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INVESTING IN EUROPE

INVESTING IN EUROPE LIBRARY INVESTING Why invest in Western Europe? Over the long term, international di­ versification may offer U.S. investors increased opportunity, reduced risk and the potential for increased returns. Patricia M. Cleary It has become increasingly popu­ lar for mutual fund companies to in­ Spurred by the headline-making Product) of $4.9 trillion. This com­ troduce funds that are composed political changes in Europe, a new pares with a population of 243 mil­ solely of European companies. It is- economic era is dawning over the lion in the United States and US GNP possible to buy closed-end funds from continent. It is hoped that by 1992, of $4.7 trillion. (GDP and GNP both one country in particular, i.e., the unified free trade will be achieved, measure the total market value of Germany Fund, or funds that would bringing with it lowered trade bar­ goods and services produced.) This include diversification to all the EEC. riers and potential economic growth. large European marketplace is fur­ Track records are available for any The emergence of a unified econ­ ther benefitting from a general im­ of the funds you might be interested omy presents a timely investment provement in living standards of the in by contacting the mutual fund opportunity. Multinational compa­ population, and from the entry of company of your financial consultant. nies will be able to take advantage Greece and Portugal into the EEC. You can also invest in individual of larger markets than ever before. The outlook for continued eco­ European companies through the The changes in Eastern Europe may nomic growth in Western Europe is purchase of ADRs (American Depo­ also increase demand and reduce based on several factors: The gov­ sitory Receipts). Not all companies trade barriers. ernments of the major European na­ offer ADRs, but there are a number If the European Economic Com­ tions have followed a conservative to choose from. munity (EEC) can become an inte­ approach to fiscal and monetary pol­ As you can see, the potential for grate d economic unit, goods, icies aimed at prolonging conditions good returns through an investment services, people and capital can move of moderate economic growth with in Europe is quite strong. It's nice to as easily from Portugal to Belgium low inflationary pressures. In the know that when the going gets tough as they do from Florida to Maine. United Kingdom, in particular, the in the U.S. markets, w e can continue The elimination of varying business budget deficit has been eliminated, to earn high rates of return by in­ laws and the formation of standard coincident with a major reduction vesting overseas — an d you won't procedures would provide a prod­ in the rates to individuals. Given the even need a passport. ═ uct approved in one country with conservative nature of current eco­ automati c approved status in all nomic policies, there is considera­ countries within the EEC. Moreover, ble scope for stimulative measures the national appeal of, for example, to be introduced should general "Made in Spain" may very well be world economic conditions deteri­ replaced with "made in Europe." orate in coming years. The removal of most remaining Western European markets are a significant part of the total world barriers to free trade among the 12 member nations of the European stoc k market capitalization. Al­ Economi c Community will make though the United States and Japan dominate the world stock market Europe one of the largest common markets in the world. Europe will values, Europe as a whole consti­ have 320 million consumers, com­ tutes over 20% of the total world equity market capitalization. pared with 240 million in the United States and 120 million in Japan. Finally, there are positive trends This year, real output should grow for equity investment at work in Western Europe. The private sector at a rate of 3.4%. Employment is raising rapidly. It is projected to in­ is becoming increasingly important crease this year by 1.5% after the to the European economies, with many government-run enterprises record 1.6% of last year. This means that almost two million additional returning to private ownership and job s will be created this year control. There are also a number of structural developments aimed at throughout the Community, while unemployment has decreased to a increasing wider share ownership in level of approximately 9% of the ci­ Europe, including the granting of tax incentives for equity investment in vilian labor force. In 1987, Western Europe's total some areas, a trend to the creation population was 405 million, with an of funded pension funds in many countries and the introduction of aggregate GDP (Gross Domestic mutua l funds. All these develop­ ments are likely to increase demand Patricia M. Cleary is a financial consultant with for equities over time. Merrill Lynch, Pierce, Fenner and Smith, New York. 32 THE BOTTOM LINE Volume 4, Number 1 http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Bottom Line: Managing Library Finances Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0888-045X
DOI
10.1108/eb025273
Publisher site
See Article on Publisher Site

