Thursday 7 July 2016

In search for security assets

Global investors are now actively search for security assets, which is reflected in government bond yields and prices of "quasi" security assets. For example, Swiss government bonds are traded at a negative rate, the yield on the 50 years is approximately -0.05%. Similar trends are observed in countries with ultrasoft monetary policies.
The most interesting situation occurs in the UK property market. Brexit provoked major withdrawals of real estate funds, forcing them to stop trading shares of funds, due to the lack of liquidity in the real estate market and the inability to implement the withdrawal of assets. What of course will continue to negatively affect the prices both commercial and private real estate due to rising uncertainty around the UK.
This, by the way, is only one of many possible consequences of Britain's exit from the EU. Even taking into account the fact, that the actual impact on the economy will not be as sharp as many fear, the feeling of uncertainty will cause investors to diversify risks, including in the portfolio emerging markets with different from the developed countries type of risk.


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