Invest
Volatility looms, but don’t panic, investors told
Short-term event risks – including the Brexit referendum, the Spanish election, Australian election, US republican and democrat conventions – will only cause near-term uncertainties in markets, according to one leading Australian economist.
Volatility looms, but don’t panic, investors told
Short-term event risks – including the Brexit referendum, the Spanish election, Australian election, US republican and democrat conventions – will only cause near-term uncertainties in markets, according to one leading Australian economist.
AMP chief economist Dr Shane Oliver said that while the past week has been dominated by Brexit worries, which have pushed down most share markets, in the long term it is expected that shares will continue to trend higher this year.
Dr Oliver said this will be helped by relatively attractive valuations, ultra-easy global monetary conditions and continuing moderate global economic growth.
Brexit concerns over the past week have seen US shares drop 1.2 per cent, Eurozone shares lose 2.4 per cent, Japanese shares, which were also hit by the absence of monetary easing, fall six per cent, Chinese shares lose 1.7 per cent and Australian shares fall 3.7 per cent.
"The Brexit vote is fast approaching and nervousness in financial markets has been building over the last few weeks, particularly as the leave campaign – focusing on the more emotive topic of immigration – has been showing a lead over remain," he said.
The eight per cent fall in Eurozone shares, he said, is likely overdone, however.
While shares may fall a little further if the leave campaign wins, "Europe is likely to hang together as it did through its sovereign debt crisis", he said.
Although the polls have been in favour of the leave campaign, he still predicts a vote to remain.
In terms of bonds, Dr Oliver said lower bond yields point to a soft medium-term potential from them, but it is difficult to have a bearish outlook in a world of fragile growth.
"That said, the recent bond rally has taken bond yields to ridiculously low levels, leaving them at risk of a sharp snapback," Dr Oliver.
Capital city dwelling price gains are expected to slow to around three per cent over the year ahead, as the heat comes out of Sydney and Melbourne thanks to toughening lending standards and pockets of oversupply, he said.
"Prices are likely to continue to fall in Perth and Darwin, but price growth may be picking up in Brisbane."
Commercial property and infrastructure, on the other hand, are likely to continue benefiting from the ongoing search for yield by investors.
RELATED ARTICLES
Stock market
Portfolio reviews as an operating discipline: turning volatility into a competitive edge
In a higher-rate, higher-volatility world, portfolio reviews are no longer an annual hygiene task; they’re a core operating rhythm that protects cash flow, unlocks tax alpha, and sharpens risk ...Read more
Stock market
Fee war on the ASX: Global X’s A300 turns up the heat on core Aussie equity ETFs
Global X has lobbed a 0.04% management fee into Australia’s core equity sandbox, launching the Australia 300 ETF (A300) to take on entrenched giants. Read more
Stock market
Challenger IM shakes up the ASX with private credit note and a side of risk
Challenger Investment Management has taken private credit mainstream with an ASX-listed note structure—LiFTs—that secured roughly $100 million in cornerstone commitments within a day of launch. Read more
Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more
Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more
Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
Stock market
Portfolio reviews as an operating discipline: turning volatility into a competitive edge
In a higher-rate, higher-volatility world, portfolio reviews are no longer an annual hygiene task; they’re a core operating rhythm that protects cash flow, unlocks tax alpha, and sharpens risk ...Read more
Stock market
Fee war on the ASX: Global X’s A300 turns up the heat on core Aussie equity ETFs
Global X has lobbed a 0.04% management fee into Australia’s core equity sandbox, launching the Australia 300 ETF (A300) to take on entrenched giants. Read more
Stock market
Challenger IM shakes up the ASX with private credit note and a side of risk
Challenger Investment Management has taken private credit mainstream with an ASX-listed note structure—LiFTs—that secured roughly $100 million in cornerstone commitments within a day of launch. Read more
Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more
Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more
Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
