Author: Helen

How Vancouver became a hub for technological talent

Posted on by Helen

Cities have an increasingly important role to play in global economic development. With increased urbanisation occurring in most major economies, cities are more than ever setting the international agenda for market growth.

Vancouver in particular offers a wealth of talent and potential for investment: the city is expected to achieve a growth rate of 3.5 percent over the next four years, making it one of the fastest-growing economies of any city in North America. With its desirable location in the Pacific Rim, it is also an exceptional destination for business and a highly attractive place for individuals in equal measure. The Canadian metropolis is consistently rated as one of the most liveable cities in the world, with its vibrant downtown core, surrounded by beaches and mountains, the envy of the rest of the world.

Nurturing start-ups
Looking past the geography, however, a whole host of stakeholders – ranging from politicians, citizens and community groups to business leaders and governmental and non-government organisations – are continually hard at work to ensure that Vancouver retains its desirability. One such backer is the Vancouver Economic Commission (VEC), which works tirelessly to guarantee the city’s enduring prosperity. The VEC’s main ambition is to ensure that Vancouver is globally recognised for its innovation, creativity and sustainability, with the intention that it will consequently attract like-minded businesses. The organisation primarily achieves this by strengthening the city’s technology, digital entertainment and green economy sectors through strategic programmes and initiatives that focus on supporting businesses at each stage of growth.

Some 75,000 technology professionals now work in the city. As such, a diverse range of technology firms can be found across Vancouver, including social media, business intelligence, security and financial technology, e-commerce and web technology companies. The sector as a whole boasts some major home-grown and global players, including Microsoft, Amazon, Cisco Systems, Samsung, SAP and Zenefits.

Growing creativity
Despite Vancouver already displaying such impressive tech credentials, the VEC is active in furthering the city’s reputation as a world-class technology hub, which it achieves by focusing on one key area: talent and capital attraction. The organisation is acutely aware of the need to draw smart talent and smart capital into the city in order to fuel its rapidly growing technology sector, and so it concentrates its efforts on putting local start-ups in front of investors, as well as telling the Vancouver story to investor groups around the world. The VEC is also building on its research capacity in order to better track capital flow into the city.

Vancouver is expected to achieve a growth rate of 3.5 percent over the next four years, making it one of the fastest-growing economies in North America

Vancouver’s digital entertainment and interactive media sector is closely connected to its burgeoning tech industry. Various screen-based productions fall under this umbrella, including film and television production and visual effects firms, totalling around 1,000 businesses. Furthermore, Vancouver now boasts the largest visual effects and animation cluster in the world.

There are a number of reasons why this industry is thriving: Vancouver’s artistic atmosphere, plus its close proximity to Los Angeles and Silicon Valley, have long been a lure for young creatives, which has readily allowed the city to gather top talent. Furthermore, highly competitive tax incentives combined with a stimulating and beautiful natural environment provides a high quality of life and the creative inspiration on which such industries thrive.

Green leader
The city is also leading the way in the fight against climate change. Vancouver aims to become the greenest city in the world by 2020 through its Greenest City 2020 Action Plan; a strategy led by the VEC that, among other things, aims to double the number of jobs related to green, local food production. The initiative also includes an accelerator programme for clean technology start-ups, a demonstration programme allowing companies to access city resources for trial opportunities, and a digital platform to connect solution providers with companies seeking to ‘green up’ their operations.

Vancouver recognises that the fight to protect the environment is a global one. Now known as a major cleantech hub, with hundreds of such companies boasting global and cross-sectoral expertise, the city is a leading force in cleanteach innovation, especially in fuel cell solutions, power electronics and wastewater treatment technologies. As the economies of East Asia begin to place increasing concern on environmental issues, Vancouver’s location on the coast of the Pacific Rim gives the sector access to vital export markets.

The VEC is proud of its unique and dynamic city. Vancouver is a vibrant 21st-century hub that is attracting smart talent, smart capital and smart businesses – and, as North America’s Asia Pacific gateway, it is perfectly positioned to take advantage of global trade and capital flows.

What globalisation has taught investors

Posted on by Helen

The health of the global economy is built on complex systems of finance, enormous stockpiles of data and the shared principle of prosperity. And while this mindset has been warmly embraced by the majority, the path to this line of thinking requires a deep understanding of the systems in place, not to mention a great deal of patience. Contained in these finer points, I believe, are the roots of the so-called agency problem.

This theory, which is closely associated with corporate finance, describes a conflict of interest inherent in any relationship where one party is expected to act in another’s best interests. In this instance, global leaders with limited understanding of economic rules pretend to have easy – and seemingly magical – solutions to the world’s problems. My advice is to keep in mind the limitations. It’s not my intention to judge their true will, although to me this makes no difference. I may have all the willingness in world to perform surgery on a person, yet I’ve never been trained for such a task. Would you accept my offer, with your decision based solely on my willingness?

Growing complexity
Nowadays, financial structures are complex and able to address most requirement. On top of that, there is such an excess of cash globally that there will likely be an investor for almost any level of risk. This does not change the basic rule for the use of any resource: that it should return enough to comfort the partners of the venture. It’s that simple.

Innovation cannot create free capital. There is no such notion and there never will be. So understanding the limitations of the system marks a crucial step on the road to developing an appropriate economic strategy. Accepting also that prosperity is a result of knowledge and effort, among other important factors, and in the right combination, creates the appropriate framework for developing a sound economic system. Leadership without strategy and financial engineering without understanding are essentially meaningless, and one without the other simply leads to financial cachexia and instability.

Globalisation has divided the world in four parts. Western Europe and North America are the main consumption areas, while Asia has been the world’s factory floor

The last financial crisis in 2008 revealed several interesting truths. Maybe the most important of those was the fact that what we then called globalisation had already inflicted major changes and on a huge scale. Really how many of us realised that suddenly we had more G20 meetings within 12 months than we did G7 meetings in the previous few years? It was unclear then what the central issue these meetings were looking to address. One answer could be that global instability brought the issue of sovereignty into focus. In other words, governments would now face problems issuing new debt and, quite possibly, the consumers of this world – Western Europe and North America included – would need to reduce their consumption as a result. An issue like this is a global one and must be addressed immediately.

My view is that the G20 decided to focus on sovereignty issues first and only at a later stage did they hone in on the debt-to-GDP ratio in a way that would minimise the impact on consumers’ day-to-day lives. In other words, I believe they decided to kick the can down the road for several years to come. Maybe that was their initial decision, maybe that was the play up until now, but it seems the game has changed recently.

The globalisation effect
Globalisation has divided the world in four parts. Western Europe and North America are the main consumption areas, and well in excess of 70 percent of total energy is consumed in this area. Asia, meanwhile, has been the world’s factory floor for quite some time, while the rest is surviving mostly on raw materials and physical resources.

Although this is a very rough description of a very complex system, I feel both the relationship between the regions and the impact of globalisation is clear. My initial thinking here was that the globe should react cautiously and take all the necessary measures to adjust economic activity, everyday life and investments, in a manner that might more easily suit all participants. It seems I was more romantic than I should have been. Globalisation is an economic notion, not a culture.

Nowadays we see an alteration in the pattern. The interest in a global equilibrium has been diminishing, whereas the focus on localised effects has increased. There have been numerous signs of this policy alteration in practice, but recent evidence stemming from China is the most compelling. Remember, Asia is the factory of the world, and if there is any one single priority for a factory then it is to keep things running at full capacity. Keeping tabs on differing prices is an essential element in this task. When it comes to global prices, few factors are more important than currency value – the rest is history – and a movement in that area could trigger a price war, provided several economies could conceivably compete for that extra euro or dollar from any one area of consumption.

I may be proven wrong, but I believe that China took some precautions against the possibility of a consumption slowdown, and equity markets have adjusted accordingly for the possibility of any sudden price movements. The country has also accounted for lower prices, earnings and a generally worse economic environment, with commodities prices pointing in the same direction. Looking at the facts, it seems the road ahead could be bumpy.

Dealing with assets
Having worked for more than 20 years in asset management, it has made me consider all the more why investing can prove a dangerous game even for the most well equipped participants. Reacting, as opposed to studying and acting, is a common mistake, while the underestimation of risk is another. The use of debt, meanwhile, in overleveraged positions may become unsustainable.

In general, ignorance is an important factor in taking the wrong first step. Having assumed a position it is essential to be patient. Markets can move in either direction for some time, and research has proven that it is not possible to time the markets.

