GLOBAL - Axa Investment Managers has issued a warning regarding the current situation in the Gulf and the imminent possibility of war.
The warning comes on the back of Schroder Investment Management last month predicting that war in the Gulf was 80% likely.
Denis Gould, UK head of fixed income, Axa IM, said: “We believe the Gulf conflict represents an unpredictable event that could have overarching consequences for investment markets.
“There is a temptation to feel that taking investment decisions in such an environment represents too much of a gamble, because some of the possible war outcomes could make any position go badly wrong. But investors have to deal in probabilities, and look for strategies that are durable to a number of different scenarios.“
Gould added that whatever the outcome, the current situation was producing an increased level of uncertainty.
“This uncertainty has almost certainly been holding down bond yields. The removal of this uncertainty should cause yields to rise as the market begins to focus on the increased level of government supply,” he said.
“There are risks. A sustained period of the oil price above US$40 per barrel would badly hurt global growth prospects. But we believe that such an outcome has a reasonably low probability, low enough for us to be willing to take strategic positions against it.
“We will keep looking for durable positions, assess the balance of risks, and be flexible.”
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