Courtesy photo. Glovista Investments Hosts Executive Briefing on Global Macro Outlook & Themes
Glovista Investments presented its views on the global macro cycle and highlighted key themes and opportunities for members of the private wealth community on October 8th, 2019, at the JW Marriott Miami, featuring the firm’s founders, Chief Investment Officer Carlos Asilis and Deputy CIO Darshan Bhatt, along with Ignacio Gil, Strategic Advisor for the firm.
“Today, investor concerns range from the potential of further global economic deceleration resulting from a late cycle US economy – with recession risks looming in the horizon – to the ongoing reversal of the market-friendly trade globalization dynamics that defined the post-1990 period and the potential for increased tax pressure in the developed world over the coming years. Today more than ever, we believe a tactical global investment approach is to be favored so as to navigate such treacherous investment waters,” said Asilis.
The discussion included Glovista’s 10 year performance outlook for major asset classes and the investment case for emerging market equities both in absolute and relative terms versus developed peers in light of secular trends that are transforming the investment landscape. The firm also spoke about its opportunity to drive positive change in the regions where it invests via the strategic use of corporate philanthropy.
“The greatest value that I took away from the presentation is simplicity, especially in the Emerging Markets area laden with factors not easily digested by an average investor. Dr. Asilis capably simplified what otherwise is a rather complex topic. Our firm emphasizes a minimalistic approach to investing, that is, a straightforward assessment of binary investment return payoffs that either work or don’t work. This presentation helped clarify for me how to choose the right targets while avoiding traps that exist in these complex markets,” said Eli Butnaru, Chief Executive Officer, Boreal Capital Management.
“I appreciated the quality of the presentations. Dr. Asilis and Mr. Bhatt shared detailed market views on the global asset classes including the emerging markets universe,” commented Ricardo de la Serna, Partner, Alvarium.
Glovista Investments is an SEC-registered and GIPS-compliant investment advisory firm with offices in New Jersey, Miami and the San Francisco Bay area. Glovista specializes in emerging market equities and multi-asset investment strategies for institutional and high net worth clients.
Brazil is a country full of contrasts. The biggest Latin American country is not only known for its sunny beaches, vast Amazon jungle, samba and passion for football, but also for poverty and social inequality, mostly seen in places like the country’s famous favelas.
The Brazilian economy has long benefited from the world’s, and particularly China’s, strong appetite for Brazil’s abundant natural resources, such as soya, oil and iron ore. The commodity boom led to strong economic growth. From 2000 to 2012, brazil was one of the fastest-growing major economies in the world with an average annual GDP growth of over 5%. However, the economy started to slow down in 2013 and entered a recession in late 2014 that lasted until 2016, driven by an economic slowdown in China that caused a sharp decline in commodity prices. The Brazilian economy shrank by more than 7% in two years, which made it the longest and deepest recession in its history.
The recovery process after the recession has been desperately slow, held back by political uncertainties, corruption scandals and external shocks (crisis in Argentina, global trade war). However, the current president, Jair Bolsonaro, has started to push through an ambitious reform agenda that should improve structural growth in Brazil. More importantly, there is still a lot of overcapacity and slack in the economy, which has helped to keep inflation under control. The central bank’s policy rate has come down from 14.25% in 2016 to 5.5%, and additional cuts are likely. Structurally lower rates and economic reforms should improve Brazil’s competitiveness and stimulate economic growth.
Investors can get access to Brazil via its stock market, the Bovespa. But investing in Brazilian stocks has proven to be a very volatile ride with massive ups and downs, and typically concentrated exposures to some large stocks with political influences, such as Petrobras, Itaú Unibanco, Bradesco, AmBev and Vale.
But there is a much more conservative way to invest in Brazil via receivables-backed funds called Fundo de Investimento em Direitos Creditórios (FIDCs). FIDCs are mutual investment funds that apply the majority of their financial resources in receivables. They offer relatively high yields and huge diversification benefits. Brazil is a fantastic example for the deficiency of the traditional banking sector with a concentration of almost 80% amongst the top four banks. These banks tend to focus on mortgages and long-term loans for larger corporates. Small- and medium-sized enterprises (SMEs) are often struggling to get access to traditional sources of funding. Also, bank spreads in Brazil are much larger than in any other major country. While interest rates have come down, banks are still widely lending at rates above 30%.
