Magellan bullish on developing markets
Interest rates could turn upwards quite soon, irrespective of inflation, says Magellan co-founder Hamish Douglass.
Thursday, April 30th 2009, 7:34AM
by Rob Hosking
"I think anyone locking themselves into long term fixed interest right now is absolutely crazy," he told a meeting of advisers in Wellington.
"When markets start to recover people are not going to be happy on an effective interest rate of half a percent, or even 2 or 3%," he said.
He noted New Zealand investor already showing interest in corporate bond issues, and says governments here and around the world will be competing with those sorts of rates - along with a recovering equity market.
"Irrespective of inflation, I think interest rates will be materially higher then they are at the moment."
Douglass remains bullish about companies with activity in developing markets, but bearish about the developed world.
"There will be a billion new middle class consumers coming onto the market in China and India over the next few years."
He is cautious though over whether the global recession has bottomed out.
"We are generally not going to have a recover until we get stability in the financial system. It is starting to knit together but it is early days."
One positive example was three banks - including Westpac and the Commonwealth Bank of Australia - recently issued debt without the need for a government guarantee backing it.
"Let's call that a green shoot."
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
| « Equities more attractive as global economy troughs | Sovereign takes regulation bull by the horns » |
Special Offers
Commenting is closed
|
|
Printable version |
|
Email to a friend |
