Last year was terrible for equities. A war in Ukraine, soaring inflation, higher interest rates and weak economic growth all weighed on sentiment. Globally, both small and large caps were firmly in negative territory. Large-cap indices like the S&P 500 were dragged down as technology companies (such as Meta and Tesla) and stocks with high valuations sold off. Meanwhile, risk-averse investors shunned small caps as economic conditions deteriorated.
Housing markets around the world are facing strong headwinds. Household finances and purchasing power are under pressure from falling real incomes, surging household bills and higher borrowing costs.
One of abrdn’s strategic priorities is supporting real world decarbonisation, as outlined in our Net Zero Directed Investing strategy. For us, that means allocating capital to credible transition leaders and climate solutions, as well as influencing the firms we invest in through active engagement.
As underlying inflation readings continue to surprise to the upside few central bankers are patient enough to allow the long and variable lags of monetary policy.
Trading conditions since the start of 2022 have been challenging for investors. High inflation, rising interest rates and the prospect of slowing economies have caused considerable volatility in equity and bond markets.
Summary of developments in emerging market debt in September 2022 and the outlook going forward.
Read more about the appeal of the private equity secondaries market.
abrdn consider some of the longer term factors that are exerting upward pressures on inflation.
Inflation has reached its highest level in over 40 years. Russia’s invasion of Ukraine continues to drive up global energy and food prices. Ongoing supply-chain bottlenecks and rising labour costs are also boosting inflation. The question for investors is – which strategies might fare best if inflation persists?
Max Rofagha, Founder and CEO of Finimize, joins host Richard Dunbar in the latest episode of the Investment IQ Podcast series. Max and Richard discuss the history of Finimize, how it can tackle the information asymmetry between institutional and retail investors, and how Finimize and abrdn can work together to create a powerhouse for investing information and research. The discussion also touches on the global problem of financial literacy and how 'learning by doing' may be part of the answer. This podcast was recorded in July 2022.
Smaller companies tend to be more susceptible to inflation risk than their larger peers. However, while the broad asset class may be floundering amid the highest inflation in decades, in our view, compelling opportunities remain among certain high-quality international small caps.
Nature is vital for a healthy economy, but the planet faces a crisis as companies, markets and governments have consistently failed to take into account the financial value of biodiversity.
It’s encouraging to see policymakers commit to ‘Net Zero 2050’. However, the road ahead will be challenging, not least in the real estate sector. In Europe, for example, greenhouse gas emissions from buildings need to drop 60% from 1990 levels by 2030. This clearly represents a major change for the sector – but dig down into the detail and the task begins to look almost Herculean. And it won’t be accomplished in time without a step change in response and radical collaboration from all actors in the sector.
Inflation has reached its highest level in over 40 years. Russia’s invasion of Ukraine continues to drive up global energy and food prices. Ongoing supply-chain bottlenecks and rising labour costs are also boosting inflation. The question for investors is – which strategies might fare best if inflation persists?
The vast majority (85%) of advisers have spoken with their clients in the last six months about how to adapt their finances or portfolios in the wake of soaring inflation, according to new research from abrdn.
Fears that the global transition to a low-carbon economy will drive inflation over the long term are overblown, with the tightening of monetary policy set to have far greater implications for portfolios.
Some three months into the Russian-Ukraine war, our experts look at what this conflict may mean for the world’s struggle to transition to more sustainable energy and how this may affect investors.
Climate-related screening of investments gets continued ‘green light’ in new court ruling
Today, half of the articles in investment magazines seem to be about ESG and climate. In our experience, however, very few funds are actually designed with a clear climate goal. We believe this is a missed opportunity.
The recovery from the Covid crisis continues, with global activity now exceeding its pre-pandemic peak. However, this rapid rebound has already run into supply constraints in many sectors and economies, leading to a surge in global inflation. Some of these demand-supply imbalances should ease over the coming quarters, helping to cool price growth. But it’s hard to escape the conclusion that Covid has permanently damaged the supply side of the global economy, implying a less favourable trade-off between growth and inflation.