Being confident and having patience for well-studied positions is a must. But one should go back to ignorance. The important question to ask are whether the underlying risks of an investment are known, to consider the difference between a winning company and a press favourite – although who’s to say newspapers don’t appreciate the fundamentals of any one company. An investor has to accept their ignorance first and invest later – in some cases years later. Another critical and often underestimated characteristic in the world of investment is patience. Given that you know most of the ‘whys’ of an investment, you must wait for the appropriate time to move on. No, you can’t time the market but you can avoid going against it. I only mean that the wrong sentiment can drive prices at lower levels in the short run and this ‘short run’ could last for two or three years, so make sure the trend of the market is compatible with your interpretation.

Another reason for staying patient is key to understanding investments, not least equity investments. Plans take time to materialise, earnings are announced quarterly and branding takes longer still. On top of that, all traded assets are branded as investments, which is in most cases separate from the company brand to a certain extend. Finally, investors would be wise to utilise their memory, and remembering ‘things’ can be very important – good issues as well as bad. Names, career histories and specific situations can prove as critical as deep fundamental analysis. History repeats itself and financial markets have their own history of crimes, wars and evolutionary legends. After all, investing is as much a science as it is an art.

In this case, global diversification, low volatility and discipline are essential elements in our investment strategy. Although globalisation has strengthened the relationship between markets, global diversification remains the surest means of creating a stable, modern portfolio. On the other hand, low volatility investments are seen as an extra precaution in what is a volatile marketplace. Discipline in investment is like the brakes of a car: you don’t know their importance until you need to stop.

For further information visit atticawealth.gr

In spite of tough conditions, the Greek insurance sector is staying on course

Posted on by Helen

According to a recent economic forecast by the OECD, Greece is set to ‘gain momentum’ in the latter half of 2016 off the back of increased rates of Chinese investment, something that has helped investor confidence. Investors are no doubt happy to see a number of much-needed structural reforms being implemented that will serve the country, boosting exports and increasing foreign direct investment.

Problems still remain, however; with the OECD noting that the low rate of inflation in the country is the result of a state economy in disarray. The international organisation also mentioned that ‘unemployment will decline’, but only slightly, emphasising the ‘importance of poverty reduction efforts’ in Greece.

Return of the underdog
Many people enjoy discussing the downfall of Greece, a country whose debt to GDP sat at 175.1 percent in 2013, according to data compiled by Eurostat, and whose economic future looks bleak. But despite the Greek economy slipping back into recession in the third quarter of 2015 – after managing to momentarily pull growth out of the abyss near end of 2014 – there are some positive signs beginning to appear, including in the corporate sector.

INTERAMERICAN – one of the top key players in the Greek insurance market – is showing positive signs of growth by continuously reshaping its business in accordance with the new digital era. In the last five years, despite the challenging economic and regulatory environment, the company has succeeded in differentiating from its peers, thanks to key investment decisions in innovation and technology.

The company belongs to the largest Dutch insurance Group, Achmea, which has a co-operative holding identity and 200 years of history. It also has a leading position in the Dutch market and is an innovative player in selected markets including Greece, Turkey, Slovakia, Ireland and Australia.By providing products and services of added value for the society as a whole, INTERAMERICAN plans to become the most trusted insurer for its customers. It has a multi-distribution strategy, which is based on three strategic pillars: innovation, digitalisation and optimisation via lean procedures. John Kantoros, Chief Operations Manager at INTERANMERICAN, said: “The company provides it’s digital experience to large agencies, via its digital infrastructures, seeking the optimal collaboration.”

INTERAMERICAN is showing positive signs of growth by continuously reshaping its business in accordance with the new digital era

During the last five years, the investments carried out in technology exceeded €20m. That money has been used to provide a unique customer experience across all of INTERAMERICAN’s digital platforms. The influx of investment has helped the company enhance the productivity of all its sales networks.
It has also helped it harness the power of Big Data in order to improve business and customer intelligence, while simultaneously reducing operating costs, allowing it to create more attractive products for its customers.

“Close collaboration between business and IT has assisted to implement various digital projects, such as the use of telematics in motor business – a pay-as-you-drive concept – which offers the opportunity to provide an insurance coverage connected to the kilometres driven from the insured, ‘360° customer view’ project, investing in platforms (MDM &CRM) to ensure data quality and customer service, the integrated information system ‘OnE’, achieve operational excellence in non-life business”, explained Xenophon Liapakis, Chief Information Officer at INTERAMERICAN.

Implementing a digital revolution
On top of all this, the company’s other projects included in this digital ‘revolution’ are things like motor insurance for the first self-driving vehicle of the CityMobil2 project in Northern Greece or the shopassurance model which uses new technologies to track and activate the insurance product and also serves to expand INTERAMERICAN’s distribution channels. In the meantime, on-line direct channel Anytime, the first digital insurance brand introduced in the Greek market – is constantly growing, and last August the goal of insuring 250,000 people was achieved. Some of Anytime’s innovative functions include new portal architecture and enhancing user experience via online issuing in less than five minutes.

At the same time, the impressive ‘digital office’ crated for the company’s sales partners is also available on smart phones and tablets and permits them to do business 24/7, as well as decreasing their administrative costs. The question right now for the Greek insurance industry, according to INTERAMERICAN, is how well it is prepared to respond to the new behavioural patterns of consumers in this new volatile, dynamic environment, and change it into an opportunity. INTERAMERICAN has always been the key player and is planning to continue treating all its stakeholders, clients, partners and the wide society, in a balanced way. The company hopes to continue delivering value to each and everyone involved, expanding into new markets and increasing its competitiveness, all in a human-friendly high-tech environment.

Understanding the Middle Eastern luxury market

Posted on by Helen

It is clear that the luxury market in the Middle East has entered a new phase of development. An increasingly maturing retail sector, global and regional macro-economic factors, combined with dampened consumer confidence is translating into a market that is growing much slower than before.

The personal luxury goods market has enjoyed eight to 10 percent annual growth over the last decade, but is expected to slow down to around four to five percent in the next few years. This obviously puts added pressure on the businesses operating in the market, but also presents them with an opportunity, so long as they are able to rise to the challenge and improve their understanding of local consumers needs and expectations moving forward.

With over 60 years experience in the Middle East’s luxury market, Chalhoub Group is a company that knows how to cater to the ever-changing demands of its customers. World Finance caught up with Patrick Chalhoub, Co-CEO of the Chalhoub Group, to find out how the market is changing and what to expect in 2016.

What is ‘in’ right now with your customers?
The customer is becoming increasingly knowledgeable, demanding and volatile. Thus, we have to offer a real experience, real knowledge and real storytelling. The customer is also less loyal due the variety of choices they have in the market. Our store must become an extension of the home, with large spaces, including private areas, comfortable seating and the legendary Arabic hospitality all being a part of the experience. There is also a need to be digitally enhanced, enabling easy screening of the whole boutique. Customers want to be recognised when stepping into the store; their tastes and needs anticipated.

Products will have to be launched in the Gulf at the same time as in the West – to the minute, including special lines for Gulf customers in terms of sizes, cuts, shades and scents, and these will need to be launched exclusively in the Gulf, or at the very least ahead of the global market.

Would you say the customer defines the luxury market or businesses such as yours?
Chalhoub Group conducted a study two years ago on the GCC luxury consumers, and we were able to identify three consumer profiles: the gazelle, the horse and the falcon. The consumer segmentation conducted last year along with Bain & Co through 2,000 face-to-face interviews across the region allowed us to quantify these different consumer types as follows:

‘The Omnivore Horse’ most represented by the markets of Abu Dhabi, Dubai and Jeddah and also more skewed towards females. These consumers have a very strong relationship with fashion as they follow trends, regularly update with new pieces, are on trend through blogs and magazines, and display strong celebrity influence. They associate luxury with things, like spas, gourmet food, furniture, travel, and cars. They will substantially spend in all these categories.

The personal luxury goods market has enjoyed eight to 10 percent annual growth over the last decade, but is expected to slow down to around four to five percent in the next few years

In terms of expectations in store they will need it all, from the latest products to store staff expertise. It is crucial to reward these loyal customers with invitations to previews and access to personal stylists. They will display the highest brand awareness and a high conversion to a wide array of brands.

‘The Opinionated Horse’ is mostly found in Doha and mostly male-oriented. For them, being granted special prices comes first, followed by the latest offer, service and of course recognition. It is also about the right appearance, but because it will showcase success.

‘The Conservative Horse’ is mostly seen in Riyadh. For them, fashion is about reassurance. Critical influences will include social media first and foremost. They will additionally need a good dose of reassurance through all types of advertising. They will still be fuelled by the need for reassurance, needing sales staff expertise in the brand and aware of trends as well as recognising them as loyal customers.

