Recent setbacks in the Indian and Chinese stock markets have served as a stark reminder that the region still carries risk and volatility for European families looking to invest heavily in emerging markets, according to Toby Osborne, director of GSL Private Investors and scion of Melbourne's entrepreneurial Osborne family.
Speaking last week at Campden's Family Investment Workshop in London, Osborne said that although there are substantial gains to be had in China and India, private investors should be aware that with high potential gains comes increased risk and volatility.
Osborne's comments come as it was revealed that the MSCI China index has fallen 27% since peaking in October last year and that India has fallen 19% in the same period. Over the past seven months China and India funds have substantially underperformed counterparts focused on Australia.
"No doubt people who invest in China and India over the long term will make substantial gains, but they will also be subjected to volatility," said Osborne. "People looking for a smoother growth curve would do well to look towards Australia and Asia Pacific."
Osborne, whose company helps investors find real estate opportunities in Australia, said domestic conditions for the Australian economy have been remarkable. Growth in domestic demand since 2002 has exceeded GDP growth by a widening margin, meaning that the domestic market is hungry for supply of products, services and property across the board.
"A combination of dramatic income tax cuts and increased household assets mean that Australians are fuelling the economy with increased consumer spending," he said. "The result of all these economic factors is an increased demand for residential real estate, office space, manufacturing plants and places for consumers to spend their money, such as shopping malls and retail parks.
"Solid property market fundamentals are helping to boost the economy and provide a degree of insurance from the present international credit crunch, and the Australian residential and commercial property markets are experiencing record low vacancy rates."