https://www.scmp.com/rss/508820/feed Chris Iggo is chair of AXA Investment Managers Investment Institute and chief investment officer of AXA IM Core. An experienced leading thinker on asset allocation in traditional markets, Chris has over 30 years’ experience in the investment industry, with previous roles including head of strategy at Cazenove Fund Management, and chief US economist and chief European economist at Barclays Capital. en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com Between June 29, 2006 and September 18, 2007, the US Federal Reserve kept the key Fed Funds interest rate at 5.25 per cent. Today, market expectations are for the Fed to keep the rate at its current level of 5.5 per cent – where it has been since July 26 – until the end of the second quarter of 2024. The earlier period of rate stability lasted 15 months and the expectation today is for the rate peak to last around 10 months. This plateau is being referred to in some quarters as a “Table... https://www.scmp.com/comment/opinion/article/3238131/two-lessons-global-economy-feds-2007-missteps?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3238131/two-lessons-global-economy-feds-2007-missteps?utm_source=rss_feed Wed, 18 Oct 2023 14:30:08 +0000 Biodiversity is deteriorating at an alarming rate and its loss is causing damage not only to the natural world but to society, the planet and the global economy. The World Economic Forum estimates that more than half of global gross domestic product – around US$44 trillion – depends on high-functioning ecosystems. Understanding how biodiversity risks might impact the economy and investments is crucial. Investors should also consider ways to contribute positively to good social and environmental... https://www.scmp.com/comment/opinion/article/3235144/why-more-ever-nature-sound-investment?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3235144/why-more-ever-nature-sound-investment?utm_source=rss_feed Wed, 20 Sep 2023 14:30:15 +0000 Markets have gone through something of a correction this month. The best-performing equities this year have delivered losses over the summer. Asian bourses and growth sectors like technology have been hit, with positive performances only seen in more defensive, higher-quality indices such as the Dow Jones Industrial Average. On the bond side, despite better news on inflation and more evidence that we are at the peak of the global interest rate cycle, most fixed-income sectors have delivered a... https://www.scmp.com/comment/opinion/article/3232004/how-lift-global-economic-gloom-and-restore-investors-faith-recovery?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3232004/how-lift-global-economic-gloom-and-restore-investors-faith-recovery?utm_source=rss_feed Wed, 23 Aug 2023 14:00:11 +0000 I was recently on a business trip to Australia and Asia, meeting with investors across the region. In general, they shared many of the same views in their outlook. There is a concern that developed economies face a moderate recession risk following a year of monetary tightening. This is reflected in their investment stance. Most people do not have an overweight position in equities. Fixed income is viewed more favourably with a peak in interest rates in sight. Also, there is a common view that... https://www.scmp.com/comment/opinion/article/3228829/investors-keep-wary-eye-recession-risks-and-chinas-confidence-woes?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3228829/investors-keep-wary-eye-recession-risks-and-chinas-confidence-woes?utm_source=rss_feed Wed, 26 Jul 2023 14:00:10 +0000 Whether the US economy achieves a soft landing, falls into recession or sees some other outcome, it remains central to the global investment outlook. The United States Federal Reserve has not claimed victory over inflation yet, but it has paused its rate-hiking cycle on the assumption that its 500 basis points of tightening so far should have an effect on growth and price rises. Currently, economic data does not overwhelmingly point to recession. There is not a lot of bottom-up evidence. Markets... https://www.scmp.com/comment/opinion/article/3225674/will-us-economy-have-soft-or-hard-landing-its-still-too-soon-say?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3225674/will-us-economy-have-soft-or-hard-landing-its-still-too-soon-say?utm_source=rss_feed Wed, 28 Jun 2023 22:15:14 +0000 Technology stocks have led returns in global equity markets so far this year. At the MSCI World level, the information technology sector has delivered total returns of more than 25 per cent compared to about 10 per cent for the total index. Global energy stocks – last year’s winners – have delivered a negative return this year. The world, it seems, has gone from dealing with a real income-destroying energy price shock to embracing growth enhancing technology again. This is good for Asia and good... https://www.scmp.com/comment/opinion/article/3222276/why-tech-stocks-are-thriving-global-stage-despite-headwinds?