HSBC Column: Derek Proctor on Investing in the Far East
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By Derek Proctor, regional director at HSBC Private Bank in the Midlands. When it comes to investing, people often make the mistake of confusing the Far East with developing markets, or even simply with China. The reality is that the region is more than just one place, with rich and varied investment opportunities – there are many different countries and economies growing at different rates with different dynamics, different risks and different potential rewards. Take Japan. This was the first fast growing economy, which is now a mature economy and, arguably, in decline – hardly the stereotypical Far Eastern investment opportunity. Compared with somewhere like China, it is very different, and Indonesia, Thailand and Malaysia are different again; no two economies are the same. The key issue for most UK investors is understanding that, while investing in the Far East can be exciting, it can also represent a much higher risk. Such investments should generally be part of a portfolio with money spread around the world and spanning a combination of bonds, equity, hedge funds, private equity and property. The most important thing is to have a balanced portfolio, which will contain some investments in the Far East. The amount you choose to invest in these markets will depend on your risk profile. Once it has been established how much is to be invested, you need to think about which countries and which markets best suit you, and whether to invest in equities or currencies, which will reflect growth in the underlying economy. This will often require the services of an investment professional with real and provable experience in these markets and a physical presence in the region. This is a highly specialised area, and it is vital to work with somebody who knows the lie of the land, the culture and the details of what is happening on the ground. This is an area where HSBC Private Bank has been working since our inception, giving us the knowledge and expertise to advise on the best solution for your investment profile. For example, we run investments where clients earn a return on their investment in a fast-growing economy based against the US dollar over a fixed period, specialist investments in countries including China, India and Indonesia, and products that are 100 per cent capital protected. The most important factor when investing in the Far East – and, indeed, when making any investment to build a balanced portfolio – is to choose your adviser carefully. This must be someone you trust, with the experience and expertise to back it up.
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