Going global - home is not necessarily where your listed shares are

New ways of doing business
New technologies, particularly web-based technologies, have changed the business model for many companies and industries, revolutionising the way that they interact with their suppliers or sell their products to consumers, domestically and abroad.

Global brands carve a unique competitive advantage
With new technologies and lower barriers to new competition, providing a unique product or service to market with a strong brand reputation is more important than ever before. Consider the world's most prominent brand names shown in the table below. Quickly recognisable on any continent, these companies have invested in their brand, creating a unique position in their marketplace, which now has no national boundaries.

A new environment for world sharemarkets
It is not only the companies that have changed as a result of these trends. The very structure of sharemarkets themselves is adapting to the global marketplace. Investors are demanding easier access to shares - domestically and abroad. This has fed rapid growth in online and discount broking facilities in developed markets across the world.

Even more telling is the reaction from companies themselves. It is now not uncommon for the larger companies in world markets to be listed on more than one stock exchange, to make it much easier for investors to actively trade in their shares. Australian-based Newscorp is an example, listed on the Australian, London and New York stock exchanges. We now see that 12 out of the top 15 companies on the London Stock Exchange are also listed in New York. London itself lists many international companies -more than any other stock exchange. In fact, the market capitalisation of international companies in the London sharemarket is over twice the size of all UK companies combined. It just goes to show that home is not necessarily where your listed shares are!

The future - one world, one marketplace
So what does the future hold for global share investing?
It's impossible to accurately forecast what the future holds but we can observe some of the key trends emerging. With many companies now listed on multiple stock exchanges across the world, it's not difficult to envisage a world where there is one global sharemarket on which all shares can be actively traded, servicing many countries in many time zones at once.

As companies and industries continue to expand internationally, it is also not difficult to foresee a time when investors focus more on placing their investments in the best quality companies they can identify from world sharemarkets rather than those which are listed only on their local stock exchange. Increasingly, we are likely to see investors deciding how much they want to invest in shares relative to more income-orientated investments and then investing globally. This strategy offers investors the opportunity to maximise investment growth available from share investing while taking advantage of the vast diversification benefits that global shares can offer.

Successful investing in a global marketplace
Taking advantage of investment opportunities in a globalised world requires a disciplined approach to investing. An approach founded on detailed company specific research which can identify quality companies and the key trends likely to influence their future performance. At Colonial First State, we have addressed this new investment environment by creating an investment team with global sector specialists, identifying quality companies with superior earnings growth and attractive prospects relative to their global peers. Regional specialists supplement the work of our global investment team, inputting their views on the specific dynamics present in local marketplaces. It is this balance of global and regional views, together with our disciplined approach to managing money, that provide a strong foundation to Colonial First State's global share funds.

Colonial First State Investment Managers (NZ) Limited
www.colonialfirststate.co.nz

Bruce Abraham is chief executive, Colonial First State Investment Managers (NZ) Ltd.

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