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Phuket Investor: Excuse me, what is QE3?

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Phuket Investor: Excuse me, what is QE3? | The Thaiger
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PHUKET: Being a regular on the sun soaked shores of Phuket, watching the many boats sail by on a frequent basis, one may start thinking that QE3 is a new luxury cruise liner replacing the old QE2 that was recently decommissioned.

Not the case. In the never ending roller-coaster ride that is the world of finance, this is the latest brain child that, it is hoped, will start to shore up the world economy and give the markets the stability they long for.

It is worth revisiting what QE actually is. Quantitative Easing (or QE for short) is essentially a form of pumping money back into a faltering economy to try to boost spending and lending.

This may sound all well and good; however, with every plus side there is a downside. If we look at one country’s currency strength, the more in demand it is, the harder it is to “get your hands on”, and the more valuable it becomes.

In the case of Quantitative Easing, if you are putting money back into the economy, albeit through purchasing bonds, the new QE3 will look towards purchasing mortgage backed securities and you are in essence increasing the amount of funds available to the economy, which means that they become easier to get. Get where I am going with this?

Indeed the value of the asset will decrease. As QE3 would suggest, this is the third time this course of action has been taken, which has given the markets the injection they needed and also given investors more confidence that governments will do whatever it takes to get markets up and running once again. So, what will the fallout from this be? And, how would you potentially be able to profit from it?

Well firstly, with the FED in the US saying it would “buy US$40 billion of mortgage backed debts per month”, a fund or investment into mortgage backed securities could be a wise move. An example of one fund, for instance, is the Doubleline Total Return Bond Fund (DLTNX). This fund invests in mortgage backed securities and while it is not renowned for capital growth it has a very attractive 7.36% dividend payment, which in my book is not too bad and could be well worth a look.

Another repercussion of the QE3 will no doubt be the weakening of the US Dollar, this in itself presents an opportunity to invest in areas such as gold, as with a weakening US Dollar this has become something of an investor’s safe haven.

The price of gold is high but you can expect it to climb a little further with this news. QE3 is sure to prop up the markets for the short term. But in the future, is this the solution? I am not too sure. However, as said earlier, it now seems that there is a common consensus that whatever needs to be done will be done and this can only be good for markets on the whole, and for your portfolios in general.

The old problems still remain, so will Europe remain intact? And, with more money pumped into the US economy, there will also follow inflation fears, but as an investor myself I still believe that the future is looking brighter than it was 12 months ago and there are still profits to be made by making the right investment decisions. For portfolios based in USD, maybe an investment in gold could be a good hedge against what will probably be an impending weakening in the US Dollar.

This article was written by Anthony Lyman, senior financial consultant for the Montpelier Group. For any investment advice or questions, please contact alyman@montpeliergroup.com.

— Anthony Lyman

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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Never miss out on future posts by following The Thaiger.

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Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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