Fri Oct 21 13:32:43 CAT 2016

Investing long-term is key - expert

By unknown | Oct 07, 2008 | COMMENTS [ 0 ]

Isaac Moledi

Isaac Moledi

Investec Asset Management says the US bailout package is likely to be passed in a moderated form now that the markets have demonstrated the potentially catastrophic consequences of inaction.

Chris Freund, portfolio manager at Investec Asset Management, adds that we could well see coordinated government resolve in the form of an interest rate reduction programme from all the major central banks in an effort to restore confidence in the financial system.

Despite these developments, he expects the ongoing global credit and liquidity crisis to contribute to a slowdown in global economic growth as credit conditions tighten and consumer confidence plummets.

Commodity prices could well continue to weaken for the next six to nine months, while risk sentiment indicators could indicate high levels of anxiety, with the often quoted volatility index reaching to levels seen in previous financial crises.

But this does not mean that the world is coming to an end, says Freund.

"Of more importance are longer-term expectations.

"Secular global economic growth factors of the past five years still remain firmly in place, namely Asia and the urbanisation and modernisation of China," he says.

Although Western economies are unlikely to grow for some time, they will eventually stabilise given time.

In addition, the impact is likely to be worse in the financial sector than the real economy.

"Now is the time to remember that we are long-term investors and although the next quarter or so may continue to be bumpy, it is likely that when markets respond positively, it will happen extraordinarily quickly and we believe there are buying opportunities offering excellent value on offer," says Freund.


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