Alternative financing options, such as accounts receivable factoring, may provide the working capital SMEs need. Accounts receivable factoring is financing that comes from a business selling its accounts receivable to a factoring company. Given the lack of lending provided by traditional banks, the Brazilian authorities implemented an investor friendly regulation for the factoring industry. In Brazil, FIDC are fully regulated and monitored by the Brazilian Securities Commission (CVM). The concept was first introduced in 2001 but since then, the transparency and accountability has been improved significantly. Today, FIDCs must comply with a number of rules that guarantee strong governance and independent controls through regulated fund administrators, independent auditors, registered managers, custodians, etc., which gives investors a very high level of transparency and accountability. Brazil is probably the country with the highest standards in terms of the regulation of the factoring industry, a real factory paradise, and definitely a positive aspect to be added to the list of contrasts. The strong regulatory framework that protects the interest of investors paved the way for sizable capital inflows, that helped to meet the strong demand from SMEs. Currently, there are around 800 different FIDCs with a total asset size of around B$ 120 billion (around USD 30 bn).
Investors have many advantages if they invest in FIDCs compared to corporate bonds or equities, for example. First, receivables portfolios usually contain receivables from a diverse group of debtors, which means that there is much less concentration compared to traditional corporate bond or equities portfolios. Second, investors mainly face the credit risk of the buyer (obligor), which tends to be a bigger, more established company, typically multinationals, that have a much lower credit risk. What is more, the credit risk of the obligors can be insured against default at relatively low costs. Third, FIDCs can also get guarantees from the suppliers, such as real estate and personal guarantees of key executives. This gives a strong incentive for suppliers to buy back the receivables in the rare case that the buyer does not pay the invoice to the factor. Therefore, expected default rates are below 2% and expected loss rates (after renegotiation and recovery) are below 1% in the Brazilian factoring industry. Interestingly, loss rates remained below 1% even during the deep recession of 2015/2016, which has been an excellent stress test of the resilience of the Brazilian factoring industry. And last but not least, the expected performance for international investors is highly attractive. Even if we deduct hedging costs (that have come down a lot thanks to the lower rates in Brazil) and any other costs related to the origination, management and administration, net returns for USD investors should be in the 8-10% range.
Opinion by Pascal Rohner, CIO at Katch Investment Group
Foto cedidaFoto: Andrés Valdivieso director de distribución global de Participant Capital . Foto: Andrés Valdivieso director de distribución global de Participant Capital
Participant Capital, a leading South Florida private equity real estate investment firm, with over US$2.5B in projects under development, has announced today the promotion of Andres Valdivieso to Director of Global Distribution. With over 15 years of experience in international real estate sales and team management of seasoned distributors and real estate international brokers, Andres will focus on strengthening relationships with strategic partners and expanding the firm’s global distribution capabilities.
Participant Capital currently runs over 40 distributors operating throughout Latin America, Asia, Europe, and the Middle East. Its investment portfolio continues to expand with new world-class developments in South Florida and beyond.
“As we bolster our global presence and seize new opportunities of untapped markets, our focus is to bring uniquely positioned real estate assets to all of the investors worldwide – individuals and smaller institutions – that have historically lacked access to leading alternative investments,” said Claudio Izquierdo, Chief Operating Officer. “I believe Andres, with the support of our highly dedicated team, will allow us to drive growth in key distribution channels and deliver our products with high-quality deal execution, transparency, and accuracy.”
Prior to Participant Capital, Andres Valdivieso worked with Fortune International Group, where he was recognized as a top real estate producer for three consecutive years. In 2012, Andres moved to New York City to manage the exclusive sales for a luxury condo-hotel. He was once again named a top-producing executive in the region for his efforts in coaching a team of real estate salesassociates and international real estate brokers to provide high-quality client service.
