BSI has just released its report on growth prospects for the second quarter of 2018.
It is interesting, and important to observe and compare the nature and extent of risks between different parts of the world.
If we can note differences, especially for Asia which shows a remarkable risk profile, we should also note a certain similarity between the profiles of the USA and Europe with Africa and Latin America.
We can see that social, geopolitical risk for example in Europe is the highest and even higher than in Latin America or Africa. That even in the US this risk is very high.
The risk of a bond bubble bursting is real and almost twice as high in the US and in Europe as in emerging countries.
The risk of a slowdown in growth, while clearly pronounced in China, is nonetheless significant in the US and in Europe, and almost the same level as in Africa and Latin America. This reflects the effective globalization of the economy and the reality of interdependence, as well the dependence of the chinese economy. China is clearly the world economy engine.
Finally, it is important to note the importance of "other" risks in the US and in Europe which are between two and three times higher than in Latin America and Africa or Asia!
Regarding the currencies and their volatility nobody can be surprised. It is still possible to question this anomaly, this imbalance, the fragility of the financial system with its systemic risks, so sue how long this situation will continue...
All this demonstrates two things:
- globalization is a fact and interdependence firmly established
- power, economic prevalence has clearly changed sides.
Any serious investor must have this in mind and take it into consideration, both to aim for the best stable and continuous performance because based on stable fundamentals, and to limit the risk of very significant losses because they are too committed to areas that have become very fragile, unstable, losing dynamic, subject to limited and dependent growth, in short with higher risks.
We must imperatively respect the golden rule of diversification: that is to say, we must globalize its portfolio and it is definitely high time to do so.
At Vivalys, practicing the world, we became aware of the changes in 2004 and made them the basis of our strategy. Of course, there are cycles and difficult times, emerging and big and fast growing has unstabillity, but in the medium and long term we can not be mistaken about the fact that the prospects are and will be globally dynamic and with higher growth over Asia, Africa and Latin America, the engines of the world (except in case of nuclear war, climatic or sysmic or cosmic disaster of course).
It's summer, many of you will travel to distant/exotic lands. Naturally enjoy the beauties of nature, tourist sites, but if you are an investor, open your eyes, listen to local life, think about what is exposed above to touch a reality that you most certainly did not know. This will be useful for your decisions.