Abstract

LIBRARY INVESTING Why invest in Western Europe? Over the long term, international di­ versification may offer U.S. investors increased opportunity, reduced risk and the potential for increased returns. Patricia M. Cleary It has become increasingly popu­ lar for mutual fund companies to in­ Spurred by the headline-making Product) of $4.9 trillion. This com­ troduce funds that are composed political changes in Europe, a new pares with a population of 243 mil­ solely of European companies. It is- economic era is dawning over the lion in the United States and US GNP possible to buy closed-end funds from continent. It is hoped that by 1992, of $4.7 trillion. (GDP and GNP both one country in particular, i.e., the unified free trade will be achieved, measure the total market value of Germany Fund, or funds that would bringing with it lowered trade bar­ goods and services produced.) This include diversification to all the EEC. riers and potential economic growth. large European marketplace is fur­ Track records are available for any The emergence of a unified econ­ ther benefitting from a general im­ of the funds you might be interested omy presents a timely investment provement in living standards of the in by contacting the mutual fund opportunity. Multinational compa­ population, and from the entry of company of your financial consultant. nies will be able to take advantage Greece and Portugal into the EEC. You can also invest in individual of larger markets than ever before. The outlook for continued eco­ European companies through the The changes in Eastern Europe may nomic growth in Western Europe is purchase of ADRs (American Depo­ also increase demand and reduce based on several factors: The gov­ sitory Receipts). Not all companies trade barriers. ernments of the major European na­ offer ADRs, but there are a number If the European Economic Com­ tions have followed a conservative to choose from. munity (EEC) can become an inte­ approach to fiscal and monetary pol­ As you can see, the potential for grate d economic unit, goods, icies aimed at prolonging conditions good returns through an investment services, people and capital can move of moderate economic growth with in Europe is quite strong. It's nice to as easily from Portugal to Belgium low inflationary pressures. In the know that when the going gets tough as they do from Florida to Maine. United Kingdom, in particular, the in the U.S. markets, w e can continue The elimination of varying business budget deficit has been eliminated, to earn high rates of return by in­ laws and the formation of standard coincident with a major reduction vesting overseas — an d you won't procedures would provide a prod­ in the rates to individuals. Given the even need a passport. ═ uct approved in one country with conservative nature of current eco­ automati c approved status in all nomic policies, there is considera­ countries within the EEC. Moreover, ble scope for stimulative measures the national appeal of, for example, to be introduced should general "Made in Spain" may very well be world economic conditions deteri­ replaced with "made in Europe." orate in coming years. The removal of most remaining Western European markets are a significant part of the total world barriers to free trade among the 12 member nations of the European stoc k market capitalization. Al­ Economi c Community will make though the United States and Japan dominate the world stock market Europe one of the largest common markets in the world. Europe will values, Europe as a whole consti­ have 320 million consumers, com­ tutes over 20% of the total world equity market capitalization. pared with 240 million in the United States and 120 million in Japan. Finally, there are positive trends This year, real output should grow for equity investment at work in Western Europe. The private sector at a rate of 3.4%. Employment is raising rapidly. It is projected to in­ is becoming increasingly important crease this year by 1.5% after the to the European economies, with many government-run enterprises record 1.6% of last year. This means that almost two million additional returning to private ownership and job s will be created this year control. There are also a number of structural developments aimed at throughout the Community, while unemployment has decreased to a increasing wider share ownership in level of approximately 9% of the ci­ Europe, including the granting of tax incentives for equity investment in vilian labor force. In 1987, Western Europe's total some areas, a trend to the creation population was 405 million, with an of funded pension funds in many countries and the introduction of aggregate GDP (Gross Domestic mutua l funds. All these develop­ ments are likely to increase demand Patricia M. Cleary is a financial consultant with for equities over time. Merrill Lynch, Pierce, Fenner and Smith, New York. 32 THE BOTTOM LINE Volume 4, Number 1

Journal

The Bottom Line: Managing Library FinancesEmerald Publishing

Published: Jan 1, 1991

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