Toronto’s Sheraton Center was the venue on Tuesday for a global overview of alternative asset management from the perspective of one of the world’s largest private equity managers.
Stephen Schwarzman, chairman and co-founder of the Blackstone Group presented his perspective of investment opportunities in his address, “Prospects for Global Economic Recovery”.
Asia—which he described as a slightly overheated economy—is currently a priority for Blackstone. On that continent, India is of particular interest.
With growth of 8% per year, Schwarzman explained that an overlooked fact about India is that it is set to overtake China in terms of population within a decade. What’s more, it has not used any economic stimulus. “That makes it about the best-performing economy in the world,” he said.
China’s 12.5% rate of growth is reason enough to continue investing in that country, but opportunities abound in the Middle Kingdom’s trading partners as well. Chile and Peru in particular are experiencing increased growth as a result of supplying China with copper, and many African countries have grown their GDP through bilateral trade.
Perhaps he was playing to the local audience, but Schwarzman had nothing but praise for the Great White North.
“Canada’s got a great banking system, it’s taking advantage of its huge resource base, and as currencies around the world become less appealing, people like commodities—gold being the best expression of that—and I think that bodes well for Canada for the intermediate term.”
He was less enthusiastic about the U.S. outlook, as that country continues to struggle with stimulus spending and a massive budget deficit. However, he spoke of an economic corner being turned, with the era of low credit, slashed staffing and minimal spending seemingly in the rear-view mirror, and a resurgent U.S. consumer.
“It’s tough to keep the American consumer down,” he said. “We’ll keep the consumer down by historical standards, but they still like shopping. It’s apparently part of the culture.”
Schwarzman expects a period of low interest rates for “quite some time” and he says the Federal Reserve will remain cautious about changing its posture in order to protect the economic recovery. The 12% budget deficit of 2009 will be brought down to around 5%, according to his sources in the government. Overall, he feels the prospects for the U.S. are surprisingly good.
Europe, on the other hand, has gotten the cold shoulder from Blackstone for the past few years, mostly because it is the “most expensive place in the world, and has the slowest growth in the world.”
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