Economic updates

Welcome again to the Environmental, Social and Governance (ESG) Wrap, where our team share the latest ESG issues in the media and their implications on investment.

 

At a time when duration is front of mind among fixed income investors, many could be overstating the probability the asset class is heading for outright negative returns, says Simon Warner, AMP Capital’s Head of Fixed Income.

Dividend lovers: we’re witnessing a bit of a changing of the guard when it comes to the performance of ASX listed companies. 

Welcome again to the Environmental, Social and Governance (ESG) Wrap, where our team share the latest ESG issues in the media and their implications on investment.

 

Property investors should be looking for commercial assets linked to GDP growth ahead of an expected rate rise in the next 18 months, says AMP Capital Head of Real Estate Research, Luke Dixon. 

The current slide in Sydney and Melbourne residential property prices will fall far short of a housing bust, according to AMP Capital Head of Investment Strategy and Chief Economist, Shane Oliver.

There is quite a lot of talk about volatility coming back to share markets all of a sudden, and with the talk there’s also bit of conjecture about where the volatility originates from.

The concentration of business activity in a handful of global cities and easy liquidity from central banks has led to phenomenal residential price growth over the last eight years. Valuations have soared in global cities from Shanghai to Stockholm as well as the most global of all; New York and London.

Increased regulation is a thorn in the side for many fund managers, but I believe it often changes our industry for the better, once we step back from the details and focus upon the intent.

The exchange traded fund market has come a long way in recent years and, thanks to its evolution, has provided investors with new ways to enter markets in a style previously only at the disposal of global financial institutions.

A lot has been said and written about Australia’s household debt levels and possible implications on the banking system and the economy more broadly. But could Australian households be even more constrained than the headline numbers are suggesting?

The sudden market realisation that US borrowing costs are likely to rise significantly this year will drive demand for real estate investments that offer income growth, according to AMP Capital Head of Real Estate Research Luke Dixon.

“The only thing we have to fear is fear itself,” said Franklin D Roosevelt at his inauguration as US President in 1933. I think “the only thing we have to fear is the fear index itself” is a better description of where investors are at right now.

Investors glued to their share portfolio screens recently following the abrupt share market selloff should expect to experience more of the same in the months ahead, according to Dermot Ryan, AMP Capital Income Equity Fund Co-Portfolio Manager. 

Welcome again to the Environmental, Social and Governance (ESG) Wrap, where our team share the latest ESG issues in the media and their implications on investment.

 

Adjustments to monetary policy by Central Banks globally, along with the technological change sweeping through and changing the shape of industries, emerge as the two pervasive themes likely to define real asset valuations in 2018 and beyond, according to leading real estate and infrastructure experts.

The recent rise of the Australian dollar has been surprising but not confounding for experts who believe the its natural level is closer to US70 cents.

Australian residential property prices are unlikely to crash despite household debt increasing to around 200 percent of household income, according to AMP Capital.

If you are looking for value in the global equities market, head to the Eurozone where economic growth is still new enough to be unhampered by central bank policies, according to AMP Capital. 

The US Federal Reserve may raise interest rates twice as often as the market expects in 2018, according to AMP Capital Head of Investment Strategy and Chief Economist Shane Oliver. 

Tax reform in the United States has helped to spur on global economic growth, but investors should be aware of the double-edged sword that comes with the added exuberance, as already expensive share markets continue to edge higher.

The funds management industry has gone so far down this benchmark-aware path we’ve not only convinced ourselves but also our clients that we’re only doing a great job if we’re beating the benchmark. 

I’m going out on a limb and calling it now: 2018 will be the year of the unloved asset. 

There is an old saying that “diversification is the only free lunch in finance”. While this adage is often wrongly attributed to Harry Markowitz, it does a great job of articulating the essential insight in his Nobel Prize winning research. 

While it makes sense for individual investors to look to institutions for cues and clues to inform how they invest – or at least how they think about the world they invest in – sometimes it really doesn’t. 

2017 was a very good year for economies, markets, and client portfolios. The global economy enters 2018 in excellent shape with synchronised growth at an above trend rate but there are some risks on the horizon to be watchful for.

The spending power of the pivotal and perhaps most talked about generation in history – the Millennials – could ultimately put an end to the modern slavery endemic in the clothing industry.

Welcome again to the Environmental, Social and Governance (ESG) Wrap, where our team share the latest ESG issues in the media and their implications on investment.

