We are already after two EXANTE Horizon events – organized in London and Cyprus. You can now watch the recording of EXANTE Horizon organized in Cyprus. You can check the first event of this series here. Speaker bios are available on the EXANTE event page.
As in London, Simona Stankovska (Head of Global PR at EXANTE) moderated the discussion. This panel joined again Arnab Das who is the Global Strategist within Invesco. The rest of the Horizon Panel participants did not appear in the first EXANTE Horizon event: Hannah Gooch-Peters who is a Global Equity Investment Analyst at Sanlam, Gregory Klumov who is the CEO of Stasis, and Fiona Mullen who is a founder of Sapients Economics.
Predicting is not easy. Global inflation finally started declining at the beginning of the year after reaching its highest level in almost 40 years in 2022. Global growth was also higher than expected due to lower energy prices. Nevertheless, the stock market faced uncertainty. The FED was still raising interest rates. 2 US banks collapsed – SVB and Signature Bank. Additionally, Credit Suisse was merged into UBS. In this environment, Bitcoin hit 2 years high. Regarding geopolitics, conflict in Ukraine continued and tension increased between China and US over Taiwan. However, EUR, GBP, and other currencies started to rebound when USD weakened. Oil prices also jumped as a result of OPEC’s announcement to cut production.
Interesting takeouts from EXANTE Horizon
The main question was: ‘What’s on the horizon for global markets and how could it impact your portfolio?’. 3 main long-term (~10 years) megatrends were mentioned: geopolitics (inflation will continue), green transition, and AI. The last one may result in much more volatility. In terms of geopolitics, the opposite trend has started in comparison to what we have observed over the last decade. Resilience became more important than efficiency. Countries want to be now energy & technology independent. Also, companies start to think about their supply chain in the form of ‘China + 1’ (to produce in China and at least one other country).
Gregory Klumov claimed that in a few years, cryptocurrencies will be for sure an asset class of alternative portfolios. They went up each time there was a major issue with US banks – SVB, Signature Bank, and First Republic Bank. Relatively good results of stocks of the S&P 500 were mainly driven by just a few stocks. Many of them were significantly lagging.
Arnab Das sees an opportunity in long-duration bonds and ‘long term stocks’. He also pointed out that the collapse of SVB was not a systemic issue but simply bad management – not FED’s fault. Credit Suisse was on the other side of the spectrum but it was facing issues for many years already. According to Arnab Das labor market changed. It is now much harder to hire & fire than it used to be because of labor shortage (societies are aging – more people retire and fewer are born). He expects that if there is a recession, it will be mild. If this is the case, interest rates may not come down at all or very much. In other words, real interest rates may remain ‘high’. This results in significant yields of bonds.
Focusing on short term…
Summing up, uncertainty is currently very high. Participants of the panel see the inflation as most impactful thing in the short term. To somehow deal with it, investors should probably have a well-diversified and more balanced portfolio (i.e. growth and value in equities).