Why are stock markets Globally so volatile at present?
How will this affect my investments?
Every developed equity market has its own issue, for example, the UK has Brexit (which impacts Europe directly) and the US (which drives the rest of the world) has uncertainty regarding trade tariffs and mid-term elections.
Vitally, US tariffs will affect all markets. At SWA we invest in emerging markets such as Brazil, China, India, South Africa to name a few and these have a huge reliance on what they sell to the US, therefore any increase in tariffs will have a significant knock-on effect for them.
Globally, every market will be affected by the current political climate, hence volatility worldwide.
The Japanese market can be separated to an extent, and corporate profitability is at its highest point since the 1950’s. We believe opportunities remain in Japanese equities as the economy continues to slowly improve.
On a positive note, the volatility we’re experiencing at present is likely to already be factoring in the impact of Brexit, US tariffs and the mid-term elections. Once these major events become clearer it is likely that global markets will settle.
Investing long-term with little or no knee-jerk reaction to external forces affecting markets presently is proven to be the best strategy to maximise returns.