Impact of monetary policy settings outside Asia crucial for investors

Since the financial crisis, the global markets have been experiencing many mini shocks to the real and financial economy and especially the political economy.

Joseph Cherian, believes that another series of financial crisis-type shocks could be on the way.

Watch the exclusive video interview with Joseph Cherian here

“We have to be cognizant that we could be facing another series of financial crisis-type shocks, so risk and investment managers have to watch their portfolio and be probably conservative in the way they manage their portfolio. Especially watching the risks and downside risks, and just keep the eye on the ball,” said the Professor of Finance (Practice), for NUS Business School and the Director for the Centre for Asset Management Research & Investments.

So what could be the reason behind these mini shocks?

Cherian points to the political situation in the Middle East as an example of how it has affected markets.

“A lot of uncertainty created some oil pressure shocks, commodity shocks, and so on. So basically, I think we are not immune to those kinds of problems. Then the other issue would be liquidity. We have problem in most of our Asian emerging markets with liquidity and I think we could face a liquidity crisis primarily when funds flee out of Asia when there’s a flight-liquidity type situation and that may create a number of scenarios that could affect portfolios in Asia perversely,” he said And even though it is hard to prognosticate the future, looking forward, Madhu Gayer - Senior Vice President, Regional Head – Asia Pacific, Investment Risk and Analytical Services for Northern Trust – explains that the key issues for investors to consider will be in the areas of monetary policy settings outside of Asia.

Read the complete interview here

“The key issues for investors to consider will be in the areas of monetary policy settings in the US and EU and the resultant impact on Asian and global investment mandates. The changing demographic profile of many of the developed countries with increasing concentrations of retirees thereby impacting consumption and production, regulatory change especially in terms of derivatives markets and the oversight of over-the-counter instruments, and the increased correlation of global markets and asset classes which have a direct impact on the investing aims of Asian investors seeking diversified long term strategies,” said Gayer who will be speaking at the 5th Annual IPARM Asia 2012 conference.

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