“I am excited to be part of Participant Capital and contribute to the firm’s international expansion,” said Andres Valdivieso. “Our experienced distribution team, decades of expertise in real estate development and local market knowledge, give us an exceptional advantage in terms of sourcing new opportunities to diversify an investment portfolio in a strong currency.”
. Natixis IM refuerza su equipo con dos nuevos fichajes
Natixis appoints Joseph Pinto as Chief Operating Officer of Natixis Investment ManagersandPhilippe Setbon as Chief Executive Officer of Ostrum Asset Management.
Joseph and Philippe will both be members of the Natixis Executive Committee and of the Natixis Investment Managers Management Committee.The creation of the COO role for Natixis Investment Managers and the appointment of Joseph Pinto–who will take up his role in the coming months –reinforce Natixis Investment Managers’management team and enhance its operational efficiency.
Joseph Pinto will report to Jean Raby, CEO of Natixis Investment Managers, member of the Senior Management Committee of Natixis in charge of Asset and Wealth Management.
Philippe will replace Matthieu Duncan who has resigned from his role as Chief Executive Officer of Ostrum Asset Managementin order to pursue other interests. Philippe will take up his role at the end of November, until which time Matthieu will remain in his role.
François Riahi, Chief Executive Officer of Natixis said: “With Philippe Setbon and Joseph Pinto, we welcome to the Natixis Executive Committee two leading asset management professionals. Joseph Pinto, whose international background perfectly fits with our setup, will bring significant added–value to our multi–affiliate business model at a truly transformative moment for the industry. Philippe Setbon will lead one of our key strategic initiatives; the creation and development with La Banque Postale Asset Management of a European leader focused on insurance–related euro fixed income.”
Jean Raby said: “Joseph and Philippe’s recognized experience and expertise will bolster Natixis IM and Ostrum AM’s growth and operational efficiency and will contribute to further power the continued developmentof our business. I thank Matthieu Duncan for his contribution to the successful transformation and repositioning of Ostrum AM that he has overseen over the past three years.”
Joseph Pintobegan his career in 1992 with Crédit Lyonnais, working in the securitization business in New York before moving to Lehman Brothers in London in the Corporate Finance division. From 1998 to 2001, Joseph was Project Manager at McKinsey & Cie in Paris. From 2001 to 2006, he was Deputy CEO and member of the Board of Directors of Banque Privée Fideuram Wargny. He joined AXA IM in January 2007 as Head of Business Development for France, South Europe and Middle East. He then took the leadership of the Markets and Investment Strategy Department in 2011 and became Chief Operating Officer in 2014, also serving as a member of AXA IM’s Management Board.
Philippe Setbonbegan his career in 1990 as a financial analyst at Barclays Bank in Paris. Between 1993 and 2003, Philippe was with Groupe AZUR–GMF, first as a portfolio manager for European stocks, then as Head of Asset Management. He then moved to Rothschild & Cie Gestion as Head of Equity portfolio management before joining Generali Group in 2004 where he held a succession of senior roles including CEO of Generali Investments France,CEO of Generali Investments Europe Sgr and CIO of Generali Group. He joined Groupama in 2013 as CEO of Groupama Asset Management.Philippe serves as vice president of the French Asset Management Association (AFG).
CC-BY-SA-2.0, FlickrRockefeller Center in New York, home to one of WE Family Offices' locations. . ,,
WE Family Offices strengthens its investment team with the hiring of Sam Sudame and Matt Farrell. Sudame joins as Senior Investment Associate and will be responsible for Public Markets, Asset Allocation, Portfolio Construction and Risk Management. Farrell joins as Senior Investments Manager and will be responsible for Private Markets.
Joe Gutierrez will continue to be responsible for Macro and Santiago Ulloa remains as the firm’s CIO.
Ferrell has more than 15 years of experience in the financial services industry. Before joining WE, Matt worked for nine years at Credit Suisse as an alternative investment specialist, and before that, he worked several years in investment banking where he advised clients on mergers and acquisitions, capital increases and strategic initiatives.
