Expat investors advised to proceed with caution on overseas investments

Published:  10 Feb at 6 PM
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With UK interest rates still at a miserable level and US stocks struggling since the start of 2014, investments in emerging markets may be tempting may expat investors.

Investing in overseas emerging markets was expected to increase after the turn of the year, but the sector has taken a beating for a number of good reasons. Tepid economies, inflation, high debt to GDB ratios and increasing political turmoil have all taken their toll on formerly optimistic projections.

China, the new power behind the global economy, has reported a fall in domestic growth to 7.7 per cent, a figure which Obama would love to be able to report but which, for China, is little short of a disaster. The mega-country’s growth is expected to decline over 2014 as its leaders attempt to encourage consumption at the same time as clamping down on a property bubble and discouraging bank lending.

The ending of the recession in the Eurozone last year, Ireland’s exit from its bailout and the prospect of Portugal’s following suit by next summer are all good news for Europe. However, the continent’s economy is still fragile, and fears of deflation are surfacing.

EU unemployment, especially amongst its young people, is damping down positive forecasts and GDP growth overall is expected to be tepid for the next two years. The proposed startup of ASEAN in South East Asia was expected to bring investment opportunities, but a number of unresolved essentials are holding back development.

Thailand, formerly popular with overseas investors for its higher interest rates and admittedly Thai-style improving economy, has seen overseas billions flow out of the country since the Bangkok demonstrations began three months ago. Unlike previous political shenanigans, the present situation seems irresolvable, with some predicting civil war, others suggesting a military coup is likely, and others pointing to the effect a further slowdown in China will have on Thailand's agriculatural export sector
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