News

If you fear that there will be a recession in 2016, the financial advisors in our Perth office would like to give you some information that may help allay your fears.

This information comes from Dr Shane Oliver, the Chief Economist for AMP Capital, our parent company. Dr Oliver also serves as AMP Capital’s Head of Investment Strategy and Economics. Recently, Dr Oliver provided an extensive document on the AMP Capital website, filled with predictions and projections for 2016.*

In that article, he covered the chances of recession, both global and in Australia. He rated the chances of global recession in 2016 unlikely, while saying that there will not be a recession in Australia in 2016. We would like to provide you with the points made by Dr Oliver.*

The financial planning advisers in our Perth office would like to provide a quick review of 2015 and what it may mean to you in 2016. We are going to provide some information for you courtesy of Dr Shane Oliver, who is the Chief Economist and Head of Investment Strategy and Economics of our parent company, AMP Capital.

On 21 January 2016, Dr Oliver wrote an article on the AMP Capital blog called, “2016 – A list of lists regarding the macro investment outlook.” The article covered many facets of the economy and how they performed last year. We are going to give you a look at some of the highlights.*

2015: What Happened?

2015 provided mixed returns for investors. Monetary conditions “remained easy” while the global economy saw mild growth. However, global markets did suffer from a variety of fears, such as dropping commodity prices, China being in the forefront of a possible emerging market crisis, the first interest rate hike in the US over seven years and Australia continuing a “soft” pattern of growth.*

2016 greeted investment planning professionals in Perth and across Australia with bad news as the global sharemarket dropped sharply on the first trading day. Chinese shares were down around 7%, European shares lost around 3% and US shares dropped 2.7% before rallying to a loss of 1.5% by the end of the trading day.*

So, what happened? Shane Oliver, Head of the Investment Strategy Team and Chief Economist for AMP Capital, addressed it in a piece on the AMP Capital blog called “Rough start – What’s happened in markets?”*

According to Mr Oliver, market volatility is being driven by insecurity about Chinese growth potential, increased tensions between Iran and Saudi Arabia and manufacturing data from the US resulting in their drop in the Institute for Supply Management (ISM) Manufacturing Conditions Index for December.*

Mr Oliver’s Food for Thought

Mr Oliver reminded investors to consider and “keep in mind.” Here is the condensed version.*

The financial advisors for our clients in the Perth area would like to discuss emerging markets with you. Recently, our parent company AMP Capital covered this on their website. We would like to provide you with some highlights from the article, written by AMP Capital Investment Strategist Callum Thomas. *

According to Mr Thomas, investor sentiment in emerging markets is deteriorating, due to somewhat softer growth in those markets. Mr Thomas questions whether or not those fears are warranted. *

A recent survey of AMP Capital fund managers determined that 75% of them perceive the possibility of an emerging market debt crisis or a recession in China to be the tail risk that causes them the most concern. *

If you are seeking financial planning help in Perth, you may or may not be aware of Australian unlisted commercial property as an investment. Recently, Shane Oliver, the Chief Economist and Head of Investment Strategy and Economics with our parent company, AMP Capital, addressed unlisted commercial property in his column, “Oliver’s Insights.” *

Mr Oliver mentioned that unlisted commercial property has been generating returns of 9.5-10.5% per annum over the last six years, since the end of the Global Financial Crisis (GFC). According to Mr Oliver, this is because yields have fallen due to investors in search of income bearing investments. *

According to Mr Oliver, when yields fall .25%, capital gains rise 4%. He goes on to explain that property prices rise relative to rents in what he calls a “falling yield environment.” This provides capital gains for those who invest in property. Mr Oliver goes on to note that Australian Real Estate Investment Trusts, or A-REITs, have produced capital gains of “around 13% PA over the last six years.” *