TT’s creeping inflation might not be a bad thing

Trinidad and Tobago’s creeping inflation might not be such a bad thing, an international investment advisor said yesterday. Carl Bang, a principal of State Street Global Advisors in Montreal, also took the view that stocks and real estate may be one way to hedge against inflation. “You are one of the places that fortunately have that problem,” he said of this country’s inflation that has been inching up recently. In the US and Europe inflation levels are coming into low and that is worrying, he said in an interview with reporters at a breakfast seminar on “Global Asset Allocation. The New Paradigm,” at the Hilton Trinidad.

It was organised by Guardian Asset Management (GAM),  a subsidiary of Guardian Holdings Limited (GHL) and TT Chapter of Investment Professionals (TCIP). He said while this country has done well to coordinate monetary policy to reduce inflation, negative inflation or deflation though can bring about different problems for any economy. “Having a little bit of inflation I think people deem as being healthy,” he said. Asked what impact inflation would have on investments, he said one option was to look for investments that hedge against inflation. Stocks, for instance, can work : as prices go up, companies make money from passing on prices. So, too, real estate, which, he said, has been seen as a good hedge. He told members of the investment and business fraternity that when thinking about investment forget about company or country, think sector. “It all had to do with what sector you are in. That’s what is important.” He said this trend started taking place about 10 years ago.

Traditionally, the strategy of money managers was to decide which country was attractive in terms of economic performance or stock market appreciation, he said. But the world has become such an integrated place that stock markets tend to move in same directions, he said, adding that whether Germany or France is doing well is no longer relevant as they were all part of the European Community. “Investors are finding that what is driving performance is the sector you are in,” he said. He said right now, investment managers were seeing a rebound of the technology, telecommunication and financial sectors. Still, he said the best thing is to have a diversified portfolio and to have an understanding of knowledge and risk.