From our friends over at the : Irishexaminer.com
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From our friends over at the : Irishexaminer.com
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Pension adviser Mercer has stepped up its warning for trustees of Irish pension funds, saying the year ahead promises to be "challenging" for investors amid “tectonic frictions in the global world order”.
The warning comes after stockmarkets fell sharply before Christmas, which left the Iseq index of Irish shares among the worst performing in Europe for 2018.
Since the start of the year, shares badly hit in Ireland last year, including house builders and banks, have staged some sort of rally.
However, in its report, Economic and Market Outlook 2019 and Beyond, the investment adviser said the investment year will be dominated by the “white waters of the late cycle” and a switch to “sustainable investing”.
In 2018, the global economy performed reasonably well, although market sentiment deteriorated significantly over December as investors considered what lies ahead.
Current market dynamics include strong consumer spending, improving labour markets and rising wages, but investors are balancing these positives against rising interest rates, concerns over peak corporate earnings and trade wars,” said Mercer.
Meanwhile, the huge JP Morgan Asset Management has turned more constructive on prospects for global stockmarkets, saying it saw opportunities among cheaply valued mid-cap companies and financials following a year of weak returns.
“Many of our investors now see an above-average level of opportunity across areas of global stock- markets,” said Paul Quinsee, global head of equities at the US asset manager, in a research note.
“Our value team is seeing more constructive opportunities, including investing in financials and small caps; our emerging markets investors are expecting improved returns ahead ... though much depends on China,” he added.
Quinsee said at current valuations, small caps looked more attractive than they had been about three-quarters of the time in the last 28 years. He said many banks and insurance companies now looked interesting.
The more upbeat tone from one of the world’s top asset managers adds to signs that investors’ mood is improving even though expectations for corporate profits are still proving too optimistic and trade tensions continue to pose a risk.
Additional reporting Reuters
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Irish pensions fund trustees have been told to “diversify and de-risk over the coming year” amid the huge losses of global stock markets and falling bond yields for some European markets.
Pensions firm Aon said the fallout of market turmoil has led to a fall of 5.2% in “the traditional Irish pension managed funds” last month.
“Global equity markets fell over the month as weak economic data from China and Europe fanned concerns of a global economic slowdown, leaving investors fretting over the wider impact of a still-unresolved US-China trade dispute,” said the firm’s Nick Hatherley.
Global stock markets started the first day of the new year mixed, with Asian markets losing heavily, European stock markets ending mixed, and some new selling weighing on US stock markets.
“Much of the initial negative sentiment seems to be emerging from China” as the latest manufacturing output survey appear to suggest the US-China trade “has played a role in putting the brakes on”, said Fiona Cincotta at City Index.
“China’s growth has been a huge factor in the overall global economic growth story and its influence as a source of investment, credit and cheap manufacturing has been felt everywhere in the last 10 years. These numbers will be making investors nervous,” she said.
IG’s Chris Beauchamp said “bruised by the volatility” of recent months that “investors aren’t yet grabbing the chance to buy the dip with both hands”.
Germany’s Dax ended slightly higher, the Cac-40 in Paris was 1% lower at one stage, while the Ftse-100 in London ended little changed, buoyed by the weakening of sterling. The Iseq was up by over 0.25%.
Irish manufacturing expanded in December but at its slowest rate for nine months, as Brexit uncertainty slowed the growth of new orders, according to a new survey.
“How events play out at Westminster in the coming weeks is likely to prove pivotal,” said Investec Ireland of the IHS Markit Irish Purchasing Managers’ Index.
Experts have long pointed out that a significant slice of Irish pension funds were tied to the performance of US markets.
Brexit fears hit the Iseq hard last year to make it one of the worst performers in Europe.
The Irish index of shares lost 21% of its value.
Davy said the sharp drop which has pummeled shares as diverse as Bank of Ireland, Applegreen and Glenveagh “created a number of very attractive investment opportunities”. But the broker added: “Political uncertainty in the UK will continue to drive asset price volatility until Brexit is resolved”.
From our friends over at the : Irishexaminer.com
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Irish pensions fund trustees have been told to “diversify and de-risk over the coming year” amid the huge losses of global stock markets and falling bond yields for some European markets.
Pensions firm Aon said the fallout of market turmoil has led to a fall of 5.2% in “the traditional Irish pension managed funds” last month.
“Global equity markets fell over the month as weak economic data from China and Europe fanned concerns of a global economic slowdown, leaving investors fretting over the wider impact of a still-unresolved US-China trade dispute,” said the firm’s Nick Hatherley.
Global stock markets started the first day of the new year mixed, with Asian markets losing heavily, European stock markets ending mixed, and some new selling weighing on US stock markets.
“Much of the initial negative sentiment seems to be emerging from China” as the latest manufacturing output survey appear to suggest the US-China trade “has played a role in putting the brakes on”, said Fiona Cincotta at City Index.
“China’s growth has been a huge factor in the overall global economic growth story and its influence as a source of investment, credit and cheap manufacturing has been felt everywhere in the last 10 years. These numbers will be making investors nervous,” she said.
IG’s Chris Beauchamp said “bruised by the volatility” of recent months that “investors aren’t yet grabbing the chance to buy the dip with both hands”.
Germany’s Dax ended slightly higher, the Cac-40 in Paris was 1% lower at one stage, while the Ftse-100 in London ended little changed, buoyed by the weakening of sterling. The Iseq was up by over 0.25%.
Irish manufacturing expanded in December but at its slowest rate for nine months, as Brexit uncertainty slowed the growth of new orders, according to a new survey.
“How events play out at Westminster in the coming weeks is likely to prove pivotal,” said Investec Ireland of the IHS Markit Irish Purchasing Managers’ Index.
Experts have long pointed out that a significant slice of Irish pension funds were tied to the performance of US markets.
Brexit fears hit the Iseq hard last year to make it one of the worst performers in Europe.
The Irish index of shares lost 21% of its value.
Davy said the sharp drop which has pummeled shares as diverse as Bank of Ireland, Applegreen and Glenveagh “created a number of very attractive investment opportunities”. But the broker added: “Political uncertainty in the UK will continue to drive asset price volatility until Brexit is resolved”.
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The Association of Chartered Certified Accountants have warned that those who don't invest their Christmas bonus into their pension risk losing a large portion of it to taxation.
The ACCA say that Christmas bonuses, which qualify for tax relief when invested as a pension contribution, are a good way for people to catch up with their retirement fund.
According to Aidan Clifford, Technical Director ACCA Ireland, a 30-year-old single person was to invest a €1,000 bonus in a pension, on current rates inclusive of the applicable tax relief, it would mature at €8,500 by retirement age.
However, should this bonus be treated as income it would be subject to the full rigour of the relevant tax band, be that 20% or 40%.
“There is looming crisis in Irish society regarding pensions with more and more people not preparing for retirement and current government plans for an auto-enrolment scheme in 2022 lacking the substance and detail to act as a catalyst to address people’s long-term shortfalls," Mr Clifford said.
"It is also unhelpful in the current environment to be looking at cutting pension tax relief, if anything the government should be incentivising additional tax contributions particularly within the private sector which are worth 80% less than those in the public sector," he added.
It is for these reasons that we are encouraging people to act now.
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