Finance Proposal Essay, Research Paper
Nature of Business
The Nike Environmental Action Team (N.E.A.T.) was founded in 1993, a subsidiary company of Nike, to coordinate and direct Head Company?s worldwide environmental programs. In particular, N.E.A.T. works toward reducing Nike’s impact on the planet in the context of our policies, operations and products. One of N.E.A.T.’s primary goals is to share these efforts with everyone we come in contact with, educating and encouraging widespread participation.
In this year, we have 100 million idle cash for us to construct a one-year of short-term investment. The investment proposal specializes in worldwide strategic investment asset.
Our aim is to get profit that is more than fixed deposit within this year. The investment time is relatively short, therefore, the level of risk of investment?s major item is low.
The above principle is used in my proposal.
Asset allocation recommendation will not usually to be adjusted except where unforeseen circumstances demand that an adjustment be made immediately. It is called the active management approach
The asset allocate suppose in the following:-
1.Constituent stocks of Hong Kong Index30%
3.US dollar Fixed Deposit20%
5.Global Technology stocks5%
6.Global BioSciences stocks5%
1.Constituent Stocks of Hang Seng Index
The 33 constituent stocks of the Hang Seng Index represent nearly 80% of the capitalization of the Hong Kong stock market. The index consistently reaches new highs, despite occasional period of consolidation and corrections. In the past 10 years, the duration of the index moving upwards was 2.8 times periods of downward movement and it has been volatile with the highest return of 115.7% in 1993 and the lowest return of 31.1% in 1994. Therefore we estimate that there is 70% of return.
Normally, investing in Bonds aim to achieve medium to long term capital growth principally from investing in international bonds of high equality, with capital gains from a mixture of income, trading and currency gains, and with a continued emphasis on income-generation. However, refer to Sal 5 yr Treasury Benchmark, it has 6.45% return for 1 year. We expected that we at least 6% of return or even more.
3.US Fixed deposit
Fixed deposit of US dollar is the only one of stable income in this proposal that provides capital protection afforded by non-equity investments, as US dollar is a key foreign currency in market together with nearly fixed exchange rate with HK dollar. In nowadays situation, deflation or inflation rate is nearly 0 so can be neglected. We expected the return rate will be about 9%
China stocks enjoyed a spectacular rally in the summer because of the finalization of China?s entry to WTO and many of the stocks have posted solid growth in the past year. However, due to concerns over several external factors such as oil process, Euro issuses and the forward trend of the economy in the United States, the market sentiment has been then affected badly. Overhang of a few mega Chinese equity issues which came out in the past months also contributed for the market drop. In addition, Shanghai and Shenzhen stock exchange, being the best performing equity index this year are going to merge some time in the first half of 2001. With significant portion of the fund being invested in Shanghai and Shenzhen B shares, we are anticipating that more and more positive measures will be coming out to the domestics stock markets. We recommend invest 15% because of negativity outsides, we expect that at least 10% of return.
5.Global Technology Stocks
The market for technology or technology-related securities can be highly volatile and illiquid and in many cases prices may reflect market speculation rather than the underlying economic value of such securities. Accordingly, there may be sudden and/ or significant changes in the value of the collective investment schemes that the Fund invests in and hence the value of the Fund. Therefore, we are advised to invest a small amount in this item as Hi-tech is still focus in the world.
6.Global BioScience Stocks
The Human Genome Project completed in June this year has opened up a new frontier in biotechnology, as well as tremendous business opportunities. BioSciences become the most attractive business and global hits after Information technologies. Investment areas may cover Biotechnology ? discovers, manufactures and markets human therapeutics, Pharmaceuticals ? manufactures drugs for humans and animals and Healthcare ? manufactures a diversified line of healthcare products and services.
However, it has a high tolerance of risks, in order to participate in the investment opportunities associated with the development of BioScineces. We suggest investing 5% in this area.
INVESTMENT ITEMEXPECTED RETURNRETURN RATE
Constituent stocks of Hong Kong Index20%6%
US dollar Fixed Deposit10%2%
Global Technology stocks15%0.75%
Global BioSciences stocks30%1.5%
Total expected return is 13.25%