Political instability and unpredictability are leading more and more to uncertainty among investors, thereby rapidly becoming the 'new normal' for many asset owners around the world.
In fact, many large investment players are uncertain how to respond to ongoing efforts in the U.S. – the world’s largest investment market – to ‘cancel’ green investments as anti-ESG sentiments are rapidly picking up in large parts of the States.
Assessing the macro-environment in which most asset owners work, new research looked into current investment strategies and what factors impacted investors' outlook over the last 12 months.
“2022 was a bad year in the markets for everybody,” said Thomas Kuh, head of ESG strategy for Morningstar Indexes, which carried out the asset owner-focused survey.
“Major destabilising influences on the global economy that were viewed as threats a year ago – specifically the war in Ukraine and its impact on energy markets – have now become normalised in their eyes,” Kuh noted.
“While recent events diminished confidence in the US banking sector and made asset owners concerned, the war in Ukraine has faded into the background.”
Kuh pointed out that “investors are learning to live with higher inflation levels and its impact on investing and are closely monitoring monetary policy."
He added: "Interestingly, inflation has become a concern with some pension plan managers to the extent it is putting pressure on beneficiaries’ ability to meet their financial needs.”
Finally, China is also an area of concern for many asset owners, particularly given geo-political developments over the last year and the fact it is such a large, fast-growing key market.
