Opinion

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 is 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 Professionals Association, or LVPA, was launched this week. It’s is 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.

Après une longue période de baisse des prix, les nouvelles n’ont pas besoin d’être bonnes. Il suffit que les nouvelles soient moins mauvaises que prévu. À cet égard, trois arguments permettent de penser que le creux des marchés d’actions et d’obligations est peut-être déjà derrière nous. 

The data leaves no doubt about it. This year is a tough one for investors everywhere. It’s very clear in the numbers reported this week, both for Europe and for Luxembourg, the domicile for about 10.000 Ucits funds, about one third of all such funds in Europe. Luxembourg’s loss of total fund value this year now is roughly equivalent to the size of an economy like Taiwan. At a European level, the losses can be compared to an economy the size of Canada.

Certes, il reste encore plusieurs semaines avant de tourner définitivement la page de cette année 2022, mais ce temps nous paraît trop court pour espérer un retournement de la tendance sur les marchés financiers pour les sortir de la zone rouge vif.

In an earlier column here I defended Liz Truss andI expressed support not so much for the content of her policies as for their intention. Truss wanted to promote the growth capacity of the UK economy and ensure that working would pay more. My support for Truss went completely against the consensus as virtually everyone I heard about her was scathing.