Investment Update Video’s

Investment Update Video’s

What a banking Royal Commission means for investors and superannuants

What a banking Royal Commission means for investors and superannuants

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.

The long heralded Royal Commission into the banking industry could have the effect of a “cloud of doubt” hanging over banks and financial for the next 12 months or so, says Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist.

“We don’t know which way it’s going to go – it may come to something more significant or it may lead to a lot more regulations. There’s a degree of uncertainty around this part of the market,” Oliver says in his latest video commentary.



But a potential overhang stemming from the Royal Commission is not just something for holders of bank shares to worry about and has the potential to impact all Australians, Oliver notes.

Banks and related financials account for almost a third of the value of the local share market, which accounts for some 8 per cent of each individuals’ superannuation exposure, Oliver highlights.

Royal Commission or not, bank shares will continue to offer attractive yield relative to the broader market and therefore will remain in demand amongst retirees seeking income via the share market, Oliver points out.

From a global perspective, though, Oliver says banks globally have some more appealing characteristics when it comes to potential share market returns, in particular, when it comes to valuation.

“Recently, out of the US, we’ve heard there could be less regulation with US banks. So the US is moving in the direction of deregulation at a time we’re moving in the direction of increased regulation potentially,” Oliver points out.

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AMP Capital's Market Watch

 


Dr Shane Oliver About the AuthorDr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

 

Important note:While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. © Copyright 2017 AMP Capital Investors Limited. All rights reserved.


Original Source AMP Capital Ltd 

How the yield trade is shaping our view of the world

How the yield trade is shaping our view of the world

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.

Since central banks have dropped interest rates to record low levels – in some cases to zero and even negative – it’s forced investors to find income in investments without traditional capital protection bonds have offered in the past.

The lower risk free rate resultingin a move out along the risk curve has been a learning experience for many investors, Oliver believes.

“In a sense we’ve become a bit more fundamentally focused. We’re focused on the cash flow, the dividend, interest rates and so on, which is different from what we saw prior to the yield trade becoming an emphasis. It’s changed the way we invest in things. We’re more focused on income and you’d have to say that’s a pretty good thing,” Oliver comments.



The so called “yield play” has been going on since the world has moved from very high inflation and high interest rates in the early 1990s, to the low inflation and low interest rates we have today, Oliver highlights.

The risk underlying the yield trade is when it gets “pushed to extreme”, potentially leaving investors stranded in places they may not have previously explored, Oliver notes.

“Yields will get pushed down as investors are making investment decisions mainly focused on the income. The danger is at some point inflation starts to creep up, interest rates start to rise, and then those yields will have to move higher again, which will then reduce the value of the underlying investments when that happens,” Oliver explains.

“When this will happen and how quickly it will happen is anyone’s guess. We think there will be some uptick in inflation as we go through next year, so that’s certainly worth keeping an eye on, to see how aggressive the Fed is at raising rates,” Oliver notes.


AMP Capital's Market Watch

 


Dr Shane Oliver About the AuthorDr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

 

Important note:While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. © Copyright 2017 AMP Capital Investors Limited. All rights reserved.


Original Source AMP Capital Ltd 

 

Volatility could present buying opportunities in 2018

Volatility could present buying opportunities in 2018

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 dips in share markets experts anticipated in 2017 are more likely to materialise in the new year, Oliver notes.

But with global growth continuing – as emerging market economies begin to join the United States in its growth recovery – these dips could present reasonable buying opportunities for savvy investors, Oliver says.

“The big thing in 2018 will be volatility. Twenty seventeen was a pretty smooth year; 2018 is likely to see a pickup in volatility. Investors should be looking out for corrections as a buying opportunities,” he says




Another big theme in 2018 will be the divergence between US monetary policy and the actions of central banks in Australia and in other countries around the world, Oliver points out.

The US Federal Reserve is likely to hike four times in 2018 and will to continue with quantitative tightening while other central banks including the Reserve Bank of Australia are likely to lag, Oliver points out.

Investment returns across most asset classes were superior in 2017 compared to the previous year, Oliver notes. He points out investors should modify their expectations for returns in the year ahead in 2018.





It’s possible political risks may have more impact in 2018 after a relatively benign 2017, Oliver notes.

US political risk is likely to become more of a focus again with the ‘Mueller inquiry’ continuing and the November mid-term elections playing out, which is likely to see the Republicans cede power in the House of Representatives to the Democrats. This may result the possibility President Trump could resort to populist policies like protectionism to shore up his support, Oliver predicts.

Meanwhile, the Italian election is likely to see the “anti-Euro” movement do well; North Korean risks continue to remain unresolved; and there is also a risk of an early election in Australia, he points out.

“Fortunately, there is still no clear sign of the sort of excesses that drive recessions and deep bear markets in shares; there has been no major global bubble in real estate or business investment; there is the bitcoin mania but not enough people are exposed to that to make it economically significant globally; inflation is unlikely to rise so far that it causes a major problem; share markets are not unambiguously overvalued and global monetary conditions are easy,” Oliver explains.

“So arguably the ‘sweet spot’ remains in place, but it may start to become a bit messier,” he says.



AMP Capital's Market Watch

 


Dr Shane Oliver About the AuthorDr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

 

Important note:While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. © Copyright 2017 AMP Capital Investors Limited. All rights reserved.

