Investing in a globalised economy

DOSSIER FONDS & CO.
Investing in a
globalised economy
We live in an increasingly globalised economy. Most of the goods we buy, even many of the foods
we consume, are now sourced overseas. What does this mean when it comes to investment? By
analysing the current environment there are few points of which investors should be aware.
therefore could be taking more risks
than someone with an international
portfolio.
Having said this, the Swiss stock
market is not the worst culprit. Looking at developed markets, the biggest
concentration of sectors is in Portugal,
where 78% of the market is in the
banking, telecom services and utilities
sectors. The most concentrated market
outside of Europe is Canada where
63% of the market is invested in the
energy, materials and banking sectors.
The most diversified market is the
U.S., which is pretty much on a par
with the global index, at just 29%
(MSCI AC World) concentrated in the
largest three industries. Japan then follows with 35% and Europe with 36% 2).
By Alfred Strebel
Executive Director Switzerland
Fidelity International, Zurich
1. Sector concentration
Sector concentration has increased
dramatically in the last decade and as a
result the Swiss stock market, for
example, is now dominated by a handful of industrial sectors and stocks
which are global in nature. The three
largest sectors – pharmaceuticals and
biotechnology, diversified financials
as well as food, beverage and tobacco
– account for almost three quarters of
the total stock-market capitalisation 1).
In other words, almost three francs in
every four francs invested go into a
pharmaceutical, financial or food-andbeverage company, and portfolio performance may largely reflect what is
happening in these areas.
This overconcentration on a few industrial sectors means that savers who
constrain their investments to Switzerland lack genuine diversification and
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2. Stock concentration
The top five companies in the MSCI
Switzerland Index – Nestlé, Novartis,
UBS, Roche and Credit Suisse – represent 71% of the index. The reality is
that these are not “Swiss” companies;
they are global companies whose stockmarket address just happens to be
Switzerland.
By constraining a portfolio to
Switzerland, investors may well find
themselves taking a large bet on a
small number of companies. They will
also be expressing a preference for
Swiss listed multinationals over their
global peers without regard for fundamentals or valuation – best in Switzer-
land will not always mean best in class
when it comes to investment potential.
3. Limited investment opportunities
The Swiss stock market accounts for
only 3% of the combined value of all
the world’s stock markets 3). In other
words, investors are missing out on
more than 95% of the potential opportunities by ignoring investment opportunities outside of Switzerland.
While some sectors in the Swiss
market are overrepresented, some of
the world’s most dynamic industries
are underrepresented. IT and telecom
services together, for example, represent less than 2% of the market 4).
In addition, certain investment plays
are simply not open to those who stick
to Swiss stocks. The energy sector
does not even register on the Swiss
market. Not only do you need to look
at stocks in Europe to tap into the high
oil price by buying the majors, such as
BP or Shell, but, if you want to focus
even more on a specific theme, such as
oil refineries, you have to look even
further afield. Capital investment in
refineries has lagged demand for their
output, and it is difficult to see much
new capacity coming on line in the
short term. After all, who wants a dirty,
big oil refinery in his own backyard?
Putting money into BP or Shell is not
the optimum way to pursue this theme,
as less than 20% of their profits are
generated from their refinery opera-
Everywhere we look, we see evidence of globalisation –
whether we are buying our food or a new TV. Isn’t it time our
investment portfolios accurately reflect the world we live in?
PRIVATE
6 /2006
DOSSIER FONDS & CO.
The three largest sectors – pharmaceuticals and biotechnology,
diversified financials as well as food, beverage and tobacco – account
for almost three quarters of Switzerland’s stock-market capitalisation.
This overconcentration means that savers who constrain their investments to Switzerland lack genuine diversification and could be taking
more risks than with an international portfolio.
tions 5). If you look outside Europe,
however, you can find companies
whose core business is refining crude
oil, companies such as Valero Energy,
which is listed on the New York Stock
Exchange. Valero is the largest refinery business in North America.
4. Currency risk
Investors should not be under any illusion that they are protected from currency risk by investing their money in
the Swiss stock market. Currency risk
is more explicit in some stocks than
others. Most of the major companies
have international operations and report their finances in U.S. dollars.
Novartis, for example, has its headquarters in Basel, Switzerland, and
does much of its research here, but because more of its revenues are generated in the U.S., an investor may well
be taking a dollar risk.
