While communication technology and collaboration software have significantly changed corporate decision-making, there remains one aspect of business that is impossible to replace: actual face time. As a result, mobility continues to be a critical growth driver for corporations and entrepreneurs seeking to increase their international market share — so much so, in fact, that global business travel spend is predicted to reach USD 1.6 trillion in 2020.
But, despite the world becoming ever more interdependent, there is still huge disparity in the levels of travel freedom enjoyed by citizens around the world. Needless to say, those who hail from countries with few visa-waiver agreements find time-consuming visa-application processes a serious hindrance to transnational mobility. A second passport, then, offers an effective means of increasing travel freedom and accessing opportunity in the world’s largest consumer markets.
In fact, for the thousands of wealthy individuals and their families who wish to operate globally, reduce their exposure to risk, diversify their investments, increase their international flexibility and open up new opportunities for growth, an alternative residence or citizenship is considered an essential resource.
Travel on Demand
St. Lucia’s citizenship-by-investment programme offers one of the most efficient and affordable routes to accessing the world’s foremost business destinations. The island nation grants its passport holders visa-free access to 127 countries, including the UK, the Schengen area, Hong Kong and Singapore. The investment costs are reasonable, processing is swift, and citizenship can be passed on to future generations by descent.
For those looking to Europe for passport diversification, Malta’s citizenship-by-investment programme –– the only one to be endorsed by the EU –– is the most popular. Ideally located between Southern Europe, North Africa and the Middle East, the country offers its citizens the freedom of unrestricted travel to no less than 167 countries. It also places one of the lowest tax burdens on residents, with the system combining corporate taxation with favourable tax credit incentives. In addition, Maltese citizenship confers the right to live, work and study in any of the 28 EU countries as well as Switzerland — effectively providing 29 European-based tax-residence options.
Broaden Your Horizons
Citizenship-by-investment programmes like those of St. Lucia and Malta provide a mutually beneficial solution that meets the needs of governments as well as a generation of ever-mobile global citizens. In 2014, global residence and citizenship planning firm, Henley & Partners, was mandated by the Government of Malta to design and implement the country’s citizenship-by-investment programme. This year, the firm opened an office in St. Lucia, its fourth in the Caribbean. As a result, Henley & Partners is uniquely positioned to provide in-depth advice and support on citizenship-by-investment in both countries, among numerous others.
As the world becomes ever more globalised and people live and conduct business on a progressively more international scale, the freedom to move within the global market provides a decided edge. So, while property, pension funds and private equities still have their place, increasingly, the most valuable asset in the portfolios of global investors is a second citizenship.
The UK’s Serious Fraud Office has started a formal investigation into British American Tobacco over corruption allegations in Africa.
The SFO said it was “investigating suspicions of corruption in the conduct of business by BAT, its subsidiaries and associated persons”.
The UK tobacco firm said in a separate statement that it was investigating allegations of “misconduct” in its business through external legal advisers and that it had been cooperating with the SFO before the formal investigation was opened. The group said it would cooperate with the SFO.
BAT would not confirm whether the investigation concerned allegations made by BAT whistleblower Paul Hopkins, who worked for the firm in Kenya for 13 years. He has claimed he paid bribes on the company’s behalf to the Kenya Revenue Authority for access to information that BAT could use against its Kenyan competitor, Mastermind. Hopkins also claimed BAT Kenya paid bribes to government officials in Burundi, Rwanda and the Comoros Islands to undermine tobacco control regulations.
BAT hired law firm Linklaters in February 2016 to conduct a “full investigation” into the claims made by Hopkins. BAT later dropped Linklaters and appointed Slaughter and May as sole adviser on the case.
BAT and other multinational tobacco companies have threatened governments in at least eight countries in Africa in an attempt to block anti-smoking laws, a Guardian investigation found last month.
The SFO investigation is another blow to the company, after the US health watchdog, the Food and Drug Administration, announced tighter regulations on the tobacco industry, which hit shares in tobacco firms.
BAT has recently completed its acquisition of US firm Reynolds, which will create the world’s biggest tobacco company.
The BAT chief executive, Nicandro Durante, told the Financial Times in March that the firm would “act in a very strong way” if wrongdoing was found to have taken place. He said: “We are in 200 countries, so I cannot give a 100% guarantee that everything’s going to go by the book.”
