At Peregrine Wealth’s Annual Investment Seminar, Investment Strategist and Portfolio Manager, Harold Strydom, warned that global economic growth is set to slow.
The event hosted more than 30 industry representatives and welcomed Peregrine’s Group CEO, Andrew Möller, and Investment Strategist and Portfolio Manager, Harold Strydom.
Harold highlighted that post-covid global markets are experiencing incredible growth but warned that the current level isn’t sustainable. He explained that many businesses have exited the pandemic stronger than they entered, but the growth some are experiencing is expected to moderate this year.
Harold said: ‘Whilst we expect the pace of economic growth to drop, we do not expect the global economy to dip into a recession. The US is more insulated from the Russia-Ukraine war, while China is already stimulating their economy to reach their growth target. The outlook for Europe is a lot more uncertain, with energy insecurity a major risk.’
During the event, Harold also examined some market dislocations in the commodity space, first caused by Covid, now by Russian sanctions.
Harold continued: ‘Whilst Covid lockdowns caused a sudden drop in the demand for oil, leading the price to fall to -$43 in April 2020, we are now seeing the exact opposite with a sudden drop in the supply of oil. With the US and UK banning Russian oil imports, the oil price is spiking. It will take time for alternative supply to come to market, and prices are expected to remain elevated.
‘The problem the equity market faces is that this spike in commodity prices is occurring at a time when inflation has already reached a 30-40 year high. Central banks are forced to hike interest rates to bring inflation under control. The key question is whether businesses and consumers will be able to handle higher interest rates and higher energy and commodity prices at the same time. Due to a healthy starting point, we believe they will be able to, and by taking a medium-term view, equities are therefore attractive.’
Peregrine has been a dedicated wealth management business for thirty years. Whilst detailed financial planning is crucial, Harold’s general rule of thumb is that at 65 years old you need 20 times your expected annual spending to have a comfortable retirement.
Despite this, Andrew Möller shared the shift in investment priorities. He said: ‘We’re seeing a priority switch from the market. I like to think of it as a change from the left brain to the right brain – a more behavioural and personable approach by clients and we strive to provide a bespoke and advice led approach to fulfil that.
‘Despite the increased amounts required to fund a retirement, we’re seeing people talk with their feet and choose investment solutions which align with their beliefs and vision for future generations.’
Bringing this outlook back to Guernsey, Hennie Esterhuizen, Managing Director of Peregrine Wealth, said: ‘More than ever, Guernsey is operating in an unpredictable world. As the market develops during these uncertain times, Guernsey’s financial industry has an opportunity to showcase itself as a flexible provider of more bespoke wealth solutions.’