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Five charts that will spook investors
By Kristen McGachey, 30 Oct 17
Forget demogorgons from parallel dimensions and killer clowns, M&G’s Anthony Doyle examines five charts that will really have investors shaking in their boots.
Up first on Doyle’s list is a spine-tingling chart, which highlights the debt-to-GDP ratio across the G20 advanced economies. Over the past decade, debt to GDP has grown steadily and now makes up more than 260% of GDP or $135trn, the fixed interest investment director said.
Much like the serial killers of teen slasher films who will not die – no matter how many times they are stabbed, shot or dismembered – the dire debt situation of the G20 economies isn’t going away. In fact, it’s become increasingly worse.
“It’s a big number, and while it is true that this debt represents an asset on another balance sheet, it is undeniable that governments, corporates, and households have never lived beyond their means by so much,” said Doyle.
“It is for this reason that advanced economy interest rates are so low, and are unlikely to return back to levels observed before the 2008 financial crisis.
“For investors, that means you are going to have to take more risk to generate positive real returns.”