Investment Officer Luxembourg

The financial sector will suffer significant declines if the climate transition does not proceed in an orderly fashion. Abrupt climate risk revaluations will hit banks, asset managers and insurers particularly hard.

Losses in financial markets due to abrupt climate risk revaluations can hit investment funds and insurers hard. It can lead to defaults by companies and cause credit losses for banks. If we fail to ensure an orderly green transition, the risks will spread quickly throughout the financial sector, with companies and banks most at risk.

Small and medium enterprises are seen as the backbone of the net zero approach to the climate. But the vast majority of them lack the financing to implement their environmental, social, and governance ( ESG) programmes. A New York City based start-up named Marco Polo Exchange (MPX) is rolling out its POLO marketplace to help at least 150,000 SMEs overcome these challenges. 

The largest economy in the eurozone is weakening. The German Dax index has been hit unprecedentedly hard in recent months. The discount that has emerged on equities presents a prime opportunity according to specialists. “The economic situation in Germany is lousy, to say the least, but the stock market looks good.”

An energy crisis is imminent in Germany. The renowned trade surplus became a trade deficit in June. Inflation is dire and consumer confidence is at an all-time low.

The US macro data show a mixed picture. GDP – before revisions at least –  has contracted for two quarters in a row. For Europeans, that is a recession.

The ISM Manufacturing index fell further, but is still above 50. ISM Services unexpectedly rose to 56.7. More than half a million jobs were added in July. And yet it has felt like a recession for a while.

Pauline Grange (Columbia Threadneedle) emphasises the opportunities that currently exist in the market to take advantage of European efforts to improve energy autonomy in Europe.