Retirement Focus - Investment Market View

Thursday, January 20, 2022

While investing during your retirement your Financial Planner should be keeping a close eye toward market movements on a global scale and investing appropriately to minimise any risk to your nest egg. This article takes a back view of 2021 and how markets have responded and been affected by global economic conditions.

Throughout 2021 world challenges continued, including the spread of Covid variants which caused governments to impose further lockdown measures, business restrictions and tighter travel arrangements.

Despite all this, and the fact that worldwide impacts of COVID have been over a longer 2 year period, global equity markets continued to perform well during 2021.  And thus markets in general concluded another year of significant gains with the MSCI World Index returning 21% for January – December.

Central banks around the world kept up their strong monetary easing policies leading to interest rates dropping to historic lows.  At the same time they continued to buy up bonds as a stimulatory measure.   

The United States experienced an outstanding year with a 29% return and recorded new highs throughout 2021. Toward the end of the year the NASDAQ index slowed as investors considered the potential of higher interest rates going forward, and chose to move out of riskier stocks.

On the other side of the world, Europe’s Stoxx50 index returned 24%, and Japan’s Nikkei experienced a more restrained 7%.

However, China was a completely different story. The markets were significantly impacted by the implosion of Evergrande, one of China’s largest property developers, and by the governments’ new stringent regulations on their tech and education sectors making them less competitive in the market place. This lead to uncertainty about the effects on the broader property markets and economy, and this was reflected in stock prices. These changes contributed to Chinese and Hong Kong stock markets falling to negative 14% and 5% respectively.

The rising expectations of inflation globally affected investor sentiment. Bonds were sold off in the latter half of the year on expectations that central banks may have to tighten their approach to inflation. December showed the start of central bank tightening as the US Fed indicated their plan to slow down bond purchases. They also indicated a view to gradually increasing interest rates via three rises of 0.25% over the course of 2022. In addition, the Bank of England stepped forward as one of the first major central banks to raise its official interest rates in an attempt to counter inflation.

Although some markets have performed strongly these past twelve months it has not been across the board. In addition, world economies are once again making adjustments to the post COVID environment particularly with chatter of interest rate increases and inflation risk. It is more important than ever that you are well advised with appropriate investments for your retirement savings.

As Sunshine Coast retirement investment specialists, Maher Digby offer sound advice in the ever changing economic environment.

For more Information contact Mark Digby at Maher Digby Securities Pty  Ltd - Financial Advisers – AFSL No. 230559. This document was prepared without taking into account any person’s particular objectives, financial situation or needs. It is not guaranteed as accurate or complete and should not be relied upon as such. Maher Digby Securities does not accept any responsibility for the opinions, comments, forward looking statements, and analysis contained in this document, all of which are intended to be of a general nature. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend consulting a financial advisor