File photo. Photo: 123rf.com
Financial markets are set to remain volatile as investors fret over the long term inflation risk.
Markets have been in turmoil for much of the year, as central banks around the world tightened monetary policy to combat soaring inflation.
New Zealand's annual inflation rate for the June quarter was at 7.3 percent. Meanwhile in the United States, August inflation remained high at 8.3 percent with the Federal Reserve expected to deliver another super-sized rate hike this week.
Nikko Asset Management's global equity fund manager Iain Fulton, said investors in New Zealand and around the world were still adjusting to the new economic reality, and markets have not hit rock bottom.
"I think there's a little bit to get through and I think those longer term inflation expectations are what we need to keep an eye on. The good news is we're a long way through," he said.
Banking systems around the world were also in "good shape" despite the uncertain period.
"They're well capitalised, certainly compared with what we saw in the GFC [Global Financial Crisis].
"We don't think this has the potential or likelihood to become a systemic issue - it's more of a cyclical adjustment in valuation and just reflecting that new reality with slightly higher inflation."
Fulton said in a post-pandemic world, companies that can improve efficiency in healthcare will be highly sought after.
"One of the key things that's really come through from the pandemic is pressure on the healthcare system. Healthcare systems around the world have really had to struggle through.
"Companies that can deliver cost savings, better healthcare outcomes at a lower cost will be key beneficiaries."