Investment Officer Luxembourg

For the stock market, inflation dynamics remain crucial. These ultimately determine the level of interest rates required to bring inflation under control. The higher the required interest rate, the greater the risk of recession and the smaller the corporate profits. High interest rates are also bad for stock valuation levels. However, some companies have managed to increase their profit margins with high inflation, as we noticed last year.

A turbulent first half of the year has had a clear impact on fund flows, with renewed investor interest in bond funds, increased focus on emerging markets, and continued growth of passive strategies defining the landscape for the first six months of 2023. BlackRock’s iShares and Vanguard led the pack in terms of inflows during the first half. 

Indosuez, the wealth management arm of French bank Credit Agricole, has agreed to acquire a majority stake in Degroof Petercam from six Belgian families that wanted to sell their shares in Belgium’s largest private bank. The transaction will create a European wealth and asset management firm with some 200 billion euro in assets under management.

The Sustainable Finance Disclosure Regulation (SFDR) framework’s Article 6 has often been perceived as a dumping ground for non-sustainable investments. However, experts question whether this perception is accurate. Some argue that an Article 6 fund can sometimes be even greener than an Article 8 fund.

Luxembourg’s financial sector has felt targeted by the European Commission’s tax policy. Three subsequent anti-tax avoidance directives - known as Atad 1, 2 and 3 – each added more reporting requirements or forced adjustments to tax structures. In July the Commission referred Luxembourg to the Court of Justice of the European Union over how it extended an exemption from interest deductibility limits to EU securitisation entities in implementing the first Atad directive. But Luxembourg feels it has a strong case and seems happy to settle it in court.

The European Commission this week disappointed sustainable investment organisations by ignoring their collective call for mandatory reporting requirements that would force companies to make public core indicators for their non-financial sustainability performance.