Pension Savers Unaffected by China's Troubles

OPINION: Ignore the headlines, says Morningstar Editor Emma Wall - pension freedoms mean market blips are no longer the death knell for pensions

Emma Wall 26 August, 2015 | 1:00PM

On Monday, the investment world imploded. Or at least that's what a number of the news headlines would have you believe. We were all going to hell in a handcart - billions of pounds were wiped off the FTSE 100 - ditto dollars off the S&P 500 and euros haemorrhaged from indices in Paris, Frankfurt and Zurich. Today, things are looking up – although year to date the FTSE 100 is still down 7% and its lost 11% on a 12 month view.

Why did Black Monday happen? It all comes down to uncertainty. If there is one certainty in investment it is that markets hate uncertainty. All year equities have been battling the unknown; contending with ongoing dramas from Athens, a slumping oil price and the threat of interest rates rising. Last month Chinese officials meddled with the stock market causing ripples - and wobbles - for global equity prices. Last week Chinese officials devalued the currency, and markets went into freefall.

The actions of the Chinese government in devaluing the renminbi in order to boost economic growth are not that dissimilar from the policies of Prime Minister Shinzo Abe in Japan – where the devalued yen has boosted the Nikkei stock market over the past two years. But the difference between the two is one was expected and the other a shock.

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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