‘Gazelles’ view fashion as an expression of effortless style and are quite influenced by celebrities. In terms of expectations in store, Gazelles will need it all: from the latest products, to store staff expertise in the brand and aware of trends, to being recognised as a loyal customer, including invitation to previews and being sent collections at home.

‘Falcons’ are an archetype still very much in its infancy, they somewhat distance themselves from the materialistic world and are beginning to appreciate luxury for the experiences and the enjoyment it can bring. In–store they seek knowledge of the brand’s history and heritage as well as deep understanding of how the product is made. The sales staff must become storytellers, helping them immerse themselves in the very essence of the brand. In terms of products, the falcons will be attracted to bespoke and ‘made to measure’ items. In terms of events, intimacy is paramount.

At Chalhoub Group, we believe that by understanding our consumers and their behaviours we will be able to cater to their needs and aspirations, and offer them the best in service and a unique experience.

What trends do you see in the luxury market?
The quest for immaterial value – the experience behind the product is one of them. This search will obviously translate in store with more augmented realities, 360 approaches and store staff as storytellers.

Another trend we call is ‘centre of the world’; as regional fashion weeks blossom and hosting of international events develop (World Expo in Dubai 2020, World Cup in Qatar 2022 for example), the region will want to be recognised not only as a rich territory for luxury consumption, but also for creation of concepts, brands and products.

How has the market evolved in the Middle East?
The retail sector of the region has seen a shift from souks in the 1960s to distributors stores in the 1980s. In the 1990s the mono-brands started to settle through franchises. At the end of the 2010 we saw the arrival of the international department stores. Today, the consumer is looking for width and depth in the choices, therefore, the return of the multi-brand specialty stores with a more specialised offer. As the leading partner for luxury across the Middle East and a major player in the sectors of beauty, fashion and gifts for the past 60 years, we are very excited to have been able to lead this retail evolution in the region and be able to support our partner brands in their development and growth.

How do you see it developing in the future?
Technological innovation is becoming critical in the luxury sectors. Consumers are expecting a deep engagement with the brands, wherever they are, whenever they want and anytime they want. Beyond technological innovation, innovation in luxury products are also becoming fundamental in the region. Consumers and millennials in particular are starting to look at luxury brands beyond the logo, for the product itself, which needs to be adapted for their needs. WOW is the group’s private label in make-up. It is the first line of make-up developed especially for the Middle East consumers, with particularities (for example heat resistance) adapted for the consumers in the region.

What is the aim of your new speciality store Tryano?
The Middle East customer is young and increasingly knowledgeable. A few years ago they needed reassurance and considerable advice, whereas today they are becoming more and more knowledgeable and assertive. They need not only access to the brand and depth of their range, but also the choice among different brands, which they will more easily find in department and specialty stores.

Furthermore, the Abu Dhabi market has grown quite tremendously with the direct implementation of some of the franchise brands, but is definitely lacking in specialty and department stores. The opening of Yas Mall with a size, choice and variety of stores need to be anchored by a specialty store that offers the luxury aspirational products, which the group is introducing with Tryano.

We expect Tryano to be an enchanting garden, extremely alive, entertaining and very specialised in the three categories: bags, kids and beauty, with a remarkable experience for all our guests.

What other projects do you have lined up?
Another concept store is planned to open its doors in the first quarter of 2016. It will be the first children’s destination in the region, and will include childrens wear, shoes, accessories, toys, specialised services and will be targeting children aged 0-14 years old, with a focus on children from 0-6 years old. We are also planning to conceive and launch a brand for Oriental Fragrances.

Capitalising on the evolution of the business aviation industry

Posted on by Helen

Given the ease of globalised networks, competitive airfares and enhanced flexibility, airline travel for business is more attainable than ever before. Meeting clients in person, visiting trade shows and conducting first-hand research can have drastic results for any type of organisation, thereby making airline travel a desirable tool for business development.

In line with growing demand, aviation technology is advancing at an exponential rate, ushering in a new phase of business travel that is both practical and enjoyable. This shift has been encouraged further by the changing expectations of business travellers – as technology has evolved, so too have passenger requirements. Passengers desire a certain lifestyle in the sky that reflects the same capabilities that they have on the ground, such as greater connectivity, high-definition entertainment and the ability to bring their own technology on board.

Leading the market with the most advanced business aircraft in the world is Gulfstream Aerospace, headquartered in Georgia, US. World Finance had the chance to speak with the company’s president, Mark Burns, about how the industry has changed and why it’s more popular than ever.

How has business aviation evolved in recent years?
Business aviation has become an international affair. This is true of the industry as a whole, and especially so for Gulfstream. In 2004, 82 percent of our aircraft were based in North America; today, it’s 65 percent, with 11 percent located in Asia Pacific, nine percent in Europe, eight percent in Latin America and seven percent in the Middle East. Business executives around the world are recognising the tremendous benefits of aviation, and have embraced the industry.

And it’s not just the market that has changed – business aircraft have undergone a metamorphosis as well. Not only are they faster and can fly near at the speed of sound, they offer more range than ever before. For example, the Gulfstream G650ER is capable of traveling 7,500 nautical miles (13,890km) at Mach 0.85, which means that it can fly almost anywhere in the world non-stop. Aircraft are also more advanced and allow passengers to use their smartphones for phone calls and even to control the cabin, making alternations to lighting, entertainment or temperature as they please.

Why is business aviation more important in today’s market?
As Thomas Friedman wrote in 2005, the world is flat. We live, work and compete in a global marketplace, where business opportunities are no longer limited by geographic boundaries. As such, customers recognise that business jets are vital tools that enable them to grow their business around the world and be more competitive.

Passengers desire a certain lifestyle in the sky that reflects the same capabilities that they have on the ground

What are the benefits of business aviation?
Business aviation is known for being safe, reliable, flexible and efficient. When you’re flying on a business jet, you don’t have to abide by a set schedule – the aircraft is ready to go when you are. If your meeting is running late, the aircraft will wait. If you wrap up early, the aircraft is ready to go. As there is no need to wait in long security lines or waste time at the gate, as soon as you arrive at the airport, you can take off. Then once on board, you can conduct meetings, give presentations, exchange emails or just relax, all in the comfort, privacy and security of a controlled environment.

How can operators obtain a competitive advantage by flying a business jet?
Business jets provide a number of competitive advantages, not least of which is saving time. The more time you save travelling, the more time you can spend doing what’s important, whether that is spending time with family, pursuing more business deals or volunteering with a charity.

How do Gulfstream Aerospace’s services differ from others?
In terms of products, we offer an extensive range of aircraft that suit a wide variety of missions. These include the wide-cabin, high-speed Gulfstream G150, right up to the flagship of our fleet, the ultra-long-range, ultra-large-cabin G650ER. Additionally, we’ve been in the ‘business’ of business aviation for more than 55 years. We’re focused solely on this sector and our ability to provide technologically advanced products that are safe, comfortable and reliable. We also deliver top-quality product support, with more than 4,000 professionals dedicated to ensuring our aircraft are safe, reliable and well maintained. As a result, our international presence has more than doubled over the past five years.

What are Gulfstream’s future ambitions?
Gulfstream will continue to focus on its core strength: creating and delivering the world’s finest aviation experience. This means focusing on our two new aircraft in development, the G500 and G600, growing our product support network to meet the needs of an ever-expanding worldwide fleet, and developing the next generation of
technological advances.

Why Saudi Arabia is one of today’s most promising investment landscapes

Posted on by Helen

Wealth management in Saudi Arabia has undergone something of a transformation lately, and, judging by recent events, it’s clear the industry is entering into an exciting new phase in its development. Major world events notwithstanding, a formidable financial services sector is fast emerging in the GCC. Having become a world-leading financial centre and major trading hub linking east and west, according to EY in its latest GCC wealth and asset management report, Saudi Arabia – as with its neighbouring nations – is today one of the world’s most favoured investment landscapes of the moment.

“Wealth management is a growing industry in Saudi Arabia”, said Tarek Al Rikhaimi, CEO of Saudi Kuwaiti Finance House (SKFH), “as a number of funds increased by 21.4 percent between 2014/15 as per Capital Market Authority (CMA). With a growing number of listed companies and rising competitiveness in the market, investors have developed an appetite for the professional management of their funds. Total values of investment funds’ assets grew considerably to SR 162.1bn ($43.2bn) at the end of 2014, an increase of 16 percent over the preceding year, and coincident with a 21.4 percent rise in the number of investment funds, to a total of 578.”

As one of the fastest growing investment Islamic banks in the country, SKFH is leading many of the latest developments in Islamic wealth management and welcoming international investors into the market. Now, coming up to a year since the Saudi Arabian Capital Markets Authority opened its equity markets up to international investment, the investment house’s expertise and influence is more important than ever.

