High Net worth invididual Investors the world over have to ask themselves at some point, where should my financial center be? Where in the World is the investment excitment/opportunties likely to most persist?
Where are transaction costs not excessive -and how to avoid the nasty so called retro-commissions which are designed to enrich the money manager and the bank, not necessarily the client.
On finding a new financial center for individual investors.
Sometimes I am asked what global high net worth investors should do when it comes to where and how to structure an astute long term investor set-up. Meaning, finding a new financial center to globally invest out of. New York as well as London is chuck’ full of regulations, dogma's and taxes, and USA/England/EU itself is ever more, can we say, lacking opportunities. The few there are, remain highly valued/priced on their exchanges. One seasoned person there recently told me if the Dollar drops some more, USA might very well start imposing currency restrictions on US $ financial holdings, in USA. (?)
Switzerland while a capable global executioner on stocks/bonds is, mind you, very top heavy on commissions charged and (at times secret handing-out rebates to outside money managers, see my separate article on this a few months ago)*. For example Swiss banks in Zurich charge no less then 5- 6 times the 0.25% commission rate to execute Thai stocks. This is not unusual but in fact the norm for financial buy/sells around the world!
So what about Luxembourg, which also comes up as an alternative. The structures/solutions/service they would there propose are the same as say in Hong Kong. The difference would be the very high fees and commissions, which likely would be even higher in LUX, then already expensive Switzerland. Further, the contentious issue of retro-commissions would be in full force as they fully subscribe to this "nasty" practice, like in Switzerland. The difference is that in Switzerland its technical illegal due to the inherent and obvious conflict of interest; whereas in Luxembourg, as I recently read from a credible source, it is legal and so a continued regular shameful practice! Hong Kong is a lesser expensive preferred alternative and with less investor abuses.
In Hong Kong whatever, if any, transaction commission rebates discount negotiated must be fully disclosed to the client, and go back to you the client, not to the fund manager(s).
Another difference is in the investment advise one receives. Surely the pros' as I know in Hong Kong are in a credible position to offer better overall Asia investment advise, as they are on location and breathe in this region!
It is my firm belief that some of the best most astute & competitive fund managers (fixed income, equity, etc) in the world reside in Hong Kong which I duly note has among the world strictest security regulations (SEC) in the world! Singapore is fine too, but Hong Kong is better.
I also remain totally convinced that some of the better returns on prudent investing in years to come will come out of Asia, not stagnant EU -or long peaked USA and likely to stay so... Election-year or not, and post sub prime mortgages scandal.
As Thailand's SET is likely to catch-up next year there will come a time where all of us have to ask how much exposure do we want to keep in Thai stocks? This is a normal healthy question, not meant as high alarm bells.
A few members might legitimately ponder the idea of getting beyond and start looking at Hong Kong as their next financial stop (if they have not done so already) with the idea that near or post the Chinese Olympics next year there will likely be a correction at some time. This would be a great entry point.
The future will remain most exciting in this region beyond Thailand ...and next year is a good time to re-asses things for some of you, assuming you get going and have in place with the right right professional set-up.
Best Regards,
Paul A. Renaud.
www.thaistocks.com
* See http://www.thaistocks.com/index.php?name=News&file=article&sid=866