He received his bachelor’s degree from North Carolina State University and earned his MBA from the University of North Carolina at Chapel Hill. He holds the Chartered Alternative Investment Analyst (CAIA) certification and has approved Level 1 of the Chartered Financial Analyst (CFA) program.
Sam Sudame has more than 25 years of experience in both traditional and alternative assets. He holds the CFA, CAIA and CFP designations, a BA from Oberlin College and an MBA from Thunderbird International Graduate School.
Before joining WE Family Offices, Sam was the Director of Research at Singer Xenos Wealth Management in Coral Gables, FL. Prior to this he lived and worked in Asia for over a decade and held investment banking roles at Bayerische Hypovereins Bank (HVB) and Lehman Brothers.
Pixabay CC0 Public Domain. El atractivo de las A-shares chinas
After its first approach to the chinese equities, in this second and last instalment, Aberdeen Standard Investments reflects its growing comfort with A-shares, from the earliest reservations to the expectations for future growth.
In the early 1990s the onshore market was isolated, accessible only to domestic investors. Gradually China has opened its stock exchanges to overseas investors with initiatives like the Qualified Foreign Institutional Investor (QFII) scheme in 2002 or the Stock Connect of 2014 and 2016. Most recently, there has been an inclusion of A-shares in MSCI’s mainstream benchmarks. These “deregulations” have facilitated the journey of the asset manager from observer to investor in China’s A-share market.
Getting comfortable
For years, global investors seeking access to China’s economic growth predominantly invested in stocks listed in Hong Kong. However, the domestic A-share market is far deeper and more liquid and its range of companies and sectors more varied.
“Our challenge was identifying firms that met our strict quality criteria“: a strong balance sheet, sustainable earnings, progressive management and good governance, reveals ASI. “We could see that A-share companies had plenty of work to do on improving their financial transparency and strengthening investor protections” and typically “they had too short an operating history for us to gain comfort in their track record”.
The asset manager especially wary of political interference in commercial decision-making, but, as they familiarised themselves with the inner workings of companies, their views became less rigid. “Some of the biggest state-owned enterprises have sound management teams, operate internationally and enjoy pseudo-monopolies at home” so “we learned to appreciate these strengths”.
ASI researched the A-share universe for more than a decade before their first investment in 2011. In the five years following, they carried out some 500 company meetings, they engaged with management teams and campaigned for better capital management practices.
“We observed incremental improvements, such as enhanced board and management composition; increased dividend pay-outs and share buy-backs; and improved transparency in reporting”, but “it wasn’t always plain sailing”. The asset manager gas had to divest stakes in companies that continued to invest heavily in non-core assets; where infighting among board directors led to dysfunction; and where firms pressed ahead with privatisation plans despite depressed valuations and dissenting voices.
“As more companies confer rights of ownership on outside shareholders, our comfort with the A-share market will continue to grow”, assures ASI, which, after extensive due diligence and analysis, was able to build up a list of companies with the highest standards in the market. This enabled to launch a dedicated A-share Fund in March 2015. Out of the present universe of about 3,500 A-shares, ASI holds a little over 30. “Generally these are well-run, industry-leading companies which enjoy a sustainable competitive advantage”.
Finantial evolution
The past five years have seen the introduction two Stock Connect schemes, creating a trading loop directly linking the exchanges of Hong Kong with Shanghai and Shenzhen. Broadly this addressed foreign investor concerns about lack of direct market access and was instrumental in global index provider MSCI agreeing to admit A-shares to its mainstream benchmarks incrementally.
For the asset manager, that will accelerate capital flows from foreign institutions tracking these indices passively. “We see this broadening of the shareholder base as a good thing: some A-share companies have told us they want more foreign institutions as shareholders because they invest for the long term. This remains a volatile market driven by retail investor speculation, after all”.
MSCI’s inclusion of A-shares into its indices has no practical application for ASI as a fundamental investor: it doesn’t affect its view of whether a company is good or bad, nor does it feel any need to adjust portfolios. “The real significance is what it says about China’s financial evolution. Over time the A-share market is becoming more institutional, more professional and more international. It’s the beginning of huge financial change”.
