities IT is split capital do you invest in the Unsecured Loan Stock, the Ordinary Shares or the Zero Dividend ?

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Frank Randall

Dec 04, 2012 at 17:27

Look at the Lumber commodity futures , that is always an indication of US housing activity and is anyone buying Motor Homes in the US also another good indicator of disposable income

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Rob Walker

Dec 08, 2012 at 12:52

More Chinese tourists - is that what you want? personally the social impact of mass tourism on London, Stratford upon Avon, and other big attractions would be dire and not worth the extra income. Do we have to sell everything just to keep afloat? Look at Paris. The queue to the Louvre takes half a day to get through, same with the Musee D'Orsay - it is shambolic and depressing with thousands of tourists (mainly Asian) crawling over every monument and consuming every flicker of culture. Same goes for Florence and Rome. Is that what you want? - well that's what you're gonna get !

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