This session examined the structural trends in the financial sector that have been either amplified or altered by the COVID crisis. It also examined whether post-COVID trends in the sector, such as the increased debt that has built up in the system, are likely to reinforce the lower for longer growth, inflation and interest rate regime or act as a catalyst for regime change. The speakers highlighted the most important waymarks for investors, including the intersection with post-crisis monetary and fiscal policy developments, offer thoughts on the likelihood of regime change and considered what that would mean for optimal capital allocation. The session also discussed the extent to which the financial sector’s resilience will be affected by physical and transition climate risk.
Click here to view Jeremy’s presentation slide[vc_quotes layout=”accordion” 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Key takeaways
It is important that fiscal policy now rotates from support to long-term stimulus. Outside the US where large public investment plans are underway, there is a danger that policy mistakes of the past will be repeated.
Inflation will be subdued going forward, with European economies, Japan, Australia, Korea and China struggling to meet long-term inflation targets.
Although remote working in the services sector could push down prices, the pandemic has also pushed up pay levels amongst low skilled workers.
People are confident in the banking sector but while some firms can handle their debt levels, others may have to restructure, and others may not make it at all. Corporate insolvency laws vary across Europe with different levels of efficiency regarding restructuring
Although central banks have opened the door to changes in the payment systems, they are reluctant to cede control or decentralise finance because of concerns around financial stability.
Central banks are looking closely at digital assets and involved in their evolution to ward off disruption from the emergence of private digital currencies.
Any transition from a heavily banked system or signal of a changing dynamic will see investors re-evaluate how they value the banking sector.
Any transition is a complex exercise for central banks whereby they can’t halt the arrival of new technology but have to marshal its progress and ensure it doesn’t weaken financial stability.
The big difference between the vaccine rollouts and the scale of the stimulus measures across the world could result in a K-shaped global economic recovery, with much of the developed world booming but poorer countries continuing to struggle. However the
The UK defined contribution fund, NEST has added a number of new asset classes to its portfolio over the past year – including infrastructure with a focus on renewables – but the fund is still missing an allocation to private equity. CIO Mark Fawcett spoke to Amanda White about the fund’s challenge to the industry on private equity fees, its focus on climate-aware portfolios and innovative approaches to portfolio management.
The CEO of CalPERS Marcie Frost has a big year ahead. Not only is the fund still searching for a CIO, but it will also conduct its four-yearly asset liability study this year. Frost speaks to Amanda White about the challenges of the top job at the largest fund in the US and how she works to make sure the “real story” of CalPERS gets told.
This week marks the rather grim milestone of a year since the World Health Organisation declared the COVID-19 spread a global pandemic. But with vaccines being rolled out and lockdown easing, we might be glimpsing the light at the end of the tunnel. The big question remains: what will the world look like when lockdown is over?
The City of Austin Employees Retirement System has turned around its five-year performance with a focus on value in active management and deconstructing its bond portfolio. As it looks to the future CIO David Veal considers venture capital and crypto investments.
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