Advisers urged to remain vigilant against ongoing volatility

Economic and geopolitical volatility has called for increased flexibility from advisers, according to Arthur Sinodinos, partner and chair of The Asia Group and former liberal minister and assistant treasurer.

Addressing financial advisers, asset consultants, and fund managers at the Hannemann and Brown Wealth Symposium last week, Mr Sinodinos said that advisers must strike a balance between preparing for ongoing disruption and leveraging potential investment opportunities arising from structural change.

“We’re facing a conundrum around how long inflation will last and the latest talk is of a rate increase on Melbourne Cup Day. In the US, inflation is high, the cost of living is going up, and rates are expected to be higher for longer than anticipated,” he said.

“Disruption is the new constant and we need to be more nimble, agile, and flexible in our responses to changing circumstances.”

While acknowledging that ongoing economic volatility has riddled the future with many unknowns, Mr Sinodinos noted that some sectors will benefit from significant structural changes that could underpin growth for decades to come, creating opportunities for private companies and investors.

“Private companies are picking up on these trends and seeing an opportunity to invest in key areas, some in partnership with governments.”

Among these, he cited the Australian government’s REDSPICE project and the recent partnership with Microsoft to boost the cyber capabilities of the Australian Signals Directorate, which is responsible for signals intelligence, support to military operations, and information security.

“All this means that some sectors will be strong for some time.”

Mr Sinodinos, who also served as Australia’s ambassador to the United States between 2020 and 2023, added that government intervention in industry policy, particularly in the US, was impacting and influencing businesses.

Namely, the global clean energy transition and the Biden administration’s CHIPS and Science Act, has underpinned significant investment in US semiconductor manufacturing, research and development.

He also pointed to the range of subsidies and tax incentives for electric vehicles and US investment in the critical minerals supply chain to boost sustainable practices.

“Governments are investing heavily in clean energy and this sector will continue to get a lot of attention,” he said.

Mr Sinodinos further projected that defence spending globally is poised to increase, particularly in the areas of cyber, artificial intelligence, and electronic warfare.