Open season
“Foreign investors were formerly not allowed to have direct access to Saudi Market”, said Al Rikhaimi. “Though access could be gained through Funds, Swaps and ETFs, an announcement by CMA to allow the Qualified Foreign Investors (QFI) to have direct access to the market has given a new opportunity to the QFI to tap the biggest GCC market. This could either be for higher returns or just for diversification purposes.” Open to banks, brokerages, securities firms, fund managers and insurance companies, the decision to open capital markets to foreign participation has attracted investors from across the globe, and promises to strengthen the market further still.

“This will not only increase the liquidity in the long term, but also the way in which the companies are being valued. The market is somewhere between weak to a semi strong form efficient right now. We expect it to move towards semi-strong form efficient as the number of institutional participants in the market increases and the volatility, as a result, decreases.” With a market capitalisation of around $550bn (see Fig. 1), Saudi Arabia has locked horns with Mexico for the number seven spot among emerging markets, ahead of South Africa and Russia.

However, it’s important the enthusiasm doesn’t detract in any way from the all-important issue of regulation. True, the reaction to the opening was akin to a ‘soft bang’ of sorts, that’s according to Institutional Investor, yet the news for wealth management in Saudi Arabia is overwhelmingly positive.
“The Capital Market Authority has been controlling the market using different laws and regulation to protect investors. These regulations are being constantly improved to follow the international best practices and standards of conduct.

Saudi Kuwaiti Financial House table

Apart from market optimism, this is one of the reasons that more and more companies as opting to go for an IPO”, noted Al Rikhaimi. “Further, recent opening of market to Qualified Foreign Investors is definitely going to increase the liquidity in the market, which is good for listed companies. However, the capital inflow is not at the pace expected due to an oil glut, and the effect of China’s hard landing on global capital markets. We consider it a major step by Saudi Capital market towards joining the emerging markets pool.”

Speaking on the ways in which SKFH has benefitted as a result of the sectors’ – though more importantly the country’s’ – transformation, Al Rikhaimi said that increased regulation has boosted investor confidence in the market, as well as the demand for professional managers. “This, combined with an ideal environment for IPO and our ability to timely understand the market trend and launch the right products, has indeed benefited us in term of an increase in AUM”, he commented.

The investment house SKFH Batik IPO fund, for example, has been something of a star performer. Launched in mid-2014, the fund comprises a total of 26 IPO funds, with 88 percent of them launched after SKFH came into being, and more than 70 percent launched just in 2015. “We have set the trend in the market with our initiative and performance”, said Al Rikhaimi of the fund.

“We expect the trend to continue in 2016 and there are number of IPOs expected in 2016. Since IPOs are usually under-priced here and there is a restriction on foreign investors to invest directly in IPOs, we believe that investors would tap that opportunity by investing in IPO Funds.” SKFH has been so successful on this front simply by focusing on the timing of the market. “We engage in fundamental and technical analysis with a focus on macroeconomics to analyse the trend and direction of the market in the long-term.”

SKFH has realised achievements above and beyond those of its competitors, again by employing an analytical investment strategy and by making the most of its workforce. Al Rikhaimi explains how SKFH’s team has a rich and diversified background, with expertise ranging from investment product development, debt and equity capital markets, to real estate and private equity investments. “Our investment strategy varies with respect to the objectives and the terms and conditions for each individual fund”, he added. “Multiple approaches are employed in order achieve those objectives.” To take one example, SKFH takes top down and bottom up approaches to equity valuation, as well as active to semi active approaches to portfolio management, depending on the market conditions, given that the market in Saudi Arabia is more volatile than in mature markets.

“Most importantly, our approach is focused. Instead of representing ourselves as a one stop shop for investors, we work hard on timing the market, to launch the appropriate products and completely focus on managing them. We attribute this focused approach to our success in ‘SKFH Batik IPO Fund’.”

Optimising strategies
Positive returns in the market depend not just on the right strategy at the right time, however, and a great deal should be said about the advantages of a healthy economy. Healthcare and education has been the focus of the Saudi government lately, according to Al Rikhaimi, and it has consistently maintained the highest budget allocation for these two sectors, which brings benefits for the country, certainly in terms of human capital.

Last year, allocation for the education sector stood at around 25 percent, while the percentage stands at a lesser – albeit still impressive – 18.6 percent for the healthcare and social sector. Despite the decline in oil markets and the fact that approximately 80 percent of the revenue for the country derives from oil, the government has vowed not to cut spending in these two sectors, in light of the benefits they bring to the country’s ongoing development.

“There has been an increase in the stock exchange listing of healthcare companies, however, the education sector still lags behind the trend as it is in its initial growth phase, and hence, an ideal scenario for private equity and venture capital market”, said Al Rikhaimi. In fact, there is only one education stock listed in the market and SKFH expects the number to increase over the next five to 10 years. “For the healthcare sector, we believe there will be quite a few private equity exits through IPO”, Al Rikhaimi went on to say. “This is also an excellent opportunity for unit holders in our IPO fund, as the outlook for the sector is excellent with the fact the shares are usually offered at below their intrinsic value in this market.”

Inasmuch as the market is still relatively new to international investors, there are plenty more hurdles for the wealth management industry to clear. “Though the recent decline in oil prices worried the investors, we are very optimistic as the market has been resilient to short term jitters and emotions”, noted Al Rikhaimi.

“As mentioned earlier, the Saudi market has recently been opened to Qualified Foreign Investors who have now been granted direct access to the local market. Capital inflow is low due to low oil prices as foreign investors typically prefer the petrochemical sector, and a huge inflow is not expected unless oil recovers.

“We believe that strong company fundamentals, government spending and an increase in the number of companies looking for an IPO will continue to support the market. We have multiple projects in the pipeline, including real estate and sector specific funds”, concluded Al Rikhaimi, which again bodes well for the future of SKFH and that of Saudi Arabia as a whole.

Hoidi works to keep the offshore industry afloat

Posted on by Helen

Much has been written about the new low oil price environment in recent months, not to mention the degree to which offshore producers have fallen on the sharp side of the decline. As a result, the fossil fuels business has trimmed back its expectations considerably and the opportunities for oilfield services are considerably less than they were some time ago. Fresh from a few years in the sun, the sector is on course still to expand in the coming years – albeit more slowly – and lend the offshore industry a much-needed helping hand in what remains a tricky period.

Since its inception, Hoidi has specialised in providing ocean engineering services and production for jack-up and semi-submersible rigs. Drawing on its expertise and comprehensive portfolio of offshore solutions, Hoidi has done a great deal to keep the offshore industry afloat, and all in accordance with the group’s longstanding commitment to creativity, quality and innovation.

Although enthusiasm in the offshore industry has been dampened recently by shrinking opportunities, demand for energy, and so oil services, will change relatively little for the foreseeable future. And while the challenges for oil and gas are well documented, cases like Hoidi serve to illustrate that there are still opportunities to be had, if only companies take the necessary steps to adapt to a changed landscape. World Finance had the pleasure of speaking with Wendy Wei, Deputy General Manager of Hoidi, to discuss the offshore industry further.

How has the global market for the offshore industry evolved over the years?
Going back to the year 2012 to 2013, it was then forecast that demand for offshore equipment would increase. However, a sharp increase in production by the Arab Gulf States and overproduction of American shale gas, led to a steep drop in oil prices in late 2014, with prices hovering around $45-55 per barrel (see Fig. 1), and making it financially unsustainable for higher cost producers such as those in the North Sea, where low oil prices have placed their entire offshore industry at risk.

Nonetheless, we believe that the market will recover marginally between the year 2017 and 2018 for both upstream and downstream. Obviously it’s hard to predict when oil will reach $60-70 per barrel, which is seen as a financially viable price for many drilling, exploration and engineering procurement construction companies. Certainly it’s unrealistic to expect oil prices will reach previous levels of around $100 in the foreseeable future.

As a result of the price plunge, a large number of projects have been put on hold, and this may cause a further standstill in the industry for the next two to three years, as the persistent issue of oversupply and a stagnant global economy together signal that there are tough times ahead for the offshore industry.

How has the fall in global oil prices impacted the business?
Oil prices continue to remain low mainly due to the oversupply issue, and the situation for either Saudi Arabia nor Russia looks set to change anytime soon. In order to maintain their market share, both Saudi Arabia and Russia, two of the top crude oil producers in the world, are unwilling to reduce production, whereas other low cost producers such as Iran are gearing up production.