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3222276/why-tech-stocks-are-thriving-global-stage-despite-headwinds?utm_source=rss_feed Wed, 31 May 2023 19:00:13 +0000 The global economy has been beleaguered by runaway inflation, but that is now easing and should continue to do so. Central banks are committed to bringing inflation back nearer to target levels and are likely to succeed within a year to 18 months. Moving forward, we will need to be watchful of the labour market and the potential overheating of wages. This moves very slowly but can build to be a significant pressure over time. The Covid-19 pandemic has had major implications for the organisation... https://www.scmp.com/comment/opinion/article/3219029/pandemic-climate-change-fight-will-drive-global-shifts-jobs-and-investment?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3219029/pandemic-climate-change-fight-will-drive-global-shifts-jobs-and-investment?utm_source=rss_feed Wed, 03 May 2023 13:15:08 +0000 This is not 2008. But market confidence in banks has been rocked and investors have had to digest significant losses in both the equity and credit markets. There may be more problems ahead as investors withdraw from certain bank-related assets and concerns remain about deposits. There is also the risk of credit impairments, losses in other sectors such as real estate, and a wave of banks reporting provisions for loan losses. The interest rate market seems to know how this story will end – with... https://www.scmp.com/comment/opinion/article/3215954/no-repeat-2008-global-financial-crisis-other-dangers-lurk?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3215954/no-repeat-2008-global-financial-crisis-other-dangers-lurk?utm_source=rss_feed Wed, 05 Apr 2023 07:45:10 +0000 Fashion is one of the biggest industries in the world, generating around US$2.5 trillion in annual sales. It is also thought to be responsible for a sizeable 10 per cent of annual global carbon emissions – more than all international flights and maritime shipping combined, according to a McKinsey report. No surprise then that it was high on the agenda at the COP27 UN climate change conference. At the event, the Global Fashion Agenda, a non-profit organisation for sustainability in fashion,... https://www.scmp.com/comment/opinion/article/3214213/if-chasing-gdp-and-consumption-bad-climate-what-are-alternative-economic-models?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3214213/if-chasing-gdp-and-consumption-bad-climate-what-are-alternative-economic-models?utm_source=rss_feed Wed, 22 Mar 2023 13:30:09 +0000 Chris Iggo Chris Iggo It is increasingly evident that this is not a normal business cycle. While there are elements that are familiar – tight labour markets, inflation and monetary tightening – many of the dynamics are unique. During the pandemic, global gross domestic product fell, then recovered at the fastest pace in living memory. Since then, inflation has been at its highest in a generation. There will continue to be short-term uncertainties on inflation, interest rates and growth. There are a few big themes... https://www.scmp.com/comment/opinion/article/3212382/find-next-big-investment-darling-just-follow-science?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3212382/find-next-big-investment-darling-just-follow-science?utm_source=rss_feed Wed, 08 Mar 2023 14:00:09 +0000 Financial markets continue to reflect two important themes. The first is that interest rates are going to remain significantly higher than the average of recent years until there is unequivocal evidence that inflation is returning to a more comfortable level. The second is that corporate earnings growth is slowing. The question for investors is whether current market pricing has fully incorporated those two trends. My view is that bond markets are aligned with the messages coming from central... https://www.scmp.com/comment/opinion/article/3210955/high-interest-rates-and-slow-earnings-growth-make-bonds-attractive-investors?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3210955/high-interest-rates-and-slow-earnings-growth-make-bonds-attractive-investors?utm_source=rss_feed Wed, 22 Feb 2023 13:30:10 +0000 The gloom spurred on by 2022’s dismal market performance has given way to optimism this year. Indeed, markets have been performing well since October. It was always unlikely there would be another year of negative returns from both bonds and equities. Higher interest rates have created a better platform for positive returns from fixed income markets while a modest improvement in the economic growth outlook has supported equity returns. Four themes will help sustain returns going forward. First,... https://www.scmp.com/comment/opinion/article/3207922/investors-can-look-forward-four-powerful-tailwinds-year?