Original Source AMP Capital Ltd 

 

What a banking Royal Commission means for investors and superannuants

What a banking Royal Commission means for investors and superannuants

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.

The long heralded Royal Commission into the banking industry could have the effect of a “cloud of doubt” hanging over banks and financial for the next 12 months or so, says Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist.

“We don’t know which way it’s going to go – it may come to something more significant or it may lead to a lot more regulations. There’s a degree of uncertainty around this part of the market,” Oliver says in his latest video commentary.



But a potential overhang stemming from the Royal Commission is not just something for holders of bank shares to worry about and has the potential to impact all Australians, Oliver notes.

Banks and related financials account for almost a third of the value of the local share market, which accounts for some 8 per cent of each individuals’ superannuation exposure, Oliver highlights.

Royal Commission or not, bank shares will continue to offer attractive yield relative to the broader market and therefore will remain in demand amongst retirees seeking income via the share market, Oliver points out.

From a global perspective, though, Oliver says banks globally have some more appealing characteristics when it comes to potential share market returns, in particular, when it comes to valuation.

“Recently, out of the US, we’ve heard there could be less regulation with US banks. So the US is moving in the direction of deregulation at a time we’re moving in the direction of increased regulation potentially,” Oliver points out.


AMP Capital's Market Watch

 


Dr Shane Oliver About the AuthorDr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

 

Important note:While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. © Copyright 2017 AMP Capital Investors Limited. All rights reserved.


Original Source AMP Capital Ltd  

All aboard the Bitcoin bandwagon

All aboard the Bitcoin bandwagon

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.

“To me, bitcoin has all the classic hallmarks of a bubble. It started off with some fundamental development, which is favourable, potentially revolutionising the payment system slashing the price of shipping money from around the world,” notes Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist.

“But as the price goes higher and higher, investors are buying into it not because of the development but because it’s gone up… so it’s become very much a speculative bandwagon,” Oliver comments, in his latest video commentary.



Amid the hype, which has led to astronomical returns for speculative traders as well as true believers in the future of the underlying Blockchain technology and the role of crypto currency, banks and financial institutions are now finding new ways to get in on the action.

Exchange traded funds dedicated to crypto currencies are the are the next obvious step. A futures market for Bitcoin will enable investors to trade derivatives rather than having exposure to the asset itself… “if you can call it an asset,” Oliver comments.

No doubt there will be increasing ways to invest in crypto currencies and bitcoin in the future, Oliver remarks.



Oliver draws on the work of Nobel Economics Laureates Daniel Kahneman, Robert Shiller and Richard Thaler in his recent note to describe the Bitcoin phenomenon in the context of asset price bubbles and crowd psychology.


Dr Shane Oliver About the Author Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

 

Important note:While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. © Copyright 2017 AMP Capital Investors Limited. All rights reserved.


Original Source AMP Capital Ltd 


Beware China’s shift to financial reform

Beware China’s shift to financial reform

It’s likely China will turn its focus towards slowing down its accumulation of debt, a decision that could have real implications for the Australian economy, Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist, reckons.

One of the key takeaways from October’s 19th National Congress of the Communist Party of China was the enhanced power and authority of the country’s President, Xi Jinping, Oliver points out.



With this enhanced power and authority comes the potential for China to refocus its attention on economic reform; making its economy more efficient with a particular focus on financial reform, Oliver notes.A renewed focus on financial reform means potentially slowing down the country’s mounting debt load, he says.

“In the past we’ve seen times when the Chinese have gone through a phase to regulate the economy to slow down the rate of growth of debt, then of course they put the accelerator back on when the economy slows too much. You could see a continuation of the economy running hot and cold,” Oliver highlights.

China’s economic engine has always been a major factor in Australia’s economic prospects, a relationship that’s set to continue. Although Oliver notes the nature of China’s influence here will continue to morph.

The focus of the Chinese economy is shifting increasingly to services such as renewables, electric cars; also the growth in middle income earners which encapsulates the ongoing demand for Australian tourist services and education, Oliver points out.

Relying on the performance of areas more prevalent during China’s fixed asset boom might be less certain than in the past, Oliver points out.

“Investors need to look beyond just exposure to iron ore and coal to get exposure to the China story in the future,” he says.

Original Source AMP Capital

PPPs are back and better than before

The image of public-to-private partnerships (PPPs) in relation to infrastructure took a hit a few years ago, but now they are back, and are much better for investors than before.

That’s the view of AMP Capital Head of Investment Strategy and Chief Economist Shane Oliver, who said that in the years leading up to the 2008 financial crisis, investor syndicates often had to over bid for infrastructure opportunities to get access to them, making it difficult in some cases to cover the costs and make the assets profitable once completed.

“The model has improved substantially,” says Oliver. “It’s less focused on encouraging the private partners to excessively bid up the price for the underlying asset and we’ve ended up with a more sustainable model.”

 

 

Published on Aug 7, 2017   YouTube.com

Aug.08 — Nader Naeimi, head of dynamic markets at AMP Capital, explains why the Federal Reserve may surprise markets with rate hikes. He speaks with Bloomberg’s Sherry Ahn on “Bloomberg Markets: Middle East.”

 


 

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