Investors should reassess their risk appetite for 2015

by Trust Matsilele 0

Investors need to reassess their risk appetite for 2015 because of volatility in the stock market; this is according to an industry expert.

According to Tom Elliot, International Investment Strategist at deVere Group, 2015 is the year in which most of wealth managers will put efforts into preserving wealth rather than promising clients that they will increase it.

“Most people are starting the year with modest expectations of what stock markets will be able to deliver this year,” Elliot told CNBC Africa.

(READ MORE: S.Africa’s rand firmer as global risk appetite rises)

“South Africa will be one of the big beneficiaries of cheaper energy prices as it is a big energy importer.”

Elliot added that the fall in oil prices does not only reflect weaker supply side as oil producing countries maintain production levels.

“The oil price is dropping as the demand is weaker than expected while demand has not grown as much as expected,” said Elliot.

“Weak growth in demand in countries such as Japan, Eurozone and other developed economies.”

Elliot said the low oil price issue is a two-edged sword and investors are focusing more on the negative side than the positive side.

He added that there were concerns over interest rate rises in the US and with that might trigger a stronger dollar.

Elliot cautioned over what might happen to countries such as South Africa that runs a large current account deficit and will need to be paying a more expensive debt in order to roll over that deficit due to a stronger dollar and rise of interest rates.

The USA and China have just announced large infrastructure projects expected to fire economic growth in some regions.

Political dynamics will also have an impact on the performances of economies across Europe.