With a lift in sanctions and trade embargoes likely to settle soon, Iran is expected to increase production further, given that low prices are still sustainable for the country. Elsewhere, although US shale oil has stayed surprisingly resilient, Opec’s oil price war has seen total US output fall by more than 600,000 bpd since the end of the first quarter 2015. Further output declines are expected for US production. Certain Opec countries, meanwhile, are also at an economic breaking point due to the abundance of cheap oil, and the situation isn’t helped by a dependence on China and India as main consumers, where consumption in the two has slowed in accordance with economic growth.

Hoidi graph

Currently, what are the industry’s biggest opportunities and challenges?
Firstly, industry players should explore additional means of increasing their productivity by tapping on both existing and new technology. This will allow businesses to streamline their operations and explore more cost efficient ways of carrying out production. Despite the cloud hanging over the current market, areas such as South East Asia, Middle East and Africa are showing some signs of growth in the offshore industry. Others such as Indonesia, Myanmar and Malaysia are also experiencing some demand in the marine spread.

It’s worth noting that smaller players in this industry may find it difficult to weather the current climate, and there is reason for those parties to explore opportunities for merger, if only to ensure survival in this harsh market environment.

The priority for now rests with the maintenance market for the refurbishment and modification of rigs and vessels, due to an oversupply of marine spread and a lower price point. Many orders were placed during the period of high oil prices when the market was in high demand, but in the current situation, many companies were not able to continue financing these projects and had to leave the new or partially built rigs in the yards. The new rigs that are not able to be delivered resulted in changes that affect shipyards, suppliers and contractors, this then becomes a chain reaction to all parties involved in the offshore industry. With the oversupply of new rigs, scrapping of old jack up rigs built in year 1970s are looking to increase in 2016.

What is Hoidi’s place within this industry?
We have never shifted focus from being the best offshore rig leg fabricator in China, and Hoidi’s market share and industry recognition is the highest as of today. We will also make every effort to ensure our reputation and credibility is maintained.

As an up and coming player for other segments in the offshore industry, we are building on our reputation, branding and creating awareness of our expertise in the field. Hoidi is versatile, and to complement our oil and gas business, the company is positioning itself as not just a ship owner, but an investor and operator. Our integrated solution provides rigs and vessel chartering, ship repair, maintenance and offers a one-stop solution for major operating clients worldwide.

What achievements are you most proud of?
Hoidi was proud to be awarded Best EPC and Solutions Company by World Finance for the second year running. With our reputation, expertise and strong financial standing, these factors mean we’re able to own a fleet of marine spread secured on long-term bareboat contracts to serve major oil and gas clients, and, as a fully integrated player, our vessels are deployed globally. With our current reputation, Hoidi has attracted skillful and professional personnel to join our team, utilising their strength to establish and improve our business model. On top of these factors, Hoidi has also partnered with seasoned industry players, forming joint ventures to build a variety of vessels, which will then fulfil demand once market conditions improve and demand picks up.

The persistent issue of oversupply and a stagnant global economy together signal that there are tough times ahead for the offshore industry

What are your plans to partner with other global players in the offshore industry?
Hoidi has enjoyed exponential growth over the last few years, with a regular clientele of esteemed international customers and with strong support from prestigious suppliers pushing the business to where it is today. This has allowed Hoidi to build a strong foundation, and with the slowing economy globally, Hoidi is well positioned to make a global footprint through continuous partnership.

We had foreseen that an over reliance on high oil prices is not a sustainable long-term strategy. Therefore, the management has embarked on a plan to diversify the business beyond their comfort zone. Such a big shift involves a high level of expertise, and Hoidi is glad to engage high calibre talents and professionals as well as strong international partners to help achieve its target and enjoy synergistic growth.

What are the future ambitions of Hoidi?
The company will grow to be a multiple investment and multi-trade concept, which transcends conventional boundaries of industry and geography. This will ensure the various business units based in any industry or country are able to support each other when a specific industry is facing a slowdown.

PICTON leads Chile on its path to economic growth

Posted on by Helen

Over the past 25 years, Chile has made remarkable progress in creating wealth and reducing inequality through gradual reforms. President Michelle Bachelet’s government has implemented a series of additional reforms in recent years, which have proved somewhat contentious. Among these reforms are changes to Chile’s tax and labour laws, along with substantial rewriting of the country’s education and healthcare systems.

The depth of these reforms and the speed with which they have been passed has led to some within the country wondering whether the policies faced enough scrutiny and analysis during their formulation. Overall growth rates in Chile for 2015 did have to be revised from 3.6 to 2.5 percent, but that was due, in part, to the unfavourable international environment, with lower commodity prices and decreased liquidity in emerging market economies – something that all governments are struggling to contend with.

Therefore, in the grand scheme of things, Chile is still on course to be one of Latin America’s leading economic hubs in the coming years and, according to José Miguel Ureta Cardoen, Founding Partner and CIO of PICTON, a wealth management company, the country is well-positioned to overcome the challenges it faces.

What are the main challenges to growth in Chile?
In the short term, we must regain private sector confidence by going back to our traditional model of gradual reforms and consensus, with enough political and technical debate.

Our long-term challenge is to diversify our exports, migrating from commodities to more value-added products and services. We have adequate infrastructure, international treaties and a sound institutional base; however, we have two clear bottlenecks: high-energy cost and low-skilled labour force. We must move towards equal access to quality education. To gain on productivity, we need better-qualified workers. This will also have the benefit of reducing inequality, which is key to avoid social unrest.

In energy, the focus has to be on diversifying our generation base and investing more in transmission projects. The difficulty to develop efficient power plants, our high dependency on hydrological plants and five dry years in a row have led to high energy costs, with a direct impact on competitiveness.

Do you think that Chile is on course to overcome these challenges?
Yes, Chile is a great country and I like to see the glass half full. However, it will take long-term public policies, which are not easy to implement.
In the educational reform currently under discussion, I believe there needs to be more focus on quality, which should be the main focus, instead of reducing the role of the private sector. It is not easy, even developed countries struggle with issues such as education.

In terms of energy cost, we need to create new rules to remove obstacles for new investments in generation and transmission. The current minister of energy has shown proactivity to make these changes, and the results are shown in the reduced prices of the recent energy auction.

What trends are you noticing in the wealth management market?
I see M&A activity that will create liquidity events such as the recent sale of CFR, CGE and Cruz Verde. This will give rise to more family offices, and creates an opportunity for independent wealth managers and advisors. Since PICTON entered the market, I have seen more independent advisors and managers coming onto the scene. Additionally, some players of the retail market will migrate to open architectures, separating the distribution channel from the investment company. The sale of Santander Asset Management is a clear move towards this trend.

Picton table


How did PICTON come to be?
On June 2011, Gregorio Donoso, then Head of the Wealth Management Division at Larraín Vial, met his childhood classmate Matías Eguiguren to help him manage the liquidity from the sale of his five percent stake in Celfin. The meeting had a radical twist and ended up with an agreement to create an independent company with a focus in two businesses: Multy Family Office (MFO) and International Fund Distribution (IFD), to institutional investors in Chile, Peru and Colombia.

The key of the model was to have 100 percent alignment of interests with our clients, avoiding any potential conflict of interest. Donoso asked Augusto Undurraga, his partner at Larraín Vial to join as partner, so both of them have the daily relationship with the MFO clients.

Matías asked me to be the fourth partner in charge of the investment team for the MFO and help him in the due diligence for the IFD. I was the CIO of Consorcio Insurance Company, a great company with great people, and the decision was not easy. In fact, all four partners had promising career paths ahead of us, but our complementary skills, the market opportunity, the soundness of the model, and the attractiveness of entrepreneurship was more appealing. I think we helped open the eyes of many other great people that have decided to enter this industry, which is great because the model gets even more validated.

Many companies talk about putting customers at the heart of their business, but how do you put that promise into practice?
One of our corporate values is ‘client focus’, which means that our clients’ interests will always come first. Having a small organisation makes it easier to create such a culture where the client comes first. All our decisions must put our client’s interests first, at any cost.

Let me illustrate it with three examples: first, we have decided that instead of hiring bankers, every client will be served by either Donoso or Undurraga, my two aforementioned partners, and that each of them will not serve more than 20 clients. This guarantees quality, consistency, risk control, continuity, permanent client knowledge and better alignment of interests. This restriction puts a limit to our scale, but we think that this is key to achieving the highest standard in client service.

Second, we have decided not to receive rebates from fund managers, given the potential bias towards the products that offer the highest rebate. Our policy of ‘one client, one invoice’ means that we are only remunerated by our clients. We only receive our management fee, which is visible to our clients at the end of every month. This might be less profitable for PICTON, but plays in the best interest of our clients.