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3207922/investors-can-look-forward-four-powerful-tailwinds-year?utm_source=rss_feed Wed, 25 Jan 2023 14:00:11 +0000 It’s been a challenging year. Across major equity and bond markets, total returns have been negative for much of 2022. It is only in the fourth quarter that they have picked up. Even now, many are sceptical of the rally, given that potential bad news is still to come on inflation, interest rates, economic growth and global politics. Investor confidence is fragile, and the news is not encouraging. So, what should we expect in 2023? Across listed bond and equity markets, it is difficult to find... https://www.scmp.com/comment/opinion/article/3201367/even-recession-looming-2023-will-be-better-year-investors?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3201367/even-recession-looming-2023-will-be-better-year-investors?utm_source=rss_feed Wed, 30 Nov 2022 14:00:12 +0000 In her press conference following the European Central Bank’s Governing Council meeting on October 27, ECB president Christine Lagarde suggested that monetary policy decisions from now on would be taken based on incoming data and an assessment of the impact of decisions already taken. The latter point is important and something that is often missed by financial market commentators. Monetary policy acts with a lag. A decision to raise interest rates today will shape economic behaviour in the... https://www.scmp.com/comment/opinion/article/3197977/investors-can-take-heart-interest-rates-may-be-peaking?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3197977/investors-can-take-heart-interest-rates-may-be-peaking?utm_source=rss_feed Wed, 02 Nov 2022 14:00:16 +0000 It is hard to believe how much global bond yields have risen in 2022. As of the close of markets on September 28, the yield to maturity on the US Treasury 10-year note – arguably the global benchmark rate for government bond markets – stood at 3.7 per cent. It was just 1.5 per cent at the end of 2021. In Europe, government bond yields started the year in negative territory and have risen by more than 200 basis points. The moves have been equally dramatic elsewhere. Emerging-market US... https://www.scmp.com/comment/opinion/article/3194866/market-shake-will-help-bonds-regain-their-safe-heaven-status-thats?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3194866/market-shake-will-help-bonds-regain-their-safe-heaven-status-thats?utm_source=rss_feed Wed, 05 Oct 2022 14:00:16 +0000 What happens to US interest rates from here on is important to investors everywhere – through the influence they have on the US economy, on global rates and the dollar. There are reasons to believe we may be near the end of the interest rate cycle after the most aggressive “front-loading” of rate rises for many decades. The US Federal Reserve has increased rates by 225 basis points since March. The suggestion is that there could be one or more moves to come but evidence is beginning to mount... https://www.scmp.com/comment/opinion/article/3188360/why-equity-and-bond-investors-can-expect-better-returns-2023?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3188360/why-equity-and-bond-investors-can-expect-better-returns-2023?utm_source=rss_feed Wed, 10 Aug 2022 17:30:10 +0000 The first half of this year saw dismal returns for equity investors. The MSCI World Index was down 20 per cent and many equity indices around the world have fallen into bear market territory. As a region, Asia has fared better than the US and Europe with only the technology-heavy Korean and Taiwanese markets down by more than the global benchmark. In part, this reflects a more balanced macroeconomic backdrop, with Asian economies not suffering as large an inflation shock as elsewhere. It also... https://www.scmp.com/comment/opinion/article/3185000/why-future-looks-brighter-equity-markets-asia-us-and-europe?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3185000/why-future-looks-brighter-equity-markets-asia-us-and-europe?utm_source=rss_feed Wed, 13 Jul 2022 04:44:20 +0000 The strength of global commodity prices, rising US interest rates and a strong dollar are all connected. They are all also contributing to the worsening growth and inflation outlook in economies across Europe, Asia and emerging markets in general. Increased US dollar prices for commodities like oil and industrial metals creates an increased demand for the currency for transactional reasons. Higher bond yields and expectations of significant increases in US interest rates also fuel speculative... https://www.scmp.com/comment/opinion/article/3178034/why-strong-dollar-could-trigger-cost-living-crisis-emerging?