Over the last two decades, emerging markets have been attractive to investors and investment strategies have followed an ever globalising trend. High growth rates in developing nations have meant that large profits have been generated in riskier assets outside of the more stable markets that have long dominated global economics.
Often double-digit growth in the BRIC nations – Brazil, Russia, India and China – has seen wilful investors reap great profits through investing in countries with plentiful opportunities, which often carry a higher degree of risk. Continue reading →
Well, we’re still here. Despite the seemingly best efforts of the leaders of the United States and North Korea – the world is still turning. But September was a month of ‘another day, another North Korean rocket flying over Japan’ and it ended with Kim Jong-un threatening to explode a nuclear bomb over the Pacific. Small wonder that South Korea is creating a special military unit with only one aim, which does not bode well for Kim. Continue reading →
July got off to the best possible start when Janet Yellen, Chair of the US Federal Reserve, announced that there would be no more financial crises “in our lifetime.” Speaking on a trip to London, she said that the reforms of the banking system since the 2007 to 2009 crash had “minimised the risk of a similar disaster happening again.” Phew, that’s alright then. And if you’re reading this commentary, Ms Yellen, just skip over the bit about Italy… Continue reading →
Well, apart from the chaotic General Election in the UK. Oh – and the decisive win for Emmanuel Macron in the French parliamentary elections. And the start of the Brexit negotiations. And Italy was forced to bail out two more banks. President Trump pulled out of the Paris climate change agreement – and in Brazil, President Michel Temer was accused of corruption – the first sitting President in Latin America’s largest country to face criminal charges. Anything else? Just another global ransomware attack… Continue reading →
As we approach the end of the 1st quarter of 2016 the mayhem that was with us at the start of January and early February has started to ease a little. Are we clear of the volatility in the financial markets? I am not sure that we are to be honest. I think markets will be quite volatile for a while yet. But really the question should be – is there cause to be worried. As I have stated before there are various differences of opinion from the doom & gloom people who believe the world is going to end, to people that tell us the global economy is not in that bad shape.
The first 8 days of trading in the financial markets have once again been dominated by scare stories, which are prompted by a large decline in mainland China shares over this 8-day period. The Chinese stock market actually suspended trading in shares on the 4th January because things got so bad. This level of volatility has spread across to almost every other equity market. You would be forgiven for asking have we not been here before. Simple because this is virtually a mirror image of what happened last August.
When I wrote my last blog on 15th June I purposely covered one of the main areas of concern for the financial markets which were in the fixed income asset class or bond market. And as if things could not get any worse, along comes Greece with all of their problems. So, in the space of a few weeks we have two completely different situations which have had a very negative effect on the market. Surely this is unusual isn’t it? Well not really. Have a look at the graph below of the FTSE All Share Index. The graph is over the last 4 years taking us back to the beginning of July 2011.
I have no doubt some clients logging onto their websites may be wondering what is happening in the markets. Basically, bond yields have risen following strong European data and the relative undervalue of government debt vs cash as the expectation of the US to raise rates heightens. This has affected Emerging Markets; traditionally money leaves Emerging Markets both across equities and bonds with a US rate rise. There is not a lot of chance of rate rises in the UK or the Eurozone. However the bond sell off has triggered a recent equity drawdown; the FTSE has lost 2.8% over the past week and the DAX (German index) is down 11% from its peak. There is no need to be concerned on this movement, we view it as short term and, if anything a buying opportunity as equity markets give up a portion of their gains year to date.
In mountain climbing an instructor may say ‘don’t look down’ to a climber, why? They are not necessarily in any danger, there are ropes and harnesses to protect them. But the reason the instructor says this, is because he doesn’t want the climber to panic.
Copyright Simple Solutions Financial Management Ltd. 2017 | Web Design by CRE8
Simple Solutions Financial Management Ltd is authorised and regulated by the Financial Conduct Authority.
We are entered on the FCA Register under Ref no 511977. Registered in England & Wales. Company Reg. No 6920858