How China, oil prices, and melting glaciers can impact your finances

This week we are looking at the key news items making the headlines and how it can impact your life, how you manage your money, your financial plans and your investments. We focus on 4 news items that caught our attention this week.

If you would like to know more contact us at info@blackswancapital.eu and we can discuss your plans and how best to navigate the complexities of life as an expat wherever you are living in the EU.

Consumer protection

We have written previously about how to protect yourself from the scourge of financial scams, and in the UK this week, new protections were announced that banks will be able to delay payments by an extra 3 days, if they suspect fraudulent activity.

This will be relevant for you if you have a bank account in the UK. It can provide a much-needed layer of protection and is something you should prepare for if you are planning on moving funds.

There is a global boom in online and by telephone scamming of often vulnerable people. We advise if you have elderly parents or family members that you speak with them about core protection measures: never giving their personal data over an unsolicited phone call or email; not being pressured into making transactions or allowing access to their personal computer.

As an working international professional you may also be a target if you are not fluent in the language of the country where you are living. There are several instances of scams where they pretend to be from the local tax office or legal authority. If in doubt disconnect from the conversation and check with the source institution directly.  

Oil prices

The conflict in the Middle East escalated this week with direct Iran firing missiles into Israel. There is of course an awful human cost to ongoing conflicts. There is also an economic and financial one that can impact you, as an expat living in Europe. Oil prices rose 5% this week as fear that oil supplies may be impacted by an escalation of conflict in the region.

This can be inflationary and as we move towards winter in Europe, it can impact cost of heating. With the transition away from Russian gas and oil in recent years the thought of high energy prices is fresh in the minds of most people.

In context, oil is still at historically moderate prices below USD$80 per barrel. We are watching this closely.

China stock markets

The Chinese economy is very much a global story as the world has become dependent on consistent strong Chinese economic growth in recent years. In the last few years, the Chinese property market has struggled causing flow on impacts in its banking sector. This has led to reports from China that they may miss their 5% growth target this year.

 In response to this the Chinese government launched a number of actions this week. They have implemented what some are calling a market stimulus blitz, with monetary easing – keeping intertest rates low, increasing the borrowing potential for people to take larger mortgages, and offering direct support for the real estate sector.

It is Golden Week in China this week, following China National Day on 1 October. It is one of the busiest weeks of the year for domestic travel in China and sees an accompanying boost in spending- a metric for economists to gauge the health of the economy. The initial market response to the stimulus package has been quite golden with stock markets surging. The Shanghai composite stock market index is up 21% in a week.

You may have exposure to the Chinese market in a diversified investment portfolio and this will provide some short-term relief and a boost. It is too early to assess any lasting impacts from these measures and it is a useful reminder for the importance of remaining diversified not just across asset classes but also across geographies to mitigate concentration risk in any one sector or region.

Global Warming and ESG investing

Finally, a reminder of the impact of climate change which causes us to focus again on the position of sustainable investing in a portfolio. Making the news this week, Italy and Switzerland have to redraw part of their border in the Alps due to melting glaciers. Because of warmer temperatures, glaciers that are normally permanently frozen, are beginning to melt and move, meaning the borders have shifted with them.

The re-drawing of borders between these two countries is all quite congenial and equitable. It does however serve as a portent against more contentious issues that may occur in the future due to impacts of climate change.

If you have sustainable investments- those that are defined as being aligned to the United Nations Sustainability Development Goals- your portfolio may be respond differently to market impacting factors. For each investor there are decisions to make about the relevance and role of what is called ESG (environmental, social, governance) in their financial plans and investment portfolios.

You can speak with us to see if you would like to know more about sustainable investments and whether it may be appropriate or relevant for your situation.

If you want to know more about how what is happening in the world may impact you and your finances and life goals, you can arrange a time to speak with us. Contact us at info@blackswancapital.eu.