“The US economy created far more jobs than had been expected during the last three months of 2011 and this good news helped to lift markets. It was also the case that many larger highly globalised businesses, such as Apple, continued to proposer despite the problems in the Eurozone; Apple sold a staggering 37 million iPhones in the final quarter of 2011.
“This year If cash is king, then income is likely to remain queen with inflation still running at around 5% and cash rates very poor. During 2011, £67.8 billion was paid out in company dividends. This figure is expected to increase in 2012 as companies choose to return cash to shareholders rather than making investments.”
“During 2010, the UK and the US markets showed great resilience when faced with an enormous weight of negative news, this is because of the global nature of these markets; in that many UK companies already generate a significant portion of their earnings from outside of Europe.
“Currently the Eurozone economy is being propped up by a weak currency, encouraging the growth of export led businesses, but eventually deep structural changes to labour markets will push continental Europe into a recession.”
This emphasis on taking a global outlook is echoed by Claudia, who also commented on the resilience of the US economy and the importance of investing in companies either based in the US or generating a large portion of their earnings from North America (such as Johnson Matthey or Union Pacific Railways). Claudia has also been looking for opportunities in Asian markets with a particular focus on businesses involved in energy efficiency:
“BorgWarner is a leading global supplier of highly engineered systems and components for automotive engines. Its technology increases fuel economy and/or reduces emissions, and the business has proven able to compete in the rapidly growing Chinese automotive market.”