Third, we have also decided not to structure success fees. It would put an incentive to assume more risk at the expense of our clients. For the same reason, we have decided not to charge different fees for different asset classes. If we charge more for a particular asset class, we might have a bias toward such asset class. We might make more money, but at the expense of our clients.

What is specifically unique about PICTON’s business model?
We strongly believe that wealth management delivers better results in absence of any conflict of interest, with total transparency and independence. Rather than managing conflicts of interests, we have decided not to have them. This guarantees total alignment of interests that will be translated into higher returns and/or lower risk in our clients’ portfolios.

Rather than advisors, we manage 100 percent of the financial assets of our clients in a discretionary way. We are the external CIO of our clients, optimising their asset allocation and selecting the best products on each asset class. This gives us better alignment, the fastest reaction, more control, clear accountability and guarantees portfolio coherence.

Additionally, we don’t have products. We believe that it is healthy for the market to clearly separate the sell side from the buy side. We focus on finding the best third party provider of any asset class or investment alternative. Our scale allows us to access all the market opportunities for our clients and choose the best alternative. Not having bias toward local products has been key during the last four years, during which developed markets have greatly outperformed Chilean and emerging markets.

Having fewer clients allows us to devote a lot of time defining the risk tolerance of every client, the nature of their strategic assets and their liquidity needs. Then we create a truly tailor-made investment policy that meets their risk tolerance, has low correlation with their strategic assets, and meets their liquidity requirements. We are able to hold a monthly investment committee for each of them. It is there where we make sure that every client is meeting its investment policy, risk profile and particular restrictions, and that the portfolio reflects PICTON’s investment views.

How do you see the wealth management landscape evolving over the next five years?
Wealth management will keep double-digit growth rates. The recently published Global Wealth Report by Credit Suisse expects the number of Chileans with wealth above $1m to grow 52 percent in the next five years (see Fig. 1).

I see more independent advisors and managers coming into the scene. Many newcomers will be tempted to do too many things, but the successful ones will be the ones with focus. You cannot be the best at everything.

The market will continue evolving towards open architectures, separating the distribution channel from the products.

How does PICTON plan to adapt to this ever-changing environment?
We believe that focus, independency, open architecture, being close to our clients, plus the flexibility of being a small organisation will be key to adapt in this highly competitive industry with highly-skilled and very sophisticated players.

How Portuguese policymakers are supporting the economic recovery

Posted on by Helen

Fresh from a financial crisis, policymakers in Portugal have revisited the basics as they look to balance the books and reduce the level of debt-based consumption. Meanwhile, on the investment side, there has been a notable shift away from risky products and into more conservative ones, with a clear preference for lower, more guaranteed returns.

In this changed climate, insurance has been forced to on-board some of the challenges, though this isn’t to say there aren’t also opportunities. The industry’s performance is on the up, and success in this arena asks only that firms take note of the ways in which consumers are changing. World Finance spoke to Teresa Godinho, CEO of Allianz Portugal, about the ways in which the sector has evolved and how the company has responded.

After years of austerity, Portugal used EU funds to recover economically. How has Allianz fared during this time?
Entering Portugal’s recent economic crisis in a strong position in terms of the efficiency of its processes, as well as the quality and innovation of its products, Allianz has maintained good relations with its distribution channels. While it was a tough period to go through, the company was able to consistently outperform the market, both on growth and profitability.

Throughout these years, the company kept a pragmatic approach, each year assuming what had been achieved represented the past, and the future would always need additional developments, innovations and actions if it is to succeed. Consequently, Allianz has never stopped improving and redesigning its processes, launching new solutions, rejuvenating its workforce and enlarging its ties with different distribution channels. As a result, the company ended 2014 as the nation’s third largest non-life company, with an 8.2 percent market share.

How has Allianz assisted with the country’s financial recovery since the economic crisis?
The insurance sector is closely linked to the growth of the country, and in recent years the market has not grown, which made the situation more difficult for most of the players. Allianz has been on a counter course to that of the industry’s general performance, and, as in previous years, has presented very favourable results, growing in all major business lines – except motor.

These results arise from the trust of the company’s intermediaries as customers have shown, as well as the work it’s been developing over the years. In particular, 2014 saw a commitment more intense, and consistent investments in the digitalisation of its operations, as it pursues a model where digital and physical world coexist, and one that allows the company’s customers to choose how they relate with intermediaries and Allianz.

What are Allianz’s highlights from 2015?
Allianz reinforced its position in the market by expanding on its presence and by keeping its profitability above the rest. This has been made possible by its investment in the beginning of the year in restructuring and the enlarging its internal distribution workforce, so it is able to deliver better and closer support to all the company’s intermediaries.

At the same time, it undertook equivalent restructurings of its product and claims areas, so it could focus on different customer segments in a more consistent and specialised manner. As well as that, the company will launch a new generation of products for retail and SMEs. It will continue to pursue its digital project, with regular launches of new tools to intermediaries and customers, a stronger and wider presence on the digital stage, not only directly, but also once again through its main agents.

Portugal’s GDP
Percentage change

-3.52%

2012

0.34%

2013

2.1%

2014

1.9%

2015

Source: International Monetary Fund


How does the company plan to build on these achievements?
To ensure it keeps to the same path, Allianz must continue to reinvent, by combining some of its current options with new innovations, not only in terms of technologies, but also in its approach to business. With that perspective, it will continue to enlarge its physical capabilities; replace some of its products with more modern solutions, befitting of its customers’ needs both in terms of coverage and services. The company will also launch new digital, more customer-friendly platforms; and it will move from being a claims payment entity to a full service provider, mainly in the retail and SMEs segments.

What challenges did Allianz face in 2015?
The beginning of the year was characterised by a rise in the optimism of Portuguese consumers, which, together with low oil prices, provoked a significant increase in car usage to pre-crisis levels, showing that the economy is recovering and consolidating (see side bar). On the insurance side, we observed a rather relevant increase in claims frequency, as well as on the severity of them.

The price of motor insurance decreased throughout the crisis period, given the low frequency and severity of claims, and this rapid pickup has to be price adjusted, but at a slower pace. Therefore, motor profitability has been a challenge, and will continue to be throughout the coming year.

Allianz has been adjusting its prices gradually, and it will continue to do so in 2016. At the same time, we are working on our processes in order to improve productivity levels and reduce our internal costs, and to be more competitive.

How are you improving your digital offer?
On this issue, we believe we are one of the leading players in the Portuguese market. Allianz has made a big bet on digital platforms that allow us to simplify the language, and, at the same time, get closer to the customer. Our main target is to facilitate communication between the client, the agent and us. In this sense, we intend to explore the relationship between physical and digital proximity; the physical agent can also be a digital one.
Good examples of this are our presence on social networks, with a particular emphasis on Facebook and our recently launched blog.

The ‘E-customer’, meanwhile, is another tool that follows the structure of a home banking portal in order to make communication with customers closer, more fluid and more direct, always through its agent. This platform allows the customer to undertake several actions and simulations in their insurance portfolio, or to acquire new products and services. On the product side, we are working to make all our retail products available for purchase via one of our online agents, and most of our services will be available online before the end of 2017.

What does sustainable growth look like at Allianz?
Allianz aims to give consumers the tools they need to live their lives without fear and to focus on the development and promotion of talent and skills for each person.

As a socially responsible company, we want to create an emotional connection with our audience, based on the question of identity. Our communication efforts focus on bringing the brand closer to the person, on speaking the same language, using the same channels, and giving them new experiences and good moments.

How does Allianz intend to put its clients at the heart of business?
Insurance companies are the ones that must adapt to demands, and not vice versa. Therefore, the company believes that its intermediaries should be multichannel and have more than just a physical presence – which is nonetheless highly valued by a very significant number of its customers. Allianz has to be where the customers are, and provide services that meet customers’ needs, both in terms of schedules and platforms. I have no doubt that this is where the future lies, and, based on this vision, the company is working to become a unifying player in this whole process.

What are some of the biggest trends you’ve noticed within the industry?
Besides the ones we most commonly hear about, like changing demographics, new technologies and climate change, I would add the services and the ways in which they’re available. Although it might sound like a buzzword, missing this multichannel experience is to miss the trend of the industry.

Today, the customer does not want to go through weeks of bureaucracy to finally get permission to repair something, or agree what amount will be indemnified. He or she just wants to have some party repair within 24 hours whatever needs to be repaired, independently of them having insurance or not. This change in mindset means that Allianz must adopt an entirely different perspective, and it takes several years in order to achieve what I would call minimum standards in this area.

How have you altered the company’s strategy to accommodate these changes?
The company is working towards offering its services in a different ways, and it expects to have the major changes fully implemented within the next two to three years. At the same time, Allianz is also looking into the other trends and it plans to start launching new solutions based on new technologies by the end of next year, as well as the risks that arise from the technology-first world we are living in.

