It’s a wild ride so in­vestors should strap in

Townsville Bulletin - - NEWS -

MUM and dad in­vestors should strap in for an on­go­ing roller­coaster ride as global mar­ket volatil­ity be­comes the new norm, a fi­nance aca­demic says.

Lo­cal in­vestors are caught up in a cy­cle of over­re­ac­tion and panic sim­i­lar to dur­ing the global fi­nan­cial cri­sis of 2007- 08, Deakin Univer­sity As­so­ciate Pro­fes­sor Vic­tor Fang says.

“The per­fect storm of Greece de­fault­ing on its in­ter­na­tional obli­ga­tions and a rapid melt­down of China’s share­mar­ket has knocked the con­fi­dence of Aus­tralian in­vestors in a way not seen since the global fi­nan­cial cri­sis,” he said.

“Peo­ple say ‘ but Aus­tralia isn’t pay­ing Greece’s bills’ and ‘ I don’t in­vest in China’s share­mar­ket’ but the in­ter­con­nect­ed­ness of global fi­nan­cial mar­kets means we’re still im­pacted by what’s hap­pen­ing over­seas.”

The lo­cal share­mar­ket has re­cently swung be­tween mas­sive falls and strong gains as debt- laden Greece looked headed for an exit from the eu­ro­zone.

A mas­sive plunge on China’s main­land share­mar­ket, and a mixed re­sponse to gov­ern­ment mea­sures to stem the falls, is adding to the wild ride.

The trend con­tin­ued yesterday, with the Aus­tralian mar­ket ral­ly­ing af­ter eu­ro­zone lead­ers fi­nally struck a deal on a third bailout for debt- stricken Greece.

Although the new Greek deal re­duces the risk of a “Grexit”, the coun­try’s fi­nan­cial cri­sis re­mains a sig­nif­i­cant is­sue, IG mar­ket strate­gist Evan Lu­cas said.

“The deal has sev­eral very tough days and weeks ahead,” he said.

The Greek debt ne­go­ti­a­tions and China’s share­mar­ket cri­sis have dented con­sumer con­fi­dence.

“As long as un­cer­tainty and fear rule, the roller- coaster ride will con­tinue for Aus­tralian in­vestors,” Prof Fang said.

But he and other mar­ket watch­ers say there is no need to panic.

David Bryant, the chief ex­ec­u­tive of Aus­tralian Unity In­vest­ments, has said these global events are un­likely to be as sig­nif­i­cant as they cur­rently ap­pear.

VOLATIL­ITY RULES: The Aus­tralian share­mar­ket is on a roller­coaster ride but mar­ket watch­ers say there is no need to panic.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.