International Investments May Beckon Affluent
As the American stock market (influenced by domestic economic concerns) shakes out more timid or conservative investors, international vehicles may seem like a safer vehicle as a hedge against home-grown market forces.
In Spectrem's Meeting the Affluent Investor’s Needs through International Investing Perspective, when asked, "How Likely Are You to Invest or Continue Investing Internationally?" 40% of the total and 51% of those under age 50 responded that they were likely or very likely.
It can be argued that global stock markets are increasingly tied together, especially when large movements are underway; such as the global "correction" which occurred this past February, as well as the current plunge that begun July 26th. But as the dollar continues to weaken against other currencies, and the American market loses its surefootedness, compared to the still high-flying exchanges of Asia and South America, the affluent will continue to be drawn away from home towards the excitement. Not with the core of their holdings, but with the smaller percentage of assets they are willing to risk for higher returns.
As 2007’s Dow, S&P and NASDAQ jumped up and down, most international markets, with the exceptions of Russia and Saudi Arabia, continued their six month rise and excellent performance. Poland’s performance was especially notable within the "New Europe" countries, with a 34% rise, followed by Turkey (22.8%). "Global markets are going crazy, but there's a reason for that since people believe we are in the middle of a Goldilocks scenario: tame inflation and good growth," said Kim Hyun-tae, a fund manager at Landmark Investment Management in Seoul. Research also shows that 30% of affluent investors are interested in China and 20% in Europe for their international investments, again, mirroring the trend in the markets.
Because the performance of the U.S. market in the first six months of this year was among the weakest in the world, those who have chosen to invest internationally have shown great foresight, and probably receive impressive dividends for their troubles; the Tokyo market has doubled since 2003, and Shanghai and Mumbai (India) were both up as well.
Perhaps prophetically, when asked what affects their investment plans the most, the affluent expressed high levels of concern with stock market conditions just prior to both major Wall Street plunges in February and July. This is likely because the affluent (and millionaires in particular) tend to be more attentive to market trends and fluctuation.
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