Phuket Business – Looking forward to 2012

PHUKET: Walking into my local shopping center yesterday I was amazed to see Christmas decorations adorning the shops and general surroundings. A quick check of the date on my watch and I realized that although the trees, baubles and tinsel were a trifle early, it certainly was closer to the holidays than I had imagined! This gave me food for thought and with 2011 racing by at a rate of knots I have located my crystal ball and had a look ahead to 2012.

Firstly to say that 2011 has been a difficult year for the world economy and financial markets would be quite an understatement. With the well documented problems of Greece, Ireland and Portugal and perhaps the impending financial crisis within Spain, Italy and France times certainly have been turbulent. Asia however, has been a robust geographical investment area and the outlook moving forward remains positive.

So, looking forward to 2012?

We can pretty much expect Europe to remain volatile with Italian bond yields now reaching the dreaded 7% mark. Global analysts openly accept this as the level in which a potential default would be expected. Once we then add high unemployment and government cost cutting into the equation it means all roads point towards very tough times ahead.

Not everything is doom and gloom however, in Asia the story is very different, and as we bask on our Phuket beaches we can be quite assured that smoother times lay ahead than with our European counter parts.

The International Monetary Fund trimmed its economic growth forecasts for Asia on Thursday because of financial turbulence in Europe and a possible slowdown in the US However, a 6.3% growth forecast still shows that Asia is definitely the place to be. With prudent planning, it shows that investments still offer good value over the medium to longer term.

Things won’t all be plain sailing, so a totally smooth ride would be wishful thinking. As always we must consider the domino effect, what happens in one part of the world tends to affect the rest in one way or another.

As Asia (and in particular Thailand and Phuket) is a major tourism hot spot, the cost cutting being felt in Europe and the US will no doubt have implications on the revenue being brought into the country. On the plus side, we should still see a continuing flow of Australian tourists and hopefully many Europeans should feel that a holiday has been well earned this year.

What does all this mean if you have an existing portfolio?

Active management is crucial. Things will remain turbulent moving into 2012 and it is advisable to look at your existing holdings and think, does this still add value? No doubt if you are heavily invested in a geographical area such as Europe, then potentially things could be a little bit bumpy, and a focus on Asia and Latin America could be more prudent.

Professional help and advice is readily available and for savings such as pension funds and investments, be proactive to determine if these are actively managed or will exposure in areas such as Europe and the US have a major bearing on how your individual portfolio performs. To do nothing, could spell disaster.

Certain areas in Europe and the US still offer good value and should not be totally discounted whether this be in mutual funds or individual stocks. The choice is so great and vast that your head could get into a spin, so keeping things simple is a wise choice. Does any of this sound familiar? If so seek professional advice, help is on hand.

For now, I am off to go and pick my Christmas tree!

Anthony Lyman (CEFA) is a Senior Financial Consultant for Montpelier Group. Readers may contact him at Alyman@montpeliergroup.com.

— Anthony Lyman