Investment Officer Luxembourg

A Brussels-based group standing up for European users of financial services has warned that European savers and investors in long-term savings and pension products face a particularly sharp erosion of purchasing power as a result of rising prices.

Speaking about “financial repression”, Betterfinance, one of two EU-level consumer finance NGOs that regularly interact with the European Commission, said European savers are set to lose “hundreds of billions of euro” in purchasing power in 2022 alone.

The Federal Reserve on Wednesday raised its main policy rate by 50 basis points, the largest increase since 2000. The steep hike reflects the current state of the US economy, where inflation surged to 8.5 percent in March with unemployment relatively low at 3.6 percent.

Major investors like Warren Buffett and Goldman Sachs are increasing their positions in oil stocks. Buffett recently bought large positions in Chevron and Occidental Petroleum. For Goldman, Exxon is the favourite. The price of oil this year peaked at $123.70 a barrel on 8 March and has since fallen to around $100 a barrel. Historically, these are not low prices, but apparently there is more in the barrel.

In Luxembourg, international law firm Clifford Chance this week announced the promotion of two of its counsel and the appointment of nine senior associates, while industry group Alfi has hired a new head of communications from PWC Luxembourg.

The Global Green Finance Index, a leading international index ranking sustainable finance activities in global financial centres makes clear that Luxembourg is facing stiff competition in green finance. The Grand Duchy has lost two spots in the latest edition, although the score for the depth and quality of its offerings was up.

The Japanese yen is rapidly losing its value against the dollar, increasing pressure  on the Japanese economy as well as the yen’s status as a safe haven. We investigated the Japanese enigma.

For the first time in twenty years, a dollar is worth 130 yen. Some currency specialists believe that in the short term 135 yen will have to be paid for a dollar. Mazen Issa, currency strategist at TD Securities, even sees an upward trend to 150.

The latest edition of the Bank of America Global Fund Manager Survey shows that fund managers are still overweight equities while their expectations of future economic growth have fallen sharply.

In fact, the chart below shows that fund managers have never been so pessimistic about growth. Not during Covid and not during the Financial Crisis. The mismatch between expectations and positioning is extreme.

Led by a steep drop in bond investments, European Ucits investment funds saw net outflows rise more than five-fold in February when compared to a month earlier due to worries over Russia’s invasion of Ukraine and over rising inflation, according to the European Fund and Asset Management Association, Efama.

Funds defined as Undertakings for the Collective Investment in Transferable Securities, or Ucits, recorded net outflows of 43 billion euro in February, compared to net outflows of EUR 8 billion in January 2022. 

The European Union’s top financial supervisory bodies have told the European Commission to move towards a clearer and more effective framework for informing retail clients about costs and potential risks their run with investments, and told it to better integrate sustainability objectives into requirements for informing consumers.