Despite the volatility experienced by equity markets worldwide, investors still have cause to harbour some optimism about the coming months according to the chief investment officer of a major fund manager.
“The US is on steroids,” ING Investment Management chief investment officer James Wright said.
“The interest rate cuts that have happened in the US [and] the amount of cash that has been injected in both the US and Europe give grounds to be quite confident about the outlook.
“The foot is definitely on the accelerator and we should see economies emerge with a little bit more impetus,” he added.
Policies insuring the assets of the major overseas investment banks underwritten by non-aligned insurance companies are another reason to be positive about the future, Wright said.
These policies are providing ratings houses with some assurance that the assets of the investment banks are solid, giving them cause to give these organisations better credit ratings.
“This gives us some comfort that those assets that are sitting on their balance sheets will hold their value and we all might get through this period of investment banks writing off more and more money,” Wright said.
He cited the strength of the Chinese economy as an additional reason for local investors to remain positive.
“China continues to grow and obviously it’s a fantastic support to the Australian market,” he said.
However, he conceded that mum and dad investors should still expect further volatility in the short term.