5. Globalisation
The effects of globalisation are perhaps most evident in the consumerdurables industry. Take a look at your
TV: it probably says “Made in Korea”
or “Made in Japan” somewhere on the
back. But this is misleading: its parts
have been merely assembled in that
country. Nowadays, the components of
a flat-screen TV, for example, will have
been sourced from around the world.
The glass for the screen may have
come from America, the chemicals for
the liquid-crystal display from Europe
and the semi-conductors from the Far
East.
The location of a company’s stockmarket listing is becoming increasingly irrelevant to its day-to-day business and profit generation and should
also be less relevant to investors.
By constraining a portfolio to
Switzerland savers are arguably not
investing their money efficiently. A
Swiss portfolio is likely to be exposed
6 /2006
PRIVATE
to currency risks and international
trends but lacks the benefit of genuine
sector or industrial diversification that
a global portfolio brings. And that’s
not to mention the breadth of opportunities it will miss.
Everywhere we look, we see evidence of globalisation – whether we
are buying our food or a new TV. Isn’t
it time our investment portfolios accurately reflect the world we live in?
1) Datastream 30.9.2006: MSCI Switzerland
2) Datastream 30.9.2006: MSCI World indices
(Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Greece,
Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, UK
and U.S.) as well as Europe
3) Datastream 30.9.2006: MSCI AC World
4) Datastream 30.9.2006: MSCI Switzerland
5) BP Plc: 2005 operating profit figures
.
Investieren in einer globalisierten Welt
Wir leben in einer zunehmend globalisierten Welt. Die meisten Güter
und selbst viele unserer Nahrungsmittel werden heutzutage irgendwo im
Ausland produziert. Was bedeutet das für unsere Investitionen?
1. Sektorkonzentration: Die Sektorkonzentration hat sich in den vergangenen
Jahrzehnten drastisch verstärkt. Heute entfallen fast drei Viertel der Marktkapitalisierung am Schweizer Aktienmarkt auf die drei grössten Sektoren – Pharma,
Finanzen und Ernährung. Das bedeutet, dass Anleger, die sich auf die Schweiz
beschränken, ungenügend diversifiziert sind und möglicherweise höhere Risiken
eingehen als internationale Investoren.
2. Titelkonzentration: Die fünf grössten Unternehmen im MSCI Switzerland
Index (Nestlé, Novartis, UBS, Roche und Credit Suisse) repräsentieren 71% des
Indexes. In Tat und Wahrheit sind diese Unternehmen keine «Schweizer» Firmen,
sondern globale Konzerne mit einer schweizerischen Börsenadresse.
3. Beschränkte Anlagechancen: Der Schweizer Aktienmarkt entspricht lediglich 3% der weltweiten Marktkapitalisierung. Mit anderen Worten: Anleger, die
sich auf die Schweiz beschränken, verzichten auf über 95% der Investitionsmöglichkeiten, die sich ausserhalb ihres Heimmarkts ergeben würden. Zudem sind
gewisse Anlagemöglichkeiten in der Schweiz zum vornherein ausgeschlossen,
weil sie, wie beispielsweise Öl und Ölraffinerien, nur anderswo zu finden sind.
4. Währungsrisiken: Anleger sollten sich nicht dem Trugschluss hingeben, dass
sie vor Währungsrisiken geschützt sind, wenn sie ausschliesslich in der Schweiz
investieren. Die grossen Schweizer Unternehmen sind weltweit tätig und erwirtschaften einen substantiellen Teil ihrer Gewinne im Dollarraum. Investoren sind
folglich automatisch auch einem gewissen Währungsrisiko ausgesetzt.
5. Globalisierung: Die Auswirkungen der Globalisierung sind wahrscheinlich
im Bereich der langlebigen Konsumgüter am offensichtlichsten. Während ein TVGerät heute vielleicht die Herkunftsbezeichnung «Made in Korea» oder «Made in
Japan» trägt, werden die einzelnen Komponenten schon ganz anderswo produziert und in Korea oder Japan nur noch zusammengestellt. So verliert der Ort der
Börsenkotierung für internationale Unternehmen zunehmend an Bedeutung,
wenn es um das Tagesgeschäft und die Gewinnerwirtschaftung geht. Dasselbe
gilt analog für die Investoren.
Es ist offensichtlich, dass Anleger, die sich auf die Schweiz beschränken, ihr
Kapital nicht optimal einsetzen. Überall, wo man hinsieht, erkennen wir die Auswirkungen der Globalisierung, vom Essen bis zur Unterhaltungselektronik. Wäre
es nicht an der Zeit, dass unsere Anlageportfolios die Welt, in der wir leben, etwas
akkurater abbilden würden?
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