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3178034/why-strong-dollar-could-trigger-cost-living-crisis-emerging?utm_source=rss_feed Wed, 18 May 2022 08:15:19 +0000 The demand for energy is growing most rapidly in Asia. Given the region’s strong economic growth, Asia is expected to represent most of the global rise in energy demand through to 2040. A decreasing amount of that growth will be met by traditional fossil fuels as the need to tackle the climate crisis along with technological advancements mean renewable energy will become much more important. For the moment, though, renewable energy capacity cannot meet demand or the expected growth that comes... https://www.scmp.com/comment/opinion/article/3171416/energy-crisis-and-sanctions-russia-are-good-news-asias-climate?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3171416/energy-crisis-and-sanctions-russia-are-good-news-asias-climate?utm_source=rss_feed Wed, 23 Mar 2022 05:30:16 +0000 Rising inflation has been the top concern for investors around the world over the past year. So far, there are few signs inflation is peaking. That means interest rates will rise, which has implications for economic growth, corporate earnings and stock valuations. Equity investors have already seen significant negative returns in anticipation of higher rates. There may be more to come in the short term. However, history suggests that, if investors take a long view, returns will be positive... https://www.scmp.com/comment/opinion/article/3167968/interest-rates-are-rising-it-isnt-all-bad-news-investors?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3167968/interest-rates-are-rising-it-isnt-all-bad-news-investors?utm_source=rss_feed Wed, 23 Feb 2022 19:30:14 +0000 The UK government has recently announced that it is lifting most of the remaining Covid-19 restrictions on social mobility, including the guidance to work from home. Evidence from around the world suggests that while the Omicron variant is highly contagious, its impact on the health of individuals and on health care provision is much less than was the case with earlier variants. With the continued roll-out of vaccinations and the Omicron wave likely to peak before the end of the first quarter,... https://www.scmp.com/comment/opinion/article/3164615/uk-opens-other-major-economies-will-follow-path-post-pandemic?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3164615/uk-opens-other-major-economies-will-follow-path-post-pandemic?utm_source=rss_feed Wed, 26 Jan 2022 17:30:14 +0000 The year is ending as it started, with Covid-19 an immediate concern for investors and policymakers alike. The apparent rapid spread of the Omicron variant has led to social and travel restrictions being reintroduced in several countries around the world. The fear is that this will impede economic activity; spending, manufacturing and distribution are all likely to be affected by further attempts to prevent another wave of infections. As the immediate outlook becomes more uncertain, central... https://www.scmp.com/comment/opinion/article/3159661/what-rising-global-inflation-and-interest-rates-mean-bond-market?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3159661/what-rising-global-inflation-and-interest-rates-mean-bond-market?utm_source=rss_feed Wed, 15 Dec 2021 05:30:20 +0000 One of the more important agreements made in Glasgow at the COP26 summit on climate change was on a global system for trading carbon. Under the auspices of the United Nations, the system will provide for the allocation of carbon credits linked to projects and activities that reduce greenhouse gases – for example, renewable energy plants or the cultivation of forestry land. These credits will be set against a country’s emission-reduction targets and/or sold to raise finance, providing an offset... https://www.scmp.com/comment/opinion/world/article/3156240/get-net-zero-we-need-effective-global-carbon-credit-market?utm_source=rss_feed https://www.scmp.com/comment/opinion/world/article/3156240/get-net-zero-we-need-effective-global-carbon-credit-market?utm_source=rss_feed Wed, 17 Nov 2021 06:30:22 +0000 World leaders will gather in Glasgow, Scotland, at the end of October to discuss how to accelerate progress towards a net-zero carbon economy. Investors, who are increasingly engaged with climate change and see the need to adapt their strategies, will be following events closely. The past year has given us plenty of examples of the urgency of climate change and how it threatens our economies and societies. We saw flooding in China, extreme temperatures in the Pacific northwest of North America... https://www.scmp.com/comment/opinion/article/3152902/cop26-despite-energy-crunch-focus-must-remain-renewables?