Financial repression set to continue creating a range of challenges for investors – Deutsche Bank

We are experiencing a period of very strong growth at a time when both monetary and fiscal policy settings are very loose and look set to remain so. I think that we can take three points from this unusual mixture of economic change and still broadly-accommodative economic policy. Christian Nolting, Global Chief Investment Officer at Deutsche Bank International Private Bank, thinks that we can take three points from this unusual mixture of economic change and still broadly-accommodative economic policy.

Investors need to stay innovative and open to new approaches

“This is a situation that will create important and new investment opportunities but also a number of risks. Stresses around growth are a normal part of any recovery but portfolios need to be resilient to them. The dangers around ‘market exuberance’ and potential asset class bubbles further strengthen the case for sophisticated risk management in portfolios.”

“While some growth challenges will be temporary, other structural economic changes will be long-lasting. Many of these changes pre-date the pandemic (e.g. digitalisation, rising debt levels) but have accelerated it; others (e.g. demographics) have different drivers. Investment strategies need to address such changes. Our key investment themes focus on ten areas of change visualised within a triangle of technology, demographics and sustainability.” 

“As investors, we need to remain innovative and open to new approaches. The growing interest in ESG investment has led to changing evaluations of investment potential and risks. Infrastructure investment, for example, is increasingly assessed in an ESG life-cycle context. Carbon pricing is now having much broader investment implications as countries face up to net zero emissions targets. All this will have continuing implications for how we all assess and respond to the investment environment ahead, even when current growth challenges subside.”