tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, November 1st, 10:39AM

News

rss
Latest Headlines

An “Age of Confusion” dawns for investors

Investors have been welcomed to an “Age of Confusion” by a company that handles EUR 178 billion ($NZ300 billion) of their wealth.

Friday, September 23rd 2022, 6:00AM

by Eric Frykberg

The warning comes from the Dutch-headquartered asset-management multinational, Robeco.

Each year, Robeco issues a forecast for the next five years. Its outlook for the years 2023 to 2027 portrays an economic machine with multiple moving parts, not all of them acting in unison.

The list of unco-ordinated activities is long: energy and food crises, high inflation in developed countries, uncertainty in China, supply chain problems, war, a pandemic, the lingering impact of printed money and hawkish central banks.

But Robeco is clear about one thing: returns on investments will diminish, due to a risk-free rate of return falling below its long term average. When combined with the impact of high inflation, investors will find getting a good return on equities hard work.

“Maintaining real purchasing power for a globally diversified portfolio will be daunting, as such a portfolio of stocks and bonds will have a real, inflation adjusted, return of -2.9% per annum,” the Robeco report said.

In another section, Robeco is forecasting a far more volatile business cycle. It suggests a farewell to the “Great Moderation”, a change 40 years ago from steep to gentle economic cycles. With the passing of the Great Moderation, sharp, up-and-down movements will be more common.

An extra problem was central banks' ineffective approach to inflation until very recently, Robeco wrote.

“Central banks have been whacking at the inflation ball and missing during the post pandemic recovery, ending up behind the curve,” the report said. This forced them to change tack and “embark upon a fast-paced tightening cycle this year.”

In its forecasts, Robeco said its base case was for a hard landing, where the global economy “undergoes a wobbly, drawn-out recovery after a US recession in 2023 cools demand enough to take the sting out of inflation.”

But there are two other scenarios. One foretells “The Silver Twenties,” in which US growth rises to 3.75%, predicated partly on environmental economic projects. But a bear scenario posits a “Stag Twenties,” in which tightening monetary policy triggers a recession which harms people's prospects but still fails to cure inflation.

Rebeco also forecasts a continued trend towards countries looking inward, with declining levels of direct foreign investment and attempts by countries to closer to self-sufficiency.

“Globalisation has become slowbalisation,” Robeco wrote.

Regarding climate change, the Rebeco report said the effect would be uneven on investment decisions. It said there would be little impact on developed country government bonds or on investment grade corporate bonds. But its effect on shares would be different, especially in emerging markets.

Generally, climate change would have a negative impact on investments, except in commodities, where energy transition and physical climate risks would put upward pressure on commodity prices.

Tags: investment

« War against inflation is part won - expertTough times ahead for NZ economy: Nikko economist »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

Last updated: 30 October 2024 9:36am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com