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Panel Detail:
Tuesday, April 25, 2006
10:50 AM - 12:05 PM
Global Capital Markets: Where Are the Returns?
Speakers:
Brian Fabbri,
Chief U.S. Economist for North America, BNP Paribas
David Jackson,
Chief Investment Officer, Istithmar
Suzanne Nora Johnson,
Vice Chairman, The Goldman Sachs Group Inc.
James Packer,
Executive Chairman, Publishing and Broadcasting Ltd.
David Rubenstein,
Co-Founder and Managing Director, The Carlyle Group
Moderator:
Maria Bartiromo, Managing Editor, "The Wall Street Journal Report," Anchor, CNBC
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Suzanne Nora Johnson gives an upbeat analysis of the health-care and biotech sectors. At left is David Jackson.
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While many opportunities exist in the capital markets, the panelists' primary concern was the incipient protectionism that seems to be emerging in the economic community. David Jackson of Dubai-based Istithmar referred to this as "a nasty strain" of protectionism.
Each of the panelists expressed concern over such actions as the call by Sen. Chuck Schumer for tariffs on Chinese imports or the recent uproar over the sale of U.S. port operations to an investment group from Dubai. And it is not only in the United States that there are signs of protectionism. Countries like France and Italy are also increasingly engaging in such measures and resorting to protectionist rhetoric in order to combat what they see as the "danger" of globalization.
Except for the protectionist issue, the panel members agreed that they see a generally benign outlook for the global capital markets, forecasting a continued pattern of low volatility and generally attractive financial market conditions. Jackson said he favors alternative investments, such as hedge funds and private equity. Suzanne Nora Johnson of Goldman, Sachs & Co. likes uranium as a cheap energy source and thinks uranium producers or even uranium futures might make an attractive investment.
Australian James Packer, Brian Fabbri of BNP Paribas and David Rubenstein of The Carlyle Group were all bullish on Asia. Packer favored China, in particular; his top idea would involve opening an equity research shop in Shanghai, as he sees this as an underserved market with fantastic growth potential. Rubenstein was a strong proponent of diversification, cautioning investors to avoid putting all of their eggs in one basket. Rubenstein favored investments in renewable or alternative energy sources. Fabbri was particularly excited by the dynamic growth prospects Asia currently offers, noting that this is in stark contrast to Europe and America.
The panel also discussed particular sector views. Rubenstein again extolled the opportunities available in the renewable-energy sector, not only in the United States, but also in China and India. Although excited by alternative and renewable-energy sources, none of the panelists felt that the current run-up in oil prices pose a threat to the strength of the economic expansion. They did note. Though. that at some level, a continued rise in energy prices would result in an end to the global economic expansion.
Fabbri and Johnson both favored the health-care and biotech sectors; demographic trends in the United States and around the world are extremely bullish for this sector in the long run, they predicted. Jackson produced perhaps the biggest surprise of the panel. Although the majority of the investment community has turned negative on the sector, Jackson's company continues to favor U.S. real estate. Finally, Packer discussed how his company was excited to have secured a gaming license in Macao, the island near Hong Kong that is forecast to soon surpass Las Vegas as the world's busiest gaming destination.
The one area of disagreement among the panelists was on the future of private equity. As the co-founder of one of the largest private-equity firms in the world, Rubenstein continues to be bullish on the future of the industry. Johnson was somewhat more bearish on the sector, particularly regarding the prospects for many of the newer entrants to the market.
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