11/05/2007

The Dragon is no Saint Bernard

Hello:

Switzerland, whose mascot symbol is a St. Bernard (with keg), was considered to be passively neutral in WWII. The banking system was secure and secretive, with numbered accounts.

Not that our current global skirmishes are considered to be a World War, however we are noticing an actively balanced neutrality (playing both sides?) on the part of China, whose mascot symbol is a dragon. On one hand, according to the South China Morning Post, Donald Tsang Yam-Kuen, the Chief Executive of the Hong Kong Special Administration Region (HKSAR) announced he will lead a delegation to the Middle East to promote Hong Kong, China, as the center for Islamic Finance. On the other hand, according to the Financial Times, three of the United State's largest Private Equity firms, KKR, Carlyle and TPG held preliminary talks about selling a minority stake to China's Social Security Fund. So one could deduce that the dragon is offering money to both sides of the current unrest in the Middle East. This might not be considered a passive strategy.

These and other reasons keep us interested in allocating a portion of many portfolios into non-domestic investments. (Investing in international and emerging markets entails special risks such as currency fluctuation and political instability)

This is the time of year to budget for next year's written investment policy statement, which would include a recommended asset allocation.Please contact us for more information.

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager