Calm markets peer beyond US, Italian political storms
LONDON (Reuters) - Despite a constitutional aversion to uncertainty, financial markets have breezed through political storms in two of the world's biggest economies, thanks to cool calculations that the crises will not trigger major shifts in investment.
As budget stalemate shut down government in the United States and political manoeuvring took Italy's to the brink of collapse, asset managers figured that neither crisis - despite involving the Republicans' unpredictable Tea Party wing and mercurial former Italian premier Silvio Berlusconi - will be disruptive enough to undermine their long-term views.
The strategy is to get away from "trying to pretend you know what's going to happen in any one event", said Mr Alan Wilde, currency and bond portfolio manager at Barings Asset Management, which has US$58 billion (S$72.8 billion) of assets under management.
"There's no easy way to trade unknown factors. One way is to take a view, but you're either horribly right or horribly wrong," he said.