It is diversifying its offering on the savings side, so it can have different solutions for different needs and profiles. And at Allianz we’re permanently revising our reinsurance terms, so they reflect the proper coverage needed, given the effects of climate changes, the company is observing.

Tatra banka shakes up Slovakian banking

Posted on by Helen

Innovation is a precondition of success for private banking in the present climate, and major names in the sector are embracing technology to boost both efficiency and customer satisfaction. On top of that, private banks in the here-and-now can ill afford to ignore the importance of the customer in informing day-to-day decisions, and customer centricity – as much as innovation – is critically important for survival.

“The banking sector has started to adapt and perceive the situation as a challenge”, Katarína Boledovičová, Director of the Private Banking Division at Slovakia’s Tatra banka, told World Finance. “Banking, as one of the most important parts of the national economy, is not static. It adapts to the continuous development of technological environment.”

Clarity and simplicity are critically important in today’s private banking sector, though innovation is seen not just by Tatra banka but many others in financial services as the key to success. The ability to spot new opportunities ahead of the crowd and listen to what it is consumers want, therefore, can often mark the difference between a good and a great bank.

Brightest potential
Speaking on the opportunities for private banking, aside from the obvious, Boledovičová said she believes the brightest potential lies on the client side and in meeting their demands for better products and services. “We try to make the client’s life easier and more comfortable through innovations, and guarantee the utmost in professionalism and discretion”, Boledovičová added.

“In the case of investments, seven years after the beginning of the global crisis, we focus mainly on the risk of investment portfolios, the elimination of these risks, and the education of our clients.” Alongside standard risk questionnaires, Tatra banka also conducts behavioural questionnaires, which it expects to play an important part in the improvement of its wealth management division. “In this service area”, continued Boledovičová, “we have been working on automation of the subsequent internal processes in terms of our ‘MobileSign’ application, which will provide our clients with even more comfortable and secure execution of transactions.”

The ability to spot new opportunities ahead of the crowd can often mark the difference between a good and a great bank

Upgrades to portfolio reporting also pose a considerable challenge to Tatra banka, as the bank seeks new views on client assets, and yet another area of focus is the overall relationship shared with the client through the bank’s ‘AllExclusive’ application.

Speaking on what differentiates Tatra banka from other banks in the region, Boledovičová said, “We are the absolute leader in innovation. We are the first to launch new innovations that facilitate a comfortable life for our clients. We see our strength in the professionalism and education of our private bankers. We receive feedback from clients and respond flexibly through projects, in which private bankers directly participate. Thanks to them we’ve improved our processes and fulfil the customer’s needs. We are available to our clients 24/7, we provide networking and cross sell with the corporate segment.”

How to become a leader
Tatra banka has always focused on affluent and corporate clients, and, from the beginning, the bank’s services have been attractive for the more demanding client willing to fork out more for added value, which, in this segment, is nothing short of a requirement. All-in-all, Tatra banka manages the funds of more than 3,000 clients, with a total value of more than €1.8bn, and the amount of assets here grows substantially with each passing year.

“Each year we introduce a number of innovative solutions in order to simplify client communication with the bank, make the management of financial assets more convenient, speed-up entering orders for sale and purchase of securities and to ensure convenient transfers between accounts. We guarantee all these services with maximum confidentiality and security.”

Speaking about the key ways in which Tatra banka differs to its competitors, Boledovičová noted, “innovations are our main line”. The bank’s clients ask for nothing less and a commitment to innovation ensures their lives are made substantially more convenient. “We bring a lot of innovations and certainly, we don‘t want to give up.”

By focusing on innovation and the means by which it can hand the bank advantages ahead of the competition, Tatra banka has been able to thrive where others have not. “We want to meet their expectations. We are not afraid to change and innovate. We want to maintain our position as the innovation leader and stick to the motto: The best follow us.”

Xeon International leads the way in sustainable investment services

Posted on by Helen

Following the 2008 financial crisis, private equity found itself with a bad reputation. Seen as part of a new speculative economy that emerged in correlation with the deindustrialisation of the advanced economies of the West, investing money simply to see more returns has since become the subject of scorn. However, private equity does have its benefits, especially in that it brings together investors with those people who require capital to pursue a business project.

It is important for investors to ask what exactly those projects will involve and what their societal impact will be, however. As a result, firms such as Xeon International are increasingly factoring in social and environmental responsibility when they manage investments (see Fig. 1). World Finance spoke to Yves Duponselle, CEO of Xeon International, who explained that modern capitalism must become more socially conscious, or else the system faces a troubling future.

Corporate social responsibility has recently emerged as a prominent theme. What is the next generation investor calling for?
In today’s market a new kind of investor has emerged, asking to invest in projects that will benefit society. The cornerstone of our thinking is to redefine the term on what a ‘good investment’ is. The idea is to be smart enough to make substantial profits, while adding the additional dimension of contribution to our society, which should have both a social and an environmental impact.

Why should the public trust that you are different from any other hedge fund that bet against sovereign states prior to 2008?
Being a private equity fund, we are not into financial speculation. Our primary task is to create value over the mid-to-long-term, and it is our objective and choice to invest capital in an ethical way. Modern capitalism needs to be more socially inspired if it wishes to preserve itself, or it won’t survive.

We can prove that continuous high returns can be made while investing in sustainable solutions that are highly beneficial for investors, such as the environment, the economy and, ultimately, the lives of people. We believe that it is our mission to generate value while contributing to the sustainability of our society.

What types of investors are interested in this approach?
The so-called ‘next generation investors’ are an emerging generation of business leaders and investment managers that have a consciousness for sustainability. They are present in all investor classes, going from private individuals to institutional investors, but are usually younger, less established and conscious about the fact that change can be a positive thing.

What is their risk profile?
Some have taken a lot of risks and others have been much more focused on wealth preservation, but the common denominator is that all of them are predisposed, to a greater or lesser extent, to take calculated risks for the sake of their investment portfolio.

We make sure that our management teams and fund players utilise the best available skills in order to generate outstanding results for the investors who trust our judgement.

What is your company’s vision for the future, particularly with regards to investment?
Our starting point is the same as all investment companies’: it should generate profits for our investors. We simply add to our investment criteria the additional dimension of contribution to our society, a contribution that should have a positive social and environmental impact. It is our objective and choice to create value in an ethical way.

How has the current economic climate shaped that vision?
Over the last 15 years, we all have experienced three major financial crises. We believe that the origin of this recurrent pattern finds a partial explanation in the development of evermore sophisticated financial products, which no longer have anything to do with the real economy. They are actually highly speculative, and mostly to the detriment of consumers and investors. There are still far too many out there, which is not very reassuring. Many financial players are ready to sacrifice quite a bit in the name of short-term results.

The economy mostly tends to swing back to the natural point of equilibrium after the hype. We pursue growth, development and returns without impacting negatively on people or the environment. We do it our way, and many investors like it.

Could you expand on your point that many financial products are speculative tools that benefit the few at the detriment of the many?
Some investment products have brought us into a financial crisis, while nobody, apart from a restrained circle of specialists, really understood what they were about or how they generated profits. Most of the time, not even those who distributed them fully understood them. It was like a contamination of the financial vessels, where single people made a lot of money on the back of investors. You could see the crisis coming, as the situation was not in line with economical principles.

Another phenomenon was that the size of certain corporations became so big and diversified that conflicts of interests were, to a certain extent, unavoidable.

Xeon International graph

How do you think wealth should be created for investors?
We carefully select the markets and the sectors that we are going to invest into and analyse the companies and the players surrounding them. We talk to the shareholders and the management in place and share our philosophy, checking our compatibility.

Our investments are medium-to-long-term oriented; hence it is mandatory to have the buy-in of all people involved in the daily effort to deliver the best products and services. By doing so, we make sure that the number of potentially disruptive factors is reduced to a minimum to ensure a smooth development and growth process.

What do you mean when you talk about Xeon International going back to the very basics of value creation?
We look at tangible companies or projects on the basis of their business models, their generated revenues and the growth potential to generate more. If they have potential, we verify whether we have the skills to match that potential, thus adding value to the company or project.

Adding value to a project, physical products or dematerialised services is what Xeon International is good at. In the end, our firm naturally generates profits and returns for our investors, all the while taking our social responsibility into account.

Could you explain what ‘next generation investors’ are, and how your philosophy will appeal to them?
We are submitting the cooperation proposal to every investor that shares our philosophy. We take the time to explain what we do and how we do it.

