Markets were dominated by geopolitical events in May, driving volatility over the month. The biggest impact came from Italy where the reverberations from the March 4 election continue. A power struggle between the Eurosceptic populists — strong performers during the March election — and the President saw fears rise of another election and the potential of a populist win. This led markets to price in the risk of an Italian departure from the European Union.
Category Archives: Investment insights
While the risk of inflation and the overpricing of assets remain concerns, we consider geopolitical risk at the same time. Here we explore one example of how we look at the international political and economic landscape, through an analysis of China’s changing position in the economic world order.
The pick-up in volatility that began in February continued into March with most major equity markets posting low single digit losses. Australian equities were amongst the worst performers dropping around 4% in local currency terms. All major sectors declined, with the more defensive sectors outperforming. This trend was also reflected in credit markets with credit spreads generally moving wider across the month. Bond yields drifted lower in March, but given the weakness evident in risk assets over the period, the rally was relatively modest. Despite trade war fears and equity weakness the US dollar recovered a touch in March, with the AUD losing ground. GBP also gained ground amid UK Brexit negotiations.
2017 was noted for its lack of volatility, and this can be seen strongly in the performance of global equity markets. For the first time, global equities (based on the MSCI ACWI’s 30 year history) saw a rise in every month of the year. The US market (S&P 500), while not posting a rise every month, saw a positive return every month once dividends are included, the first time since 1958. The largest fall for the US market intra year was 3%, which is the smallest intra year fall in any calendar year in the post war period.
Another area of note were signs of , most notably with the interest in cryptocurrencies. Bitcoin saw a rise of 1,300% and created billionaires of the Winklevoss twins, who were previously known for claiming Mark Zuckerberg stole their idea for Facebook. It was also reflected in the art world, with a world record $US450m paid for Leonardo Da Vinci’s Salvator Mundi, shattering previous records – over double the previous record for a painting sold at auction and a third higher than the highest private sale.
So after a record breaking year, it is worthwhile reflecting on what lessons we can learn from last year.
22% of people in pension phase feel underfunded, globally Funding retirement is at the forefront of many people’s minds, but how well are they preparing for it and how do those already in retirement feel about their situation? We spoke to over 22,000 people who invest from 30 countries around the globe about retirement to see if and how expectations differ from reality.