Rietumu Asset Management experts: “natural disasters have not caused problems for investors”
27-Sep-2017, 11:29 / Products & Services The specialists of Rietumu Group have prepared an overview on the return of the investment funds of Rietumu Asset Management (RAM) for August.
Along with information on the structure and dynamics of the funds, the review contains the traditional analysis of the current political events and key economic factors that exert an influence on financial markets.
“Neither natural disasters nor geopolitical cataclysm did shake the moral of investors and their confidence in tomorrow. American stock indices set new highs, while the volatility and credit risk premium stayed at record lows,” note RAM experts in the review
North Korea tested nuclear bomb and fired two ballistic missiles over Japan. In return, the United Nations Security Council unanimously adopted a US-drafted resolution to impose new sanctions on North Korea. The hermit state showed remarkable tact and diplomacy, it threatened to sink Japan in ocean and reduce the U.S. to ashes and darkness. Worth mentioning that escalation of conflict on Korean Peninsula did not meaningfully influenced financial markets.
Unfortunately, last month was full of natural disasters. Caribbean islands, Florida and Gulf Coast was devastated by hurricanes, Mexico experienced the most severe earthquake in a century, and countries from Southeast Asia have seen one of the worst flooding. The brutal natural cataclysms likely costed dozens of billions in lost economic activity and real estate damage. However, the negative effect won’t last long, and the economies may even experience a bump in growth from rebuilding.
The natural disasters accidentally eased the pressure on the U.S. Treasury. The Treasury would have been unable to handle payments on national debt by the October due to a debt ceiling and Senate impotence to negotiate new deal. However, the debt ceiling was making the state hurricane relief bill impossible to pass – something that the government could not afford. As a result, debt-cap suspension was prolonged till December 8. Therefore, expect hot debates about debt-limit issue to emerge at the end of year.
At the end of August, the president of France presented labour market reforms. The aim of reforms is to make labour market more flexible, increase productivity of the economy, decrease unemployment and raise France attractiveness for start-ups and small businesses. Policymakers are expected to vote on the reforms in September. Overall, European economy continued bright recovery.
“Colorful autumn took place of sunny summer in an endless cycle of the nature. The concept of the cyclical nature of life – infinite rotation of death and life, destruction and creation, goes back to the origin of current civilization. An ancient symbol of the cyclicality of life – Ouoroboros, a serpent eating its own tail, first appeared thousand years BC. Cyclicality is also inherent in financial markets. However, in contrast to ancient philosophy, financial markets inherited one more key trait – growth tendency. Therefore, despite various falls and rises, an award always awaits patient long-term investors,” say RAM experts.
The review on RAM and the current comments of the specialists can be found here.
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