 

Investors in the local share market should be on high alert for signs of risks creeping into their portfolios as mortgage stresses may start mounting on younger families into next year, says Dermot Ryan, AMP Capital’s Equity Income Fund Co-Portfolio Manager. 

Tax policy is in the news again. The federal government wants to reduce the corporate tax rate to 25 per cent for all companies and has signalled a desire to cut personal tax to offset the impact of bracket creep. 

A dip in the value of listed financial stocks including Australia’s Big Four banks the day the federal government announced a Royal Commission into the banking, superannuation and financial services industry, could be a sign of things to come for shareholders in the country’s most widely held institutions.   

Volatility and the first meaningful lift in inflation coming from the United States will likely be the main differentiating features in global financial markets in 2018 compared to this year, according to Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist.

The so called yield trade – which has pushed investors out along the risk curve into more risky assets seeking income – has trained individuals to think more critically about their assets they include in their investment portfolios, reckons Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist.

As global financial regulators and market exchanges discuss the potential for investors to trade Bitcoin in new ways, including via a futures market, investment experts continue to caution people curious about getting exposure to the meteoric rise of the crypto currency.

Disruption is the buzz word of the modern era and San Francisco as the home of Uber, Twitter and Salesforce.com should know a thing or two about it.

The AMP Capital Listed Infrastructure Team shows how infrastructure offers a more interesting investment opportunity than shiny electric cars.

A future of road users sharing electric cars gives hope for a solution to the congestion that plagues cities across the developed world. 

When AMP Capital’s infrastructure equity team invested in a postgraduate college development at the University of NSW, it made a 12 percent return per annum for ten years.

The imminent arrival of e-commerce giant Amazon in Australia will have a positive impact on industrial property values, a negative impact on some retail property values, and require change in strategy from both sectors to reap the most benefits.

Strong demand for the broader real estate segment is likely to help prices remain strong for at least another year as the aging population seeks regular annuity in a low interest rate environment, says Luke Dixon, AMP Capital Head of Head of Real Estate Research.

The rise of e-commerce has enabled Amazon to become the global giant that continues to grow, a trend that’s having a huge impact on the global logistics real estate markets.

Big-ticket acquisitions of Australian resources, office towers and luxury homes by Chinese corporates and billionaires are grabbing headlines.

Investing in infrastructure in a post US President Donald Trump-elected world has less to do with government spending and policy changes to encourage private investment than some people might think.

Contrary to the conventional wisdom, inflation in the United States is not dead.

An increased focus by investors on costs and fees is driving major changes in the funds management industry. AMP Capital’s Multi-Asset Group Head of Portfolio Management, Debbie Alliston, talks about how to determine whether paying for performance is warranted in this type of market.

The expectation tax reform in the United States will pass through US Congress has already buoyed share markets globally, but are investors getting ahead of themselves?

Welcome again to the Environmental, Social and Governance (ESG) Wrap, where our team share the latest ESG issues in the media and their implications on investment.

 

Fixed Income investors are not getting what they bargain for when they allocate to benchmarks, research shows.

Lack of affordability of housing leads to a corresponding increase in demand for public housing which, in turn, increases segregation of the population and creates an economic drag. Now, more than ever, there is a need for both the government and private sectors to become involved in the provision of publicly funded or social housing, Simon Hunter, CommIF Asset Manager, highlights.

Some may think of it as the feel-good side of investing, but don’t ever describe environmental, social and governance as “fluffy” around Ian Woods, AMP Capital’s Head of ESG Investments.

It’s the most significant event in financial markets since the global financial crisis, so what can investors expect now quantitative easing (QE) has come to an end? 

The efforts by the Spanish government to stop the Catalonian referendum, a situation marred by violence, is not another “Brexit”, nor is it a sign of instability in the Eurozone, says Shane Oliver, AMP Capital head of Investment Strategy and Chief Economist.

Banks globally are better value than local banks for share market investors but our “big four” still don’t look overvalued, says Shane Oliver, AMP Capital head of Investment Strategy and Chief Economist.

The Australian and US dollars could be set for a turn in fortunes, according to Shane Oliver, AMP Capital head of Investment Strategy and Chief Economist.

Big data technology has emerged as one of the leading opportunities for healthcare advancement.

Fixed income investors be alert: the massive shift of money into passive equity investment strategies is about to hit the debt market, too, and with good reason.