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Part 2 of 2: Low Rates, Assets Inflate

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– Andrew Macken, Chris Demasi & Amit Nath

 

While in the whitepaper Part I we considered the likely drivers of low interest rates, explored the case of Japan and the lessons that can be taken from their economy and concluded that there is a strong case for interest rates to be remain structurally lower for a protracted period of time.


In the concluding Part II we consider the consequences of such a protracted low-rate environment on asset prices – in particular on equity prices. The prospect of sustainably low longterm “risk-free rates” of interest has driven required returns down, and boosted prices, in many financial asset classes. Yields on government and corporate bonds, and capitalization rates on real estate, have fallen. The same has not been true for the aggregate equity market…yet.

 

Links to both the papers are shared below:

Part I: Low rates, assets inflate (Whitepaper)

Part II: Low rates, assets inflate (Whitepaper)

Disclaimer :

This document was prepared by Montaka Global Pty Ltd (ACN 604 878 533, AFSL: 516 942). The information provided is general in nature and does not take into account your investment objectives, financial situation or particular needs. You should read the offer document and consider your own investment objectives, financial situation and particular needs before acting upon this information. All investments contain risk and may lose value. Consider seeking advice from a licensed financial advisor. Past performance is not a reliable indicator of future performance.

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