GEO-POLITICAL INSTABILITY A KEY MAJOR CHALLENGE TO GLOBAL ECONOMIC GROWTH
Institutional Investors and Fund Managers responsible for in excess of €20 trillion attend Mercer Global Investment Forum in Dublin
Dublin, 12 November
Dealing with geo-political instability is seen as a key challenge for the global economy according to a poll of over 300 European institutional investors and asset managers in Dublin today. The attendees of the Mercer Global Investment Forum, who are responsible for in excess of €20 trillion in assets, voted on the key issues that will dominant the prospects for global economic growth.
Geo-political instability was ranked as the number one issue for global growth ahead of dealing with debt reduction, equipping for a knowledge-driven age, coping with increasing longevity, and climate change. Andrew Kirton, Europac Head of Mercer Investments, commented “Geo-political instability should be of concern to investors. In particular, the rise of China as an economic power may well bring profound change over the years and decades ahead. What China will want for its people and as a place in the World, and how this will impact its neighbours and global powers including the US will shape the global economy.”
Europe’s largest institutional investors and asset managers attended the Mercer Forum entitled ‘Entering the upswing? Charting a course for investment success’. The Forum addressed macro-economic trends over the next decade, how investors can manage the current challenges, and how best to explore market opportunities. In addition, Ireland’s current and future economic position was considered.
Ireland is forecasted to have the strongest growth in the European Union in 2014, with a growth rate of over 4%. Looking to the future Brian Griffin, Head of Mercer Investments in Ireland noted “Ireland’s projected growth rate in 2015 is three times the eurozone average. While the rest of the eurozone is likely to struggle, Ireland may experience strong growth for some time to come. Obviously the buoyancy of the UK and the US, key trading partners, will be fundamental to our sustained growth.”
Deb Clarke, Global Head of Investment Research (voted one of the Most Influential Women in Finance by UK’s Financial News) recommended that investors ensure they have strong governance structures in place to enable them to capitalise on competitive advantages. For some investors that means an ability to take a long-term perspective when making investment decisions. A significant body of evidence now suggests that investors have become increasingly short-term in their outlook and behavior. Ms Clarke noted that “Institutional investors may be better placed to capture a premium by adopting a longer-term mindset than other investors — both in the way they structure their mandates and how they monitor asset managers and evaluate investment performance.”
Delegates heard that part of the answer to building long-term sustainable portfolios includes the consideration of the major long-term risks and opportunities that may have an impact over a multi-decade time horizon. Ms Clarke noted “Key mega-trends include climate change and resource scarcity, technological advances, demographic trends, ‘fair capitalism’, and the continued emergence of China as a global power.”
In considering the impact of technological advances on global growth Ms Clarke noted “It seems clear that there will be a range of technological advances over the next few decades in areas such as pharmaceuticals and IT. 3D printing, robots and the use of graphene could have a profound impact on the global economy. These should provide opportunities for investors.”