You may have read some of the recent headlines about the dramatic falls in share markets around the world.
What’s happening in financial markets?
- Chinese growth concerns – Chinese economic data has been lacklustre but not to the extent that should prompt the market declines seen since the start of the year. Furthermore, action by Chinese officials to lower the yuan together with the temporary closure of the Chinese stock market followed by the removal of the “circuit breaker” controls led investors to again question China’s growth trajectory and, more importantly, the ability of the Chinese government to manage these issues.
- US monetary tightening – The US Federal Reserve increased official interest rates to 0.25% late last year. This has concerned some investors but they have seemingly overlooked the fact that recent US employment data shows the US economy is not on the verge of collapse and that interest rates remain extremely low.
- Geopolitical affairs – The North Korean hydrogen bomb test on 6 January and increased Saudi/Iran tensions have led to heightened risk aversion.
What should you do?
At times like this it’s important to stay calm. Remember some of the fundamental principles of investing, such as making sure you have a diversified portfolio and investing for the long term. By taking a long-term approach, you give your investments time to recover from the downswings that are a natural part of any investment cycle.
If you would like to discuss your situation or clarify any questions you may have, contact our office.
Image courtesy of cooldesign at FreedigitalPhotos.net.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.