| By Adam Patterson Are we entering a "new normal" in asset valuations? In an interesting recent piece in the Telegraph, Tom Stevenson, investment director at Fidelity Worldwide, suggested that the current trend for central bank negative interest rate policies (NIRP) that we are seeing across the globe – and their subsequent impact on rising equity values – could actually represent a "new investment paradigm". He rightly added that such discourse could potentially be pernicious; after all, it is for good reason that the words "this time it's different", can be some of the most expensive in the English language. As in: "Boom and bust", maybe? Pah! Nonetheless, as a practitioner and avid student of financial valuation, the concept certainly raises some interesting points and potentially challenges textbook corporate finance theory. So how did we get here?
Over the last 40 years, yields have been on a downward trajectory. The Financial Crisis of 2007-09 accentuated this trend. In response to the crisis, central banks lowered interest rates to historically low levels. In 2009 and 2010, this was seen as merely a temporary solution: with the coming uptick rates would spring back to normal. However, the goalposts of monetary "normality" kept shifting. In 2011 and 2012, the conviction was that as central banks rolled back QE programmes, interest rates would naturally rise. In 2013 and 2014, various crises (such as the ongoing Greek tragedy) were blamed for continued depressed rates. By 2015, commodity price deflation and an anticipated Chinese slowdown were the key culprits. Rate rises were always just around the corner. Last year, short-term interest rates in the Danish Krone, Swiss Franc and the Euro dropped below zero. Sweden and Japan were the next dominos to fall into negative territory. The US could be next... Click Here To Read The Full Story The Master Investor Market Report - The FTSE 100 closed the day at 6,851.30, an increase of 42.17 points.
- The FTSE 250 rose 129.66 points to finish at 17,687.40
- The FTSE All Share climbed 23.95 points to finish at 3,724.84.
- The FTSE AIM All Share finished at 777.16, up by 4.60 points.
Insurer Standard Life (SL.) posted an 18% improvement in its operating profits for the first half of 2016 as it benefited from diversifying despite the recent volatility in financial markets. The wholesale consumer business saw net outflows of £400 million, but this was outweighed by more than £2 billion in inflows from institutional clients. Management expect uncertainty to remain a concern in the coming months, but feel that the company's long-term strategy leaves it well placed to cope. The shares rose by 21.70p to 340.10p. | 
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