The eurozone notched up growth of 0.6% in the second quarter of the year, official Eurostat figures showed.
The figure puts annual growth in the 19-country bloc at 2.1% since a year ago.
First-quarter growth was revised down slightly from 0.6% to 0.5%.
Other figures released on Monday showed unemployment in the zone was at its lowest since 2009, building on the picture of improving economic health across the area.
On Friday, figures showed Spain’s economy, one of the worst-hit by the financial crisis, grew by 0.9% in the second quarter, suggesting the country’s economy had finally grown back to the size it was before 2008.
The International Monetary Fund last week said the outlook for several eurozone economies was brighter than initially thought, with countries including France, Germany, Italy and Spain seeing growth forecasts revised up.
The European Central Bank is planning to tighten up monetary policy after years of pumping up activity through low interest rates and bond-buying.
It intends to begin the process in the autumn, although inflation remains low at 1.3%, well under the 2% target for the eurozone.
Low inflation is often one of the side effects of weak economic activity.
Investors may be in for disappointing market returns in the decade to come with valuations at levels this high, if history is any indication.
Analysts at Goldman Sachs pointed out that annualized returns on the S&P 500 10 years out were in the single digits or negative 99 percent of the time when starting with valuations at current levels.
In a chart, they point out that the S&P’s cyclically adjusted price-to-earnings ratio (CAPE) is currently around its highest historical levels. CAPE is a widely followed valuation metric developed by Nobel Prize winners John Campbell and Robert Shiller.
The chart shows how the S&P 500’s 10-year-out returns are mostly below 10 percent or negative when CAPE is around historical highs.
Here’s the chart:
Source: Goldman Sachs Asset Management
“In light of high equity valuations and the potential for lower returns, we see the case for a fresh look at alternative strategies” such as international small-cap stocks, Goldman said in its third-quarter outlook containing this chart.
“International small caps may be well positioned to benefit from the global economic expansion,” they said. “International small caps’ exposure is 70% cyclical by sector and includes a relatively high degree (55%) of domestic revenue drivers. These domestically-oriented companies in the past have also been better positioned than international large caps during periods when broad international equity markets have outperformed the US.”
The S&P 500 has had a banner year thus far, advancing 10.4 percent and posting record highs. However, the index’s sharp rise has raised concern that stocks may be too expensive.
Despite this dire historical data, many strategists will tell you not to drastically change your long-term asset allocation philosophy based on valuations. Plus, a single-digit return isn’t so bad, considering the potential returns for other asset classes out there.
“The most important thing with respect to the CAPE ratio is that it should be used to set expectations, rather than to time the market,” Michael Batnick, director of research at Ritholtz Wealth Management, told CNBC via email. “If you pay more for an investment, you should expect to receive less in return.”
“But jumping in and out of the market because stocks appear expensive, is a very difficult way to invest,” said Batnick, who tweeted out the Goldman chart on Sunday.
Batnick also noted CAPE has spiked 38 percent since June 2014. In that time period, the S&P has gained 25.3 percent.
Growth in China’s manufacturing quickened in July, with output and new orders rising at the fastest pace since February on strong export sales.
But even as firms boosted purchasing in anticipation of more business, employment levels at factories fell at the fastest pace in 10 months and a reading on business outlook was the lowest since last August – a sign economic momentum may start to ebb in the months ahead.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.1 in July, above the 50-point mark separating growth from contraction and well ahead of the 50.4 in June.
A resurgent export sector underpinned by a brightening global economy helped China post surprisingly strong gross domestic product growth of 6.9 per cent in the first half of the year.
The Caixin readings diverged from an official PMI survey released on Monday which showed growth in China’s manufacturing sector cooled slightly last month, with export demand slackening.
Divergence in the two indexes is usually a result of the Caixin PMI’s smaller sample size rather than anything fundamental to China’s economy, said Jonas Short, who heads the Beijing office at investment bank Sun Hung Kai Financial (SHKF).
The Caixin new export orders reading came in at 53.5 in July, up from 50.9 June and the highest since February.
Despite mixed signals, analysts are still generally optimistic about the outlook for China’s exports, even if there is a slight dip in July.
“We are not that worried about the export outlook for China in the second half,” said ANZ senior China economist Betty Wang.
While China’s foreign trade faces a mostly positive environment in the second half of the year, uncertainties still exist, Vice Commerce Minister Qian Keming said in Beijing on Monday.