Interest rates and inflation remain the dominant themes that are dampening the outlook for returns at the moment. Photo / AP
Interest rates and inflation remain the dominant themes that are dampening the outlook for returns at the moment. Photo / AP
Global sharemarkets have had a rocky start to the year as investors sweat on a range of issues, including inflation, rising interest rates and persistent Covid-19 cases.
Recent market falls have been driven by expectations that rising inflation in the US, Australia and other developed countries will lead to tighter financial conditions.
Throw in the Omicron outbreak here with the expected disruption to business from staff shortages, and the Russia-Ukraine crisis and it's a hot mix for investors to handle.
So how should investors respond to the volatility?
And what else is in store for 2022?
In the latest episode of the investment podcast Continuous Disclosure, Duncan Bridgeman talks to Fisher Funds' chief investment officer Ashley Gardyne about the outlook for the year ahead and some tips on how to combat the pressures building up.
In this episode we also discuss the dramatic fall in crypto-currencies in recent days and what that means for the wider investment arena.
Gardyne says interest rates and inflation remain the dominant themes dampening the outlook for returns at the moment with inflation in the US running at close to 7 per cent and 5 per cent in New Zealand. Fresh local data is due out tomorrow.
"There is a lot of research that shows through periods of high inflation equity multiples tend to be lower and equity returns tend to be lower.
"But at the same time [that] only becomes an issue if it becomes persistent and at this stage there's still no reason to believe it's going to be overly persistent."
There are also new opportunities for investors as the heat comes out of the market, he says.
"As an investor it has been difficult in the last six months to a year looking for new opportunities as everything seems to have been priced to perfection but when you get a little bit more volatility and stocks coming off their high that's when you get dispersion in markets and the opportunity to sell out of some of the companies that have held up well and perhaps buy in to some that have sold off a bit more or if you have had cash on the sidelines an opportunity to enter.
"So definitely a bit of a healthy correction and we are seeing more opportunities than we were a few months ago."
Listen to the podcast for more insights into investing.
Continuous Disclosure is available on IHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every second Wednesday.
