Global Investments
International Limited

ECONOMIC & MARKET COMMENTARY DECEMBER 2003

The last month has witnessed encouraging news for equity investors. This included some healthy economic figures, good corporate earnings and an increase in M&A activity.

In the US the low interest rates and tax giveaways have led to a strong bounce in consumption. Q3 GDP in the US was revised up to an impressive 8.2% annualised growth rate. Looking forward, tax incentives for corporate investment and good cash generation from companies should encourage a pick-up in capital expenditure. We have also seen recent statistics which show early indications of the long-awaited employment growth which is crucial for a sustainable recovery. We have raised our forecasts for GDP growth in the US to 3.0% for 2003 and 4.25% for 2004.

In the euro area Q3 economic data has also been encouraging, showing a return to growth, led by exports after the flat first half. There are also clear signs of an improvement in domestic demand and this should be boosted by fiscal activity in 2004. We have seen an expected 0.25% increase in base rates in the UK but we do not expect aggressive tightening from here, nor do we expect other central banks to follow the move in the short term. Inflation risks appear limited and central authorities will want greater evidence of sustainable recovery before reducing the monetary stimulus.

Corporate news has also been supportive to markets. Q3 has carried on the trend of Q2 with companies in general reporting better than expected earnings numbers. In the US 64% of Q3 reports were ahead of expectations, compared to only 15% that were below. Furthermore, in contrast to Q2, we are now seeing some top-line growth coming through to companies rather than cost cutting being the only worthwhile source of earnings growth. We have revised upwards our earnings growth forecasts for the euro area to 20% for 2003 and 15% for 2004 and for the UK to 12% and 8% respectively. M&A activity has also accelerated with a number of bids by venture capitalists or companies for undervalued assets as well as mergers aimed at cutting overheads.

We believe the current environment is supportive of equities and valuations are attractive, particularly in light of recent upgrades to earnings forecasts. Our preferred regions remain the emerging markets, where we see the strongest growth combined with the lowest price/earnings multiples. Returns from government bonds are likely to be fairly pedestrian, despite the ongoing low inflation. We continue to prefer higher yielding corporate bonds and emerging market debt.

Within our equity portfolios our strategy has been to favour cyclical companies that will benefit from the accelerating demand. At the same time we have focused on mid cap and small cap companies which tend to be the most closely tied to economic activity. This has been beneficial to performance in recent months and we think it right to maintain this stance given the economic figures that are coming through.

Recent weeks have seen some encouraging news in equities. Markets have made some progress but have been held back by a number of factors including terrorist activity. Prices certainly do not appear to fully discount this improved picture.

CHINA: THE LAUNCH OF PLATINUM DYNASTY

Platinum Capital Management Ltd., the international financial investment group, has announced the launch of the Platinum Dynasty Fund Limited - a new hedge fund focused on long/short investment in the equities of China-related publicly listed companies that will profit from China’s growth. Investors in the new Fund will benefit from access to a portfolio currently achieving average monthly returns in excess of 3% per month (Feb. 2000 to end-Oct. 2003).

Platinum Dynasty’s investment universe consists of companies in China, Hong Kong, Korea, Japan, Singapore, Taiwan and the USA that have a significant portion of their assets or revenue in China, that source of manufacture in China, or that target the large and growing Chinese consumer market. Dynasty Asset Management of Shanghai advises the new Fund. Established in 2000, Dynasty was one of the earliest investment management companies to set up operations in China and aims to exploit local Chinese expertise with a global perspective. Led by Steve Dai (a Chinese native and formerly a long- term US resident) and Edward Mullen (a US native and currently a resident of China - see CV page), there are currently eleven members in the team including analysts, investment managers and an administrator.

Investors in Platinum Dynasty gain access to the Dynasty investment portfolio, launched in February 2000, on the basis of a direct minimum investment of $ 100,000 or € 100,000 or, via the Platinum Wealth Management Bond, of  $ 25,000 or € 25,000.

Average annual returns for this portfolio are currently (to end-October 2003) in excess of 50% p.a. boosted by exceptional returns during the first half of 2000.

"China is already one of the largest economies in the world and is scheduled, by some forecasts, to become perhaps the leading economy within 20 years,“ said Peter Sprecher, Chairman, Platinum Capital Management. “For this reason, Platinum has been very keen to offer our investors exposure to this key market but we have consistently insisted on using established local expertise. Dynasty Asset Management has this expertise and we are delighted to be able to work with them to create Platinum Dynasty, a Fund that, we believe, will quickly become an important component of the Chinese investment landscape.”

Platinum Dynasty Fund Limited - Summary