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3152902/cop26-despite-energy-crunch-focus-must-remain-renewables?utm_source=rss_feed Wed, 20 Oct 2021 19:30:17 +0000 Every three months, my colleagues and I meet to discuss the outlook for the global economy and, more importantly, bond markets. The US Treasury market and what will happen to the benchmark 10-year yield is always at the centre of discussions. Part of the process involves hearing the views of economists and strategists at leading investment banks. We did the most recent review in early September. The range of forecasts for the 10-year Treasury yield for the next three months was anywhere between... https://www.scmp.com/comment/opinion/article/3149522/how-us-federal-reserves-tapering-decision-will-reshape-global-bond?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3149522/how-us-federal-reserves-tapering-decision-will-reshape-global-bond?utm_source=rss_feed Wed, 22 Sep 2021 17:30:18 +0000 Although a number of Asian countries, such as Vietnam and South Korea, have recently seen higher inflation rates, inflation remains low across the Asia-Pacific region. This means central banks can keep interest rates low for the foreseeable future, which in turn will support economic recovery and should be good news for equity investors. Although Asia and the Pacific has underperformed the United States and Europe since the first quarter of this year, current valuations and the outlook are both... https://www.scmp.com/comment/opinion/article/3146042/asian-stock-markets-expect-rest-2021-be-brighter?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3146042/asian-stock-markets-expect-rest-2021-be-brighter?utm_source=rss_feed Thu, 26 Aug 2021 01:15:15 +0000 Chris Iggo Chris Iggo Advocates of bitcoin and other cryptocurrencies argue that traditional fiat currencies are inherently unstable and that the monetary systems that underpin them are inefficient and corrupt. Yet the argument that bitcoin provides a more stable alternative is not playing out very convincingly in real time. Against the dollar, bitcoin has traded in the range of US$30,000 to US$64,000 this year. Since its peak in April, its price has almost halved in US dollar terms – hardly a convincing store of... https://www.scmp.com/comment/opinion/article/3139165/where-bitcoin-fails-central-bank-digital-currencies-will-succeed?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3139165/where-bitcoin-fails-central-bank-digital-currencies-will-succeed?utm_source=rss_feed Wed, 30 Jun 2021 06:30:09 +0000 The US-hosted Leaders Summit on Climate marked a significant milestone on the road to the UN Climate Change Conference to be held in Glasgow, in the UK, this November. It also marked the return of the United States to the forefront of meeting the challenges of climate change. The Biden presidency set a new target to reduce greenhouse gases by 50-52 per cent, compared to 2005 levels, by 2030. More countries are likely to restate their national carbon emissions reduction targets ahead of the... https://www.scmp.com/comment/opinion/article/3132208/climate-crisis-investors-have-key-role-play-shift-green-finance?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3132208/climate-crisis-investors-have-key-role-play-shift-green-finance?utm_source=rss_feed Wed, 05 May 2021 06:30:16 +0000 The theme of reflation continues to dominate financial markets. Economists expect significant increases in the pace of economic growth later this year. This, of course, is in response to the lifting of lockdowns and social mobility restrictions as the widespread deployment of Covid-19 vaccinations brings infection and mortality rates down and reduces the pressure on public health systems. After a year of restricted economic activity, the level of pent-up demand is huge. Savings rates have... https://www.scmp.com/comment/opinion/article/3124702/coronavirus-recovery-strong-growth-and-low-interest-rates-set-drive?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3124702/coronavirus-recovery-strong-growth-and-low-interest-rates-set-drive?utm_source=rss_feed Wed, 10 Mar 2021 19:30:16 +0000 On February 2, the Reserve Bank of Australia announced that it was maintaining its key interest rate target at 0.1 per cent and that it would extend its purchases of bonds by another A$100 billion (US$76.8 billion). It said it would not raise interest rates until inflation is comfortably between 2 and 3 per cent (it is currently less than 1 per cent). In no uncertain terms, the central bank argued that this is unlikely before 2024. Australia faces an economic outlook common to many countries.... https://www.scmp.com/comment/opinion/article/3121153/why-financial-markets-need-not-worry-about-inflation-now?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3121153/why-financial-markets-need-not-worry-about-inflation-now?utm_source=rss_feed Wed, 10 Feb 2021 19:30:14 +0000