Lord Rothschild sounds alarm over stability of post-war order
Lord Rothschild warned the post-war world order was at risk on Tuesday due to rising tensions over trade between the US and China and high debt levels in the eurozone.
The financier’s £3.2 billion RIT Capital investment vehicle said it was sitting on the sidelines and not adding more to stocks because of fears the 10-year run-up in stock prices could end.
“In 9/11 and in the 2008 financial crisis, the powers of the world worked together with a common approach. Co-operation today is proving much more difficult. This puts at risk the post-war economic and security order,” the 82-year old said.
“In the circumstances our policy is to maintain our limited exposure to quoted equities and to enter into new commitments with great caution.”
RIT has 47% of its money exposed to the stock market on a net basis, which is low by historical standards.
It pointed to areas of weaker growth emerging, compounded by “potentially destructive” debt levels in Europe and the likelihood of a trade war. Shares in China have fallen 22% since January due to increasing trade war fears.
RIT made a 3.2% return for investors for the six months ending June, including the dividend, after the net asset value rose to 1,882p.
