How inflation can slash stock market returns

Inflation can have an enormous impact on the value of your investments. And emerging markets tend to suffer much higher inflation than developed markets. Here, Cris Sholto Heaton looks at the effect inflation has had on one Asian economy, and what it means for your wealth.

A couple of weeks ago, I looked at the history of Asian stock markets. This article is essentially part two of that, so you may want to read the original article first if you haven't already. But in short, I looked at some very long-term charts. And my conclusion was that, while at first they might suggest that Asia is entering a bubble, once you examine the context, it clearly isn't.

I got a number of follow-up questions about inflation, average returns and using logarithmic charts. So they're going to be the main topic of this article.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.