Nigel Green says there are three main triggers for market rout
There could be a nervy spell in financial markets in September over concerns of the Delta variant, regulatory attacks by the Chinese government and changing monetary policies, according to the CEO of deVere Group, one of the largest asset management firms in the world.
Nigel Green, who heads up deVere, added that investors should consider reviewing their portfolios with the view to possibly rebalancing them.
“History teaches us that October is tricky for stock markets having been the month in which some of the biggest market routs have begun,” Green said.
“But this year, I believe the autumnal volatility is going to be seen earlier, with markets getting jittery in September.”
There are, according to the deVere CEO, three main triggers for the expected market rout.
“First, markets are likely to pull-back due to expected slower economic growth, which is being driven by serious worries over the Delta variant of Covid and how it could force further restrictions, impacting many sectors,” he notes.
Investors could be willing to wait some more time for the economy to make a full recovery from the pandemic. While Green suggests that most of the pent-up demand accrued during the lockdowns has now been burned out.
“Second, markets will be carefully monitoring for signs of a broader regulatory crackdown on Chinese tech companies after Beijing effectively issued a shock ban on the country’s $100bn private tutoring sector last month,” said Green.
“That regulatory attack appears to highlight the Chinese government’s new thinking and its increasing push for control of private enterprise. This stance could be expected to ripple through global markets as we move into the critical month of September.”
He continues: “Third, markets could throw a ‘taper tantrum’ as central banks signal that their massive stimulus packages – which have supported asset prices – are fading.”
Despite these potential obstacles, Green says it is very possible that the 2021 bull-run continues through to the end of the year. However, he adds that markets could become more turbulent.
“Yet, as ever, with the turbulence some key opportunities will be presented for investors to grow their wealth by topping up their portfolios. Those best-positioned to seize these will be those who are properly diversified across asset class, sector, currency and region.”