Damien Wood

When markets are in extreme fear or greed mode, new selling or buying can have an outsized impact on prices. Right now, many markets are near panic mode. We believe the reported selling of assets by Sovereign Wealth Funds (SWFs) is contributing to the scale of the plunge. The driver of SWF selling is linked to the collapse in commodity values and in particular oil prices. As a sustained recovery in commodity prices may not come soon, this investment “crunch” may recur. Not all asset classes are being hit as hard, though. As the graph below shows, A$ corporate bonds have performed reasonably well since mid-December 2015. The sound credit fundamentals, values and an absence from offshore selling, underpins sustained solid, albeit, bumpy returns for 2016. Read more. (VIEW LINK)


Please sign in to comment on this wire.