Investor concerns that global markets could experience a repeat of 2008's global financial crisis (GFC) were unfounded, a Macquarie Group research executive said yesterday.
Macquarie Private Wealth head of research Riccardo Briganti said that while global equity markets had "retraced" some of the gains made earlier in the year, concerns about a repeat of the GFC were unwarranted.
"Undoubtedly the first six months of 2012 have continued to challenge global economies and markets, which has naturally led to cautious consumers and hesitant investors," Briganti said.
"However, while issues continued to play out, it is important for investors to keep a realistic view of the flow of information they are receiving, both the good and the bad."
He said investors should also pay close attention to asset allocation within their portfolio and working with their financial adviser to adjust weightings.
His comments were part of Macquarie Private Wealth's biannual Market Outlook report, which found the biggest challenges to global growth were a combination of an "unravelling" of the European debt situation and a deepening of the slowdown in China.
"While there are grounds for these concerns, we don't believe they are sufficient to lead to a hard landing for China, because policy easing will limit the extent of the slowdown. A hard landing would be a sustained period of economic growth below 7 per cent," he said.
In Europe, the coupling of austerity measures in Greece and other countries, and emerging pressures from the Spanish banking system, had revived concerns about how European authorities might react if a sovereign debt issue morphed into a more dangerous banking stability issue, he said.
"We believe the European concerns will continue to ebb and flow as the structural economic problems combine with national politics, which means continuing uncertainty," he said.
In terms of the United States, he said: "We believe the US will avoid the worst-case scenario of a recession.
"Importantly, in contrast to Europe, the US banking sector is in relatively good health."