But Stock Connect was about more than raising foreign participation. China no longer needs its financial system to finance rapid economic growth; it needs it to provide pension income for a rapidly ageing society. According to ASI, it means the quality of financial assets matter more now than ever and Chinese pension funds need to invest sustainably.
“Over the long term, China’s structural growth will be driven by domestic consumption and a rising middle class. We believe the key to unlocking shareholder value is identifying companies which can tap into these growing disposable incomes”, says the asset manager, who has found companies with good long-term growth prospects in segments such as internet technology, travel and health care”.
Photo: PxHere CC0. Equities in September Closed on a High Note, but Long-Term Rates are Still Low...
In a notable display of resiliency, U.S. stocks closed September near all-time highs against a very uncertain investment backdrop and finished the month and the third quarter with a gain and with a double-digit return for the nine months. Stock prices gyrated as they interfaced with diverse news headlines and world events. A partial list of topics includes the China/U.S. trade war, Brexit, Saudi oil field drone attack, central bank easing, yield curve inversion, negative interest rates, U.S. recession concerns, and relatively slow growth in China and Europe.
Top trade negotiators for the U.S. and China are set to square off on October 10-11 in Washington, as both sides seem more willing to resolve some issues. The U.S. economy, though starting to show some trade war related stress in the industrial sector, is still expected to grow about two percent in the third quarter. Employment, housing and a record $113.5 trillion household net worth are key.
During the post FOMC Statement Press Conference Q&A on September 18, Chairman Powell asked a timely rhetorical question: “But why are long-term rates low? There can be a signal about expectations about growth there for sure, but there can also just be low term premiums. For example, it can just be that there’s this large quantity of negative yielding and very low yielding sovereign debt around the world, and inevitably that’s exerting downward pressure on U.S. sovereign rates without really necessarily having an independent signal.”
Corporate earnings, as measured by the S&P 500, are currently projected to rise 4.1 percent in Q4 2019 and be up 11.2 percent in 2020 based on IBES data. Though global M&A activity declined in the third quarter due to trade war fears, a September 30 NIKKEI Asian Review headline – Japan eyes tax breaks to steer idle cash into M&A deals – Companies hoarding profits miss out on innovation, ruling party tax chief says – sets up new deals for merger arbitrage.
GAMCO continues to research new investment opportunities in the North American equipment rental market for infrastructure replacement and new structures for highways, bridges, buildings, energy and water. Public drinking water systems are projected to need about a trillion dollars in upgrades and new systems over the next 25 years.
Column by Gabelli Funds, written by Michael Gabelli
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GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise. The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach: free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.
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Disclaimer:
The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.
Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reflect the manager’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.
AIS Financial Group has hired Artemio Hernández Salort as Head of its Fund Solutions Division. He will report directly to Samir Lakkis, founding partner of the company.
AIS currently distributes over 1billion dollars a year in structured products and is currently looking to expand in order to diversify its business offering. Artemio will focus on third party fund distribution, a new business line which will be offered to clients of AIS and he will be responsible for.
Artemio has a degree in Business Administration from CUNEF and he joins AIS with over 10 years of experience in the sector. He had previously worked in the Private Banking division at Credit Suisse in Madrid, Zurich and Panama where he focused on fund selection for the Iberian and Latinamaerican markets. His most recent position was as a private banker for the Iberian market at UBS, Geneva.
With offices in Madrid, Geneva, Bahamas and currently opening a fourth office in Panama, AIS will look to partner with those managers who want to outsource their sales force and benefit from the knowledge and experience that the company has in the region.
Mora Wealth Management announced today that it is changing its corporate name to Boreal Capital Management (BCM). The name change reflects the company’s broader investment commitment and its global presence in Europe and America. Boreal is an independent multi-disciplinary wealth management services firm. It is a true fiduciary with a clear goal of providing its clients with a full array of financial and wealth planning solutions.
Founded in 2009, Boreal operates as a fully independent unit offering a Multi-Custody, multi-jurisdiction, multi-disciplinary model with independent financial advice as a code of conduct. Boreal Capital Management has a well-established tradition in private banking and Wealth Management.
