How do global events affect my super and investments?

It’s a fact that what happens in other countries can have an impact on markets – including in Australia. Currently, we’re seeing some unique situations driving market movements. We unpack these and how the CFS Investment team prepares for times of uncertainty.

We’ve been experiencing a more challenging investment environment for some time driven by factors such as inflation, higher interest rates, and geopolitical events. In the short term, you may see a negative effect on the performance of some investments. The good news is that history has shown markets generally recover over time.

Here’s what you need to know.

The current global landscape

Markets have been moving around lately, which may mean your super and investment returns have been affected. Some of the key reasons we’ve seen these fluctuations:

• Geopolitical events
• Inflation
• Politics.

Recent times have seen an increase in significant geopolitical events, including the war in Ukraine and most recently the conflict in the Middle East. ‘Geopolitical' refers to political activity relating to geography. For instance, disputes over territory.

Geopolitics hasn’t been a big factor for a while and so these events have driven instability in markets as investors react to changing circumstances.

Another driver of market movement is inflation. As we’ve experienced lately, higher inflation across the world has meant that interest rates have gone up. Rate rises increase costs for companies, which can then result in lower earnings that impact share prices. Positively, central banks are signalling they are close to an end to the current cycle of increases.

Political dynamics are also having an impact on markets. Over in the US, there is political dysfunction as it moves into an election year. Elections can shake investor confidence as they wait to see the outcome.

In Europe, populist candidates are increasingly winning local elections, which is another factor for investors to digest. 

What does this mean for CFS super members and investors?

Be assured, we prepare for times like these.

The CFS Investment team is geared to think about the unpredictable and take action to navigate through times of instability.

We monitor key global events and their potential implications, then take mitigating action.

Our Investment team follows a philosophy of diversification and holds significant liquidity to enable us to be responsive in these types of environments. Our active management style also means we can more effectively manage risk.

Do I need to do anything?

There’s nothing you need to do. However, if you are concerned about your investments, speak to your financial adviser. If you do not have a financial adviser, you can use our find an adviser service to locate one near you.

If you have any questions about your super or investments, call us on 13 13 36, Monday to Friday 8:30am – 6pm, Sydney time.

Want to find out more?

During these periods of uncertainty in global financial markets, it’s important to understand market volatility and its potential effect on super and investments. Our easy guide explains the basics and what you need to consider.

You can keep up to date with market developments with our monthly Market Updates.