The top three risks on the global investment horizon22 November 2017
Transition risk, rising inflation and populism are the top risks on the agenda of Investec’s Global Investment Strategy Group, says the committee’s Chairman John Haynes.
Transition risk, rising inflation and populist trends are topping the agenda of Investec’s Global Investment Strategy Group, says the committee’s Chairman John Haynes of Investec Wealth & Investment, UK.
The Global Investment Strategy Group brings together the finest investment minds at Investec Wealth & Investment across the different geographies, to set the overarching positioning and investment strategy for the investment portfolios of clients.
In this video at the recent Investec Wealth Forum in Johannesburg, Haynes discusses the issues getting the most airtime at his committee meetings.
With the current synchronised global upswing in growth thanks to injections of money into the economy, governments and institutions can now “afford to withdraw that monetary support” and if they do so, the potential for volatility, or transition risk “could have an effect on growth,” explains Haynes.
The potential for increased inflation not only hits the “consumer’s pocket as they impact on demand, but also they increase the pressure on central banks to withdraw the stimulus that they have in the system” – another potential contributor to increased transition risk. “This could cascade into a situation where we reverse some of the gains we’ve made in the world economy over the past three to five years,” says Haynes.
“I am very concerned about the impact of populism on fiscal policy. In some economies there is a rejection of capitalism, in some economies populism is a reaffirmation of capitalism but a redistribution of the income that capitalism produces,” says Haynes whose committee has to make a judgement call on whether the trend of populism could result in a rejection of capitalism. “At the moment, we are making the judgement that Trumpist politics are populist and good for business and actually in Europe too that appears to be the case.”