The experience of Japan, which is struggling with two lost decades of stagnation in the economy, it is very disturbing story.
The abundance of cheap money in the world, said investors to download hitherto unprecedented risks in order to achieve returns in an environment of interest rates close to zero, imposed after the start of the financial crisis in 2007 to move from the US to the euro zone.
Nearly a decade of cheap money has helped these countries to easily overcome the crisis, but with a set price for savers, restricting the earnings of traditional forms of investments, such as bonds, and leads many of them to seek more risky, unconventional alternatives.
Interest in hedge funds, real estate, paintings and wine is strongly increased. Such a turn is especially expressive in Sweden, where the interest rates for a long time at very low levels.
The famous auction house in Stockholm, Bukowskis recorded increasing demand for Swedish art and Scandinavian designer furniture. “Online sales in Sweden is growing very strongly. Prices is really in strong growth, but I do not think they reach the peak,” said Paulina Sokolow. He is creative director at Bukowskis.
For wine, for example, a lot can be earn. A box of 12 bottles of wine Chateau Mouton-Rothschild, vintage 2000. The value has since risen to around $ 2,800 to $ 18,600 which is the current price. A bonus is that you can always drink, no matter whatever happened to his cost.
“Yields seem attractive in the current environment. So if all goes wrong, you will still have a tangible asset,” said Executive Director of the British company for investment in the wine Cult Wines Tom Gearing.
The accumulation of money
The main investment strategist in the Swedish bank SEB Hans Peterson says that many customers are looking for new forms of investment. “Customers are frustrated. This leads them to the point that they have to buy cyclically sensitive categories of assets, such as stocks, which can make these markets even more variable. Investors can also invest in real estate.”
Price jump at the Swedish pieces of furniture and carpets happens in a country where property prices have risen by 36 percent since the end of 2013. Last year’s sales flat in Stockholm for $ 12 million achieved a new record. Even though such a thing is almost not to attract attention in a London or New York. Strong price boom partly prompted tax breaks, but also interest rates close to zero that last year passed in the negative.
The negative interest rate banks increases the cost and is designed to encourage them to lend more. But such a difficult environment, especially after the recent sharp decline in stock prices seem vulnerable.
“Are the risks too big? Time will tell,” said Peterson.
The disturbing story
The experience of Japan, which is struggling with two lost decades of stagnation in the economy, is a very disturbing story. Like many cities in Europe now, Tokyo has recorded a strong rise of real estate prices . Beside that, art at the beginning of the 90s of the last century.
A sudden tightening of rules related to investment property that is decided by the Japanese government. They has led to a sharp drop in real estate prices, taking with it the art market. Consequent lowering of interest rates in Japan, which are about 2000 were zero, did not the managed enliven the economy.
Bank come out with different solution
This is precisely the fate of the European Central Bank (ECB) wants to avoid. The main tools that they want to achieve, include, however, the maintenance of low interest rates.
In Switzerland, the negative interest rates, which the central bank charges banks for holding their money. It will transferred on the back of some clients, who are forced to pay for keeping the cash deposit.
Some, however, prefer to keep money in mattresses. The money is also stored in the home or in the vaults of the euro area has exceeded 1,000 billion, mostly in bills of 500 euros.
“It had become apparent that we have negative interest rates, which will, it seems, to maintain over time, and this influences the preferences of investors,” said Alfred Roel. He is senior portfolio manager at Pictet, a Swiss bank that presents its clients and art collectors objects to the special meetings.
According to him, the environment of low interest rates, “forcing investors to be more prone to adventurism and open to new investment ideas.”
Robert Ketterer, who leads an auction house in Germany, said that low interest rates are good for business. This is because they lead to the purchase of works of art those who say they can achieve returns on their savings.
“The owners, on the other hand, are reluctant to sell because they do not know what to do with the money,” said Ketterer.
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