large political risks, warns Hermes

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Political risk in developed countries is higher than it should have been for at least two generations and investors considered the credit risk of the assets of the government, civil unrest and even war, after a major investment house.

Saker Nusseibeh, CEO of Hermes Fund Managers, a £ 25000000000 UK investment house fears the United States and China in a cold war, creating the rise of economic nationalism in Europe "unprecedented conditions since the late 19th century in the function until the First World War "and the high youth unemployment prevalent in many southern European countries" is usually one of the two main components of civil war "alongside poor harvests.

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This will affect the prices of stocks, bonds and commodities, says Hermes, which is both owned and managed the BT Pension Scheme, the UK's largest private pension fund.

"The idea of ​​a war between the developed countries in the modern era may seem absurd, but it's not so far-fetched. Note that for most of modern history, these countries have fought the war on the economy," said Nusseibeh.

"Given today's growing wealth gap between countries and within them, it is quite possible that at some point, some will say" enough "and seek change through violence."

Hermes claim is that the time since the Second World War, and especially since 1980, was one of "unprecedented political stability" in the developed world. This investment will again be a "scientific basis to depend on mathematical models" as mean reversion and the theory of efficient markets.

Now we're back, "normal", where politics is as important as the economic fundamentals and "it is who learns the quickest and fastest confiscated," said Nusseibeh.

"It seems that the era of high economic growth in the Reagan / Thatcher era began and anemic growth will continue for some time. 'S Wealth cake will be smaller and raises questions about the division between capital and labor."

Hermes said there is the equity markets and sectors that it "will not touch" because of the political risk.

Along with Argentina and Venezuela, where it. The risk of nationalization, Iran and Syria, where sanctions are a threat, and Greece is also careful Hermes public stocks, especially in Spain, market reforms that could adversely Corporate bonds similar risks.

"Everyone assumes it is acceptable to buy corporate bonds, because that's where the money is. Everybody has forgotten in the 1970s, when appropriation of wealth?" Said A Nusseibeh.

"Given the amount of debt in many countries about the strength of the balance sheets. How long indebted nations companies these benefits without permit to harvest more of the pie for themselves?"

Nusseibeh in the U.S. said the cost of servicing the debt military expenditures exceed 10-15 years, a "tipping point" that supports the death knell of the Roman, Ottoman and British he sounded.

However, could the Cold War between the United States and China have seen favorable commodity prices, with China Resources sees no stockpiling of course only for economic reasons.

"The Chinese demand for commodities is not strategically, economically. They accumulate goods partly for political and military power. As long as they can afford it, they will buy more, because they think they are in a strategic race," said Nusseibeh.

In addition, "chronic" unemployment, inflation of food prices and unrest, the pressure on a number of countries in the Middle East is set to oil prices high, as could the potential conflict between Israel and Iran, Hermes hielte a proxy war between the United States and China, the prism through which he can already see the violence in Syria.