"Think globally, act locally" may be the maxim of the environmental movement, but it also happens to closely resemble the current investment plan of Mark Luschini, chief investment strategist at Janney. By reinstituting a "go global theme," he says he's positioning for an uptick in world trade that will boost confidence and prompt greater risk-taking in markets outside the U.S., such as China.
"China is a country that is at least stabilizing, if not accelerating," Luschini says in the attached video. While conceding that the data coming from the world's second largest economy may be "somewhat man-made," he still believes it is useful and indicative of what's happening.
After wallowing for most of 2012 and trailing most global markets, Chinese shares have put up double-digit gains since early December and are clearly drawing the attention of investors again. While many investors prefer to play China from the outside via U.S.-based multi-nationals, Luschini recommends a more direct route via the iShares MSCI China Index (MCHI).
In a similar vein, Luschini also thinks "the worst of the European recession is behind it" and says there is great value to be had across the continent for savvy investors. In particular, he highlights the "domicile discount" which essentially punishes European-based multi-nationals because of their zip code. However, he says even though European markets have already "rallied rather smartly," they still trade at about a 40% discount to the U.S. market. He cites names such as the French oil giant Total SA (TOT) as an example, with a 4.9% dividend, operations all over the world and a $120 billion market value.
While the U.S. markets continue to lead the global push higher, Luschini points out that the rally here has been led by multi-national companies, rather than those that just do business domestically, as further proof that it's time to embrace the global trade.