A red flag for investors?
One of the major contributors to the declines in equity markets in 2016 has been the sell off in banking stocks. The selling has been widespread and Australian banks have not been spared. A subdued growth environment and the prospect of exposure to bad debts in the resources industries have been marked as the culprits. Chris Watling from Longview Economics says there may be something else at play. "I worry that going negative on interest rates and going more deeply negative as we have seen in Europe and Japan, is actually undermining their ability to make money in the longer term." In this discussion Watling expands on this view and why he is worried about negative interest rates.