Investors and investment managers who believe that making a contribution to the environment and the next generation is important are our natural matching counterpart, as it is easier to develop a long-term relationship when both parties share the same values. We started calling them ‘next generation investors’.

How do you think the world can balance the need for economic growth with environmental stability?
Growth is a necessity for every individual, and for societies in general. That process cannot and shall not be hindered, but what has to be controlled is the way you go through the process.

Even the most renitent emerging markets are realising that they have reached a point of saturation, and that they cannot continue pursuing self-implosion by being ruthless towards the environment and the people. If at the end of the development process there is nothing more to enjoy, then what is the rationale behind it?

How is Xeon Fund attempting to find that same balance?
For us, the economic growth comes when social and environmental impact investments are not meeting the demand – for example, water supply or alternative biofuels. We are also working on healthcare and CSR technology development. By increasing the capacity of those needs, we will contribute to a reduced carbon footprint and will have a more equitable and sustainable balance.

We are also interested in measurable ratios and targets: when we select an investment opportunity, we focus on factors besides the return on equity and internal rate of return. The social and environmental impact is our guideline for a responsible way to approach the long-term growth.

What are your hopes for the future?
I hope that we all acknowledge our responsibility to contribute to preserving our exceptional planet, especially as scientific research urges us to do something immediate against the threats of tomorrow. We should be accountable for our acts to our next generation – we can’t tell them that we did not know of the consequences when they ask us, “And what did you do about it?”

JFD Group causes a stir in the global financial industry

Posted on by Helen

As a rapidly growing player within the financial sector, JFD Group has emerged into the industry spotlight in recent years for all the right reasons: continuously innovating, this young company has already established itself as a pioneer, standing out among its peers and earning itself an unparalleled reputation as a game-changer.

JFD is a global group comprising JFD Brokers, JFD Prime and JFD Wealth, which provide retail electronic trading, prime brokerage and asset management solutions respectively. With offices spanning across Europe and multiple awards to its name, the company, which was launched in December 2011, is now ranked among the top 25 largest electronic brokers and top five largest MT4 brokers worldwide.

JFD has achieved remarkable business growth during a relatively short period, earning unrivalled loyalty from its clients and recognition among renowned analysts. It has done this by adopting a radically different position and way of thinking within its field. The firm’s long list of accomplishments to date is in large part due to the drive and expertise of its French and German founders, Partner and CEO Cyril Tabet and Partner and COO Lars Gottwik.

5th

JFD Brokers’ position out of worldwide MT4 brokers

22.4%

JFD Wealth’s Top Spin three-year annualised return

60+

Countries of operation

Dynamic leadership
Spearheading an ambitious team of young professionals and establishing the firm’s overall business and work ethics, our dynamic partnership has helped JFD rise to the top. I personally have been able to bring a strategic vision and in-depth knowledge of the retail electronic brokerage industry to the firm, as well as more than 15 years of hands-on experience with global go-to-market initiatives. Historically, my work has proved instrumental to the success of over 30 high-stake transformation projects that have been implemented across Europe, many of which have been for Global Fortune 500 organisations. More recently, I successfully led the international launches of two of the largest and most recognisable retail forex brands in the world today, Alpari and Interbank FX.

My partner, Lars Gottwik, is equally key to our success: he brings to the table unrivalled expertise in financial markets, gained from a decade of professional trading. A former member of BörseGo, one of Germany’s largest financial media networks, his in-depth expertise in forex, futures and stock trading, along with his reputation as a highly respected financial market analyst has acted as the perfect complement to my electronic brokerage experience. We both believe that research is to see what everyone else has seen, but to think what nobody else has thought. With this mentality, we were able to see beyond the work of our competitors and conduct extensive research before we officially launched JFD, gaining a full and thorough understanding of the market. Our ultimate goal is to always provide clients with the best possible service in new and innovative ways.

Living up to its name
JFD – Just Fair and Direct – bases its operations on a truly win/win scenario, and controls the only large-scale, agency-only business model in the industry. This strategy offers a complete solution suite, providing direct access to the main financial markets as well as to world-class investment products within a completely client-centric environment, without any possible conflict of interest.

While retail investors are becoming more knowledgeable and demanding, their access to quality investment services and products remains extremely limited. Reflecting the company’s ‘just fair and direct’ values while taking advantage of the latest available business and technology transformations, the unique model by which JFD operates targets sophisticated retail investors. Irrespective of their trading volumes or investment capacities, the model offers them non-discriminatory, cost-effective and risk-averse access to the financial markets through an array of products and services typically reserved for the private banking sector and hedge fund client-base elite – a clear, industry-wide uniqueness.

JFD’s greatest strength resides in its ability to conduct brokerage activity – providing DMA/STP access to 20 Tier1 FX liquidity providers and over 80 exchanges – and extensive asset management activity. As a broker, JFD reduces its end-clients’ trading costs by controlling its proprietary direct market execution venue. As an asset manager, however, JFD eliminates the possibility of incurring any entry, exit, performance or management fees by cutting off any unwanted brokerage intermediaries, instead sourcing direct brokerage revenues from its proprietary asset management activity and so significantly increasing its overall investors’ net annual returns.

JFD’s competitiveness in top-end execution, powered by its global proprietary IT infrastructure, allows for overall control of the whole development and delivery chain. In turn, this allows for the delivery of highly optimised brokerage solutions that have been tailored for active investors, as well as systematic strategies tailored for passive investors.

Backed by a team of dedicated prime brokerage, private banking, asset management, research, quantitative and IFA professionals who are distributed across Europe and are ready to connect the dots of JFD’s clients’ personal investment objectives, the company prides itself on its successful deployment of one of the most innovative and democratic electronic brokerage and wealth management client-centric solutions within the retail market place.

In addition to these achievements, JFD complements its proprietary offering with best-of-breed solutions under an open structure. In effect, the company provides qualified emerging asset managers with a comprehensive kick-starter package: this comprises FCA-based portfolio management umbrella licenses, execution-only services with ultra-low trading costs, multi-account trading tools, and cost-effective access to an array of financial vehicles ranging from managed accounts and German and Swiss-listed Certificates to ETFs and Luxembourg-listed alternative investment funds. This package is backed by unrestricted access to JFD’s proprietary online and offline distribution network, which comprises more than 350 EU-licensed IFAs spread across France, Germany, the UK and Ireland.

JFD’s various brands work together, offering a range of intertwined services. The correlation between each branch means that, whenever research is done or accomplishments are achieved in one entity, the other areas also thrive – like a domino effect of success.

Making its mark
JFD has caused a real stir in the industry with its low-cost offerings, high-quality service and customisation options. This exceptional service had an impact on the company’s competitors, who used to offer average trading costs within the two pips range on the EUR/USD trade system (versus JFD’s 0.1 to 0.2 pip spread average per 24-hour session, which is the current inter-banking top-of-the-book pricing). What systems have not yet been implemented by JFD’s competitors remains the provision of MiFID-compliant post-trade transparent execution reports, which present the names of the Tier1 banks and non-banks filling clients’ trades. As with JFD, this is how transparency shall be understood and implemented across the sector, and is precisely how JFD believes any retail electronic broker should operate. In addition, JFD prides itself on its ability to protect its clients’ positions and strategies with full anonymity at the inter-banking market level. Unlike with market makers, JFD’s clients’ identities and limit/pending orders are kept 100 percent anonymous in order to minimise the risk of any kind of sensitive information leak.

JFD’s headquarters are based in Limassol, Cyprus, the second largest retail online trading hub in Europe. Due to the company’s keen focus on retail investment, its decision to base its operations from this key location was a strategic one, as it also allows JFD to take advantage of the island’s lower operating costs. The company continues to expand across Europe, however, with over 80 employees currently positioned in offices in Germany, France and Bulgaria. The firm has also applied for a banking licence in Germany, which will commence in 2016 if approved.

While primary markets are falling across key countries in the European Economic Community – Germany, France, Switzerland and Austria included – JFD’s business continues to expand globally, having now left its footprint in over 60 countries worldwide. The firm made tremendous gains in 2015, generating on average $44bn in trading volumes every month. Furthermore, over 50 percent of all of JFD’s trading clients are still active after three years, an impressive figure when compared to the industry average of just nine weeks.

Having acquired numerous awards during its four years of operations, JFD is the youngest and fastest-growing player in the top 25 rankings of electronic brokers worldwide. With a strong strategy that emerged from thorough research and an impressive adoption of progressive technologies within the online trading sphere, this innovative financial firm has earned itself an extensive list of accomplishments and a vast, satisfied client base. With such a solid foundation to build upon, JFD’s commitment to the core values and ideals that its very name represents suggests that the young firm has a very bright future ahead of it.