Portfolio Recommendations: Shaw Capital Management Korea

We have made no changes in the balance of our portfolios this month. The strength of the equity markets is encouraging, and we expect that the global economy will continue to recover, and push the markets even higher by year-end.

Portfolio Recommendations: Shaw Capital Management Korea. Market Developments. Economies virtually everywhere have been recovering for some months; the question is what to do post-crisis. For some, like Ireland, Iceland and Latvia, there is little option but severe and immediate public sector retrenchment. For most however there is a choice: on the fiscal side

cuts (or tax rises) now, or later spread over a long period. On the monetary side, continued printing of money or cessation and even reversal. In fact this is one of those periods when the ‘independence’ of central banks, that is their independent authority to set interest rates and

the extent of money printing, is a disadvantage for the economy, all of which need at present careful coordination of monetary and fiscal policy.

Portfolio Recommendations: Shaw Capital Management Korea. There has been an increase in the risks in the bond market; the current situation, with the latest attempts to resolve the Greek debt crisis achieving only limited success, and a sudden weakening in the world bond market emphasising the funding problems that are affecting the entire bond market.

Portfolio Recommendations: Shaw Capital Management Korea. Independence of Central Banks. Economies virtually everywhere have been recovering for some months, the question is what to do post-crisis. For some, like Ireland, Iceland and Latvia, there is little option but severe and immediate public sector retrenchment.

For most however there is a choice: on the fiscal side cuts (or tax rises) now, or later spread over a long period. On the monetary side, continued printing of money or cessation and even reversal. In fact this is one of those periods when the ‘independence’ of central banks, that is their independent authority to set interest rates and the extent of money printing, is a disadvantage for the economy, all of which need at present careful coordination of monetary and fiscal policy.

At Shaw Capital Management we give you the information and insight you need to make the right investment choices. We look forward to working with you and being the open architects of your financial well being.

Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor. Our philosophy is simple: almost every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.

Before Shaw Capital Management South Korea launched the open architecture revolution, investors had to make the unhappy choice between selecting an advisor who was independent, but unsophisticated (the traditional pension and endowment consulting firms), or selecting an advisor who was sophisticated but had conflicting interests (global banks, trust companies, money management firms).

Today, virtually all investors faced with the challenge of managing a significant pool of capital can access open architecture advice.

bott_ � i ; �^y z ttom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal;mso-layout-grid-align: none;text-autospace:none'>The UK and the Budget: Shaw Capital Management Korea. Spending cuts To begin with the last, the current government unleashed a massive surge in public spending from 2000, raising it by 8% of GDP before the crisis raised it by more again.

Everyone knew that without reform and gradual increases, such money would be wasted; there is no practical way to spend such vast sums without raising wages and wasting money on speculative projects.

Productivity in the public sector duly slumped and public sector remuneration including pensions has surged past the private sector where market forces suggest pay should be higher to reflect greater insecurity.

The UK and the Budget: Shaw Capital Management Korea. To reduce public spending back to where it started in 2000 as a share of GDP (at around 36%) would require it to grow in real terms by about 16% less than real GDP over the next five years. Since total GDP growth over that period is likely to be about 10%, that means that spending must be cut by about 1% a year in real terms.

This is a feasible target. The UK Treasury under Gordon Brown became a brute instrument of spending increase, oddly somewhat against the protests of some departments worrying about wasteful effects. The UK Treasury was never traditionally like this … very much the opposite, a place from which wringing money was like getting blood from stones.

It should be returned to its traditional function of restraint; Treasury control, old-style, is the best instrument for forcing departments to find the economies they privately know they can make.