Article Abstract:
Almost 300 billion pounds sterling work of foreign equities are owned by the UK. Some foreign markets can perform better than the UK but it is difficult to select the right markets, and the UK market may perform better than foreign markets as a whole. Diversification through investing in foreign stocks may not necessarily reduce risk since markets have tended to move together, especially when they are weak. Some analysts argue that correlations change over time and there has been a fashion for dismissing diversification linked to a strong performance of domestic stocks. International diversification may be a useful way of cutting risks.
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Article Abstract:
Equity markets may not benefit from planned European monetary Union (Emu). Bond yields could rise in the Netherlands and Germany, which could lead to lower share prices. Corporate earnings in countries that have seen devaluations could be affected by an end to currency depreciation, and this would affect Spain, the UK and Italy. Germany could benefit if the euro is weaker than the German mark, but French share prices are likely to suffer since bond yields are not likely to fall and French companies have had problems cutting costs.
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Article Abstract:
The US Federal Market Open Committee decided against raising interest rates in Sep 1996. Alan Greenspan, chairman of the Federal Reserve, hopes that inflation will be subdued due to factors such as new technology and lower economic growth rates. Some analysts are concerned about the impact of this decision on financial markets. Inflation could be a risk if economic growth is strong, while slower growth could affect corporate results and so share prices.
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