News

Among the many financial services we provide to clients in the Perth area is helping to diversify their portfolios. Property investment is one way to diversify. Recently Michael Kingcott, Head of Property Investment Strategy and Research for our parent company, AMP Capital, took a look at how the “chase for yield” is affecting property returns. We would like to provide you with some highlights. (1)

During a period of low interest rates, Australian investors and foreign investors are choosing to invest in commercial real estate. Because yields on bonds tend to be low, investors are searching for a “safe” investment that provides higher yields. Currently, investors searching for a high-yield, low-risk investment are attracted to commercial real estate. (1)

However, yields have compressed during the last decade from a high of 8.7% just before the Global Financial Crisis (GFC) to their current level of 6.6%. Mr Kingcott expects yields to fall even further, matching their 2007 peaks. Some assets may see rates even lower than their 2007 peaks, such as investments with secure high yield, markets with rising prospects for rental growth and trophy assets. (2)

With years of experience serving the Perth market as financial planners, we have learned to look for the good in any market variation. Recently, four executives from our parent company, AMP Capital, did just that in a discussion of what recent volatility, especially in oil, the banking sector and emerging markets, could mean to investors.*

The participants: Investment Director Jeff Brunton, Head of Global Fixed Income Simon Warner, Head of Credit Research Sonia Baillie and Chief Economist and Head of Investment Strategy Dr Shane Oliver. We would like to present the salient points of their discussion.*

Current Market Volatility Driven by Global Macroeconomic Uncertainty

Uncertainty can affect markets in a negative manner. Global uncertainty has affected the market in three main areas.*

Perth financial planners are responsible for helping their clients navigate the markets during good times and bad times. At Approved Financial Planners, we have a great resource that helps us do just that. His name is Dr Shane Oliver. He is not only the Chief Economist for our parent company AMP Capital; he is also the Head of Investment Strategy and Economics and is responsible for their diversified investment funds. (1)

In mid-February, shares on the ASX 200 index temporarily entered “bear market” status. It is considered a “bear market” when shares declined 20% from their most recent high. For this instance, that “high” took place in April 2015. Media coverage helped generate great concern for this development. Dr Oliver responded with a post in his “Oliver’s Insights” column explaining why bear markets are “not always of the grizzly variety.” (1)

According to Dr Oliver, it is unfortunate that there is no true definition of what separates a bear market from a correction market. In addition, there is no industry official who is responsible for making that kind of declaration. Dr Oliver prefers to view a correction market as “sharp falls” within a rising market that only last a few months until the market continues its previous trend of rising, reaching a new “high” within 6 months of the low. (1)

When we provide financial advice to our clients in the Perth area, we use every resource we have at our disposal. One of our best resources is the property leadership team of our parent company, AMP Capital.

Recently, AMP Capital announced that they are expanding their property leadership team. Luke Briscoe has been appointed as Managing Director, Office and Industrial. Louise Mason has been appointed as Chief Operating Officer. They will report to Carmel Hourigan, who is the Global Head of Property for AMP Capital.*

Ms Mason’s role will be to manage the Property business operations, while managing the teams who are responsible for mixed use strategies, business asset creation and office development pipeline. One of her duties will be to deliver premier opportunities for development to clients of AMP Capital, such as Quay Quarter Sydney.*

Perth financial planners who recommend real estate as a way to diversify portfolios are on the right track if a recent AMP Capital blog entry is any indication. The blog post being referenced is called, “Strength in real assets to continue – 2016 outlook.” The article had contributions from AMP Capital’s Heads of Infrastructure Equity, Infrastructure Debt, Global Listed Infrastructure, Property and the Deputy Head of Global Listed Real Estate.*

Generally, the real estate and infrastructure managers of AMP Capital expect global demand to strengthen in 2016 for all of the above listed categories. Here are capsules of each asset class projections for 2016 according to their respective managers.*

Boe Pahari, Global Head of Infrastructure Equity

Mr Pahari expects the markets to be the most active in North America and Western Europe. More managers are expected to launch funds during 2016, making this segment more competitive. Also, larger investors appear to be developing a preference for direct investments in infrastructure assets.*

We provide a full menu of financial services in Perth. While we can only provide specific information and recommendations during an individual consult, we do have access to a lot of information we can pass on to consumers. We came across some information we think is relevant to a lot of Perth households: the effects of falling oil prices.

Recently, in his column “Oliver’s Insights,” Dr Shane Oliver covered the effect of falling oil prices. Dr Oliver is the Chief Economist for our parent company, AMP Capital. He is also the AMP Capital Head of Investment Strategy and Economics. His article was called, “The plunging oil price – why and what it means.” We would like to pass on some of the information to you.*

In two years, oil prices have gone down 70%. This is because supply has surged in comparison to demand and because the US dollar is high. The price could fall as low as $20 per barrel, but Dr Oliver believes the supply will decrease soon.*

If you are looking for financial planning help in Perth, you may or may not be aware of the many sectors of the sharemarket. Recently, our parent company, AMP Capital, reviewed the food and beverage sector on their website. The article was called, “Part 4 of the ESG Series: Food trends and investor impacts.”

The article was written by Ian Woods, who is the Head of Environmental, Social and Governance (ESG) Investment Research for AMP Capital. He explored some of the industry’s drivers, providing the perspective of an investor. Here are some of the highlights.*

Sustainability Drivers in the Food and Beverage Industry

Mr Woods believes that the food and beverage industry is connected to stronger sustainability drivers when compared to other sectors. Here are some of those drivers.*

Financial planning encompasses a number of factors. The economies of Perth, WA, Australia and the world could play an important role in how your investments perform. Recently, Andy Gardner, the Australian Resources Analyst on the AMP Capital Fundamental Equities team, wrote a post on the AMP Capital blog exploring the connection between Chinese consumer habits and the Australian economy.

The post was called, “The Chinese consumer shift to experience over ‘things.’” We would like to provide you with some of the highlights.

How Chinese Consumer Attitudes can Affect Australia

Mr Gardner sees a connection between changing Chinese consumer attitudes and the Australian economy. For his broad conclusions, Mr Gardner believes that the Chinese and many others across the globe are beginning to value experiences over material products.*

Mr Gardner sees this trend resulting in a boost for the Australian economy in the tourism, education and housing sectors as Chinese Nationals will be more likely to come to Australia and those who immigrate here will need housing and education.*