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January 2005

LLOYD GEORGE MANAGEMENT The East-West Pendulum Revisited The Outlook for Asian and Emerging Markets Robert Lloyd George. January 2005. The East-West Pendulum. The East-West Pendulum Updated. CHINA 2005 vs CHINA 1990 GNP/Trade/Per Capita Income/Stock Market CHINA’s Impact on the World

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January 2005

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  1. LLOYD GEORGE MANAGEMENTThe East-West Pendulum RevisitedThe Outlook for Asian and Emerging MarketsRobert Lloyd George January 2005

  2. The East-West Pendulum

  3. The East-West Pendulum Updated • CHINA 2005 vs CHINA 1990 GNP/Trade/Per Capita Income/Stock Market • CHINA’s Impact on the World Manufacturing, Exports, Deflation/Inflation, Commodities • CHINA Investment opportunities and Risks

  4. Indirect Investment in China • Australian mining shares • Brazil iron ore/ Chilean copper • Hong Kong Real Estate • Japanese Machine Tools • Travel and Tourism (HK, Thailand, Malaysia)

  5. CHINA’s Impact on the World (like JAPAN 1980s) 2005-2010 • Deflation or Inflation? • Chinese (like Japanese), buying Art treasures and property • CNOOC’s bid for UNOCAL and - LENOVO/IBM important pointers for the future

  6. Investment Outlook 2005 • US dollar recovery • Liquidity Squeeze • Steady growth in Asian economies • The key is the Asian Consumer (China, India)

  7. REITS - a new Asian Asset Class • US: and Australian / examples in past 20 years - • Japan, Singapore • Hong Kong • Cashflow - High Dividend Yield • Asian preference for property ownership

  8. Lloyd George Management • US$5.5 Billion Assets Under Management • Largest Independent Investment “Boutique” in Asia • Founded 1992 - our vision is that CHINA and INDIA are 2 key Emerging Markets • Offices in Hong Kong, Singapore, Bombay and London • 60 staff (20 investment professionals) worldwide

  9. Investment Philosophy • Conservative, long term, stock-picking • Small cap and Mid cap (Find the “Microsoft of China 2015”) • High ROE, strong balance sheet and committed management with same interests as shareholders • Concentrated Asian Portfolio of 40 stocks - make “bets outside the benchmark”

  10. Natural Resources - Key Investment Theme • “BRIC” - Brazil / Russia / India / China • Food, oil and minerals • Risks are legal, political and corporate governance • Watch the Middle East - where will the oil price be in 2010?

  11. Three Geopolitical Blocs • USA, EU, and Asia • US-DEBT, THE DOLLAR, and “EMPIRE” • EU-EXPANDS FROM 15 To 33 nations (including TURKEY) • ASIA-CHINA/ASEAN FREE TRADE accord, and possible NEW ASIAN CURRENCY BLOC - China is the Regional Leader

  12. China demand as a percentage of world demand

  13. Conclusion • The East West Pendulum has bounced back • Hong Kong still the place to be • LGM a reliable partner for Asian investment

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