Opinion

A post recently appeared on my Bloomberg timeline that headlined: ‘BoE’s Bailey Says Truss Risk Premium on UK Assets is Gone’. Being overweight in some UK assets, I wondered what Bailey bases this on.

So I look at some asset classes that were hit hardest by the panic sell-offs caused by then finance minister Kwasi Kwarteng’s mini-budget. Just a refresher: that mini-budget consisted mainly of tax cuts for high-income earners that were not compensated elsewhere in the budget.

Data analysis of transactions of Universal Investment’s institutional clients shows that alternative investments once again proved to be supporting pillars of their portfolios, writes Sophia Harrschar, the firm’s country head Luxembourg in her latest contribution as IO knowledge partner. Private equity scored with 9.8 percent in the one-year range and with 10.3 percent per annum over five years.

“The UBS phase is over,” a Quintet banker told me last week.

The demand for ESG-compliant investments is growing, especially among professional investors. The urgency of climate change and the regulatory requirements are driving the development for responsible investing. 

No, this is not a column about the Netherlands’ performance at the World Cup. Although, of course, the title fits this seamlessly. This column is about China and its Covid issues.

Luxembourg last week was buzzing with speculation and market talk. A major deal was said to be in the making that could change the international leadership tables among Alternative Investment Fund Managers, AIFMs. “Is your firm going to be bought?” 

The new Luxembourg Valuation Associations Professionals, or LVPA, launched this week. It’s a boost to the grand duchy’s reputation as a private equity powerhouse, demonstrating that we have outgrown the early days of “let’s figure out what’s going on here”, and want to live up to the high expectations of the international investor community, writes Nic Müller, CEO of Avega Capital Management SA.

With the prominent focus on ESG, asset managers find themselves in a challenging position: On the one hand, they rely increasingly on ESG ratings, not only for meeting regulations but also for establishing trust and satisfying the growing customer demand for sustainable products. On the other hand, ratings based on the evaluation of past data can always only be retrospective. Real-time signals and their impact on a company’s sustainability cannot be considered.

Although inflation has made its comeback in Western economies after decades of oblivion (the great moderation), in public discourse on the housing market, the impact of current inflation levels is quite often ignored. In particular, people talk about the nominal price level of the housing market without looking at the real price level. 

As might be expected, the US 10-year - 3-month yield curve has also turned negative. This inversion means that the two traditional yield curves with the longest and most reliable track record as recession predictors are now negative. By itself that’s is no reason to sell equities, or any asset class for that matter.