Prevention is the balm for global economic shock, says respected central bank adviser Professor Warwick McKibbin who says the world’s economic future is uncertain and inflation is likely to remain under a persistent pandemic.
Financial markets played a central role in creating the problems that ultimately inflicted significant damage on the wider economy - in the dot.com bubble, sub-prime mortgage crisis and the eurozone debt crisis. But what about the unhelpful role that the finance sector can play in amplifying crises that emerge from entirely non-financial origins?
From December to mid-March of this year New Zealand Super lost 20 per cent of its assets. It’s the second time in less than 18 months the fund has experienced a significant drop in assets but in an example of how good governance and process can allow for counter cyclical behaviour the fund is now buying equities.
Investors are putting pressure on companies to accelerate the shift to purpose-driven leadership and focus on human capital policies during the crisis. But while there are some examples of corporations making policy changes that positively impact their workers, supply chain issues pose a significant problem.
The current coronavirus crisis has created investment governance challenges for Australia’s superannuation funds – with regard to liquidity requirements – that are relevant to any DC scheme which invests in illiquid assets. It highlights the potential impact of agency issues on decision-making during a crisis environment.
ESG data provider, Fair Supply Analytics, has produced technology that maps the impact of COVID-19 on global supply chains, and can be used by investors to measure their investment portfolios exposure to the sectors and countries most effected.
The coronavirus is an unprecedented test for the UK’s eight Local Government Pension Scheme asset pools. The London Collective Investment Vehicle, the pooling manager for the pension assets of London’s 32 boroughs has lost 15 per cent of the value of its portfolio for the month, and CEO Mike O’Donnell says ensuring liquidity and diversification are priorities in the months ahead.
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