According to the company, “BCM’s mission is to offer a risk-based investment approach to individuals and families across multiple custodian banks and jurisdictions. BCM strives to offer an independent platform with the only objective to minimize risk, preserving capital to achieve consistency in the rate of wealth appreciation.”
The new name is effective immediately, and will be implemented across the company’s product and services throughout the calendar year 2019.
Pixabay CC0 Public Domain. Catalizar la inversión ASG en Asia
In order to meet the demands of urbanisation, population growth and moving to a more sustainable use of scarce natural resources and a lower carbon future, most analysis suggests developing countries in Asia will need between 20 and 30 trillion dollars in infrastructure investment over the next 15 years, says Aberdeen Standard Investments in a recent publication.
To put these numbers in context, between 1960 and 1973, the United States spent some 288 billion dollars (in today’s money) on the space programmes that put men on the moon. The upper end of that range is around the same as the current forecast for all assets under management in Asia-Pacific in 2025.
“These are huge sums of money well beyond the capacity of the public purse on its own. In fact, Asia will have to attract significant amounts of private capital, including from outside the region. What’s more, this investment has to fund growth in a sustainable way or the region risks repeating the mistakes of the past; expensive mistakes to rectify and with global implications”, points out the global asset manager.
In that line, ASI maintains that despite rapid urbanisation and the rise of a middle class, Asia has still to address some of the most serious development issues: a significant number of people still live at a subsistence level; in many countries there is insufficient and inefficient infrastructure; and some 70 of the 100 most polluted cities in the world are in Asia.
The good news is there is increasing momentum towards getting this right. For example, the Asian Infrastructure Investment Bank (AIIB) has a mandate to develop infrastructure as an asset class; develop bond markets for infrastructure investment; and promote the integration of environmental, social and governance (ESG) principles into fixed income investments in emerging Asia.
“This should serve as a catalyst for mobilising additional private capital from institutional investors”. he China-led ‘Belt and Road’ Initiative has similar objectives with a broader footprint.
Supporting this, institutional investors around the world have now also adopted ESG analysis as a mandatory, rather than optional, component of their investment process. “Sustainability is now irrefutably recognised as an issue of global importance. Influential asset owners are leading the call for change and allocating capital to fund managers who can demonstrate ESG sensitivity and tangible action”.
Regulatory pressures are also supportive by pushing for greater ESG transparency. ASI emphasizes that there is growing evidence that ESG integration does not imply lower investment performance. What used to be seen as a trade-off – doing the right thing meant lower returns – is no longer the case. The performance of selected sustainability indices has been largely on par with benchmark indices over different investment horizons.
This is why the asset manager thinks that Asian infrastructure investment offers “a real opportunity to embed ESG principles to enhance the long-term social and economic value that such infrastructure investment can deliver to far-sighted Asian countries and communities”. Beyond fund managers incorporating ESG analysis into their investment process, Asian demographics and the growing democratisation of savings will play important roles in driving assets towards these strategies.
“The younger generation is venturing into financial markets with different priorities from its predecessors. These changing preferences, combined with public policy shifts and technology facilitation that place greater control into the hands of underlying beneficiaries, will help propel the shift towards ESG-friendly investments“, says ASI.
In Asian markets, these changes will be felt in three key areas. The first area relates to climate change mitigation: sustainability-linked infrastructure will transform how governments finance and build power infrastructure, energy efficiency, sustainable transport and waste management.
The second relates to air quality improvement: East Asia has the world’s highest mortality rate from air pollution. Industries involved in the development and manufacturing of clean-air related products will have important roles to play.
The last relates to ethical and sustainable palm oil and natural rubber: the Association of Southeast Asian Nations is the largest producer of palm oil and natural rubber in the world. However, this industry has been linked to deforestation, biodiversity loss, land grabs and forced labour. “Clearly, this has to change and the leading companies are doing so”, asserts ASI.
“By incorporating ESG principles into Asian development finance, we have a once-in-a-lifetime chance to build a market ecosystem that will benefit investors, issuers, the people of Asia, and the rest of the world. We must not let this historic opportunity slip away”, assures ASI.
