Should we worry about Catalonia?
You may have seen in the news recently discussion surrounding Catalonia electing to become independent from the rest of Spain.
Whilst it is interesting political news, what does this mean for us? As we have experienced in the past, any form of political risk will see an increase in volatility in the markets, particularly the international markets. Most of us have an exposure to international investments, whether they be shares or fixed interest to ensure that we are diversifying our investments. Therefore, we can expect an amount of volatility when such policitical movements are made.
However, it is important to note that when investing internationally, it is diversified across a number of countries, a number of economies and a number of different companies, thereby reducing the effect of political unrest in any one region may have on your investments.
Our research partners believe it is quite unlikely that Catalonia would formally secede from Spain, due to the high economic costs and the fact that it is not an easy process – Britain have certainly learnt that of late! However, expect a little bit of an impact on the markets in the short term.
As always, if you have any questions about your specific investment, please contact our office on 1300 014 368.