Author: itsupport

Making the right investment calls in a turbulent economy

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Since 2008, a series of global events has made us question most of our preconceptions about the world we live in: economic and environmental crises; a pandemic that slowed down the whole economy; and, most recently, geopolitical crises and even wars that have altered energy markets as strategic as the European one. All of it came with harsh consequences not just for the global markets, but at a personal level.

Our future offers more questions than answers. However, the only way to improve our reality is to understand how it changes, and from that perspective, make the right decisions that allow us to move forward. After all, we stand where we are today because of the decisions that we all took in the past.

This was the case for BBK Banking Foundation since it started its activity in 2014. It is worth remembering that the Savings Banks and Banking Foundations Act of 26/2013 clearly defined a series of conditions for banking foundations that maintained a shareholding equal to or greater than 50 percent of their respective financial institutions. That is indeed the case of the BBK Banking Foundation, with respect to Kutxabank, as it controls 57 percent of its shares.

All entities in such a situation are required to present a reinforced financial plan that includes its forecasts in terms of investment diversification and risk management. This requirement seeks to minimise the financial dependence of banking foundations on the investor credit institutions they support. Furthermore, those foundations interested in maintaining their majority positions have to set up a reserve fund to meet any future needs that the investor might face that could jeopardise its solvency. The alternative is to sell stakes in the bank until it reaches a threshold below the control position, either through an IPO or with a different transaction.

Making the right call
From the very beginning, BBK was committed to opt for the endowment of the reserve fund, being well aware of both the disincentives to retaining its majority position and the financial dimensions that the fund required; €231m at the end of 2022. And its commitment emerged from its understanding of Kutxabank as a strategic contributor to the Basque economy, its unquestionable institutional relevance, and its need of a stability provider that could manage its growth without a dependence on cyclical factors.

We stand where we are today because of the decisions that we all took in the past

BBK made the right call: this investment is generating a moderate but stable return regardless of the many crises that economies all around the world have been facing. This decision was also essential as it allowed Kutxabank not to become a listed company, which has also been proven as the best fit for the context of the operation. Those savings banks that chose to become publicly traded companies have not performed as well as expected. Meanwhile, a study conducted by Deusto Business School last year concluded that not being a listed company avoided about €2bn in losses.

What could have happened if the company had instead chosen to let go and turn Kutxabank into a listed firm? In our opinion, the bank would have suffered greatly and the successes we have realised would have been that much harder to achieve. BBK recently managed to fill its reserve fund two years earlier than expected. This was despite very complex economic contexts, namely the drastic reduction in income experienced during the pandemic and the uncertainty generated by the health crisis in the absence of dividends.

The milestone of the early endowment of this fund allows the BBK Banking Foundation to strengthen the strategic horizon of our activity, which is none other than to guarantee, reinforce and promote the activity of our social work, the largest per capita in Spain. This is our raison d’être. And to achieve it through a prudent management model that focuses on diversification and minimising risk, as demanded by the law since its enactment. So it’s a model that adapts its course to make it sustainable over time and one that enhances the financial solvency of the entity and energetically defends the roots of its activity in the province of Bizkaia. With this model in place, we can make decisions with the goal of meeting the strategic objectives set.

Although we acknowledge that our approach is not always the fastest, the most striking or the noisiest, we do not know any other way. The measure of our success can be seen in the steps we have taken since we began our journey nine years ago and it proves that as a banking firm, we are without doubt, a success story.

Antigua and Barbuda’s sustainable development

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The Antigua and Barbuda Citizenship by Investment Programme (CIP) has experienced transformative changes in recent years, propelling it to the forefront of the investment migration industry. These changes have not only enhanced the programme’s appeal to global investors, but also brought about significant economic and social transformations within the jurisdiction. In this article, we will delve into the key transformative changes in the Antigua and Barbuda CIP and their impact on the country’s future.

Expansion of investment options
The expansion of investment options within the Antigua and Barbuda CIP has been a significant development, offering potential investors a wider range of avenues to choose from. This expansion has not only diversified the programme but has also attracted a broader spectrum of investors, catering to their unique preferences and investment goals. One notable sector that has witnessed substantial growth is real estate.

The CIP has approved a variety of real estate development projects that focus on sustainable development and responsible tourism. By investing in these projects, individuals not only contribute to the country’s economic growth but also actively participate in preserving its natural beauty. These projects adhere to strict criteria, ensuring that they have a positive impact on the environment and promote responsible tourism practices.

The Antigua and Barbuda CIP has opened doors for investors with diverse interests and investment goals

The emphasis on sustainable development aligns with global efforts to mitigate the environmental impact of development projects while creating economic opportunities.

In addition to the real estate sector, the introduction of business investments has played a pivotal role in stimulating entrepreneurial activity within Antigua and Barbuda. The CIP allows investors to invest in businesses that have been approved by the Citizenship by Investment Unit (CIU). This has resulted in job creation and economic diversification, as investors inject capital into new or existing businesses.

By encouraging business investments, the CIP has created an environment conducive to innovation and enterprise, fostering a more vibrant and resilient economy. The entrepreneurial opportunities provided through the CIP contribute to the long-term sustainability and prosperity of Antigua and Barbuda. By expanding investment options beyond real estate and including business investments, contributions to the National Development Fund (NDF), and investments in the University of the West Indies (UWI), the Antigua and Barbuda CIP has opened doors for investors with diverse interests and investment goals.

This flexibility allows individuals to choose the avenue that best aligns with their preferences, risk appetite, and long-term objectives. It enables investors to tailor their investment strategy to their specific needs, promoting a more personalised and beneficial experience.

Strengthening due diligence measures
Recognising the significance of upholding the integrity of the Antigua and Barbuda CIP, the jurisdiction has implemented robust due diligence measures. These measures are designed to ensure that only individuals who genuinely have an interest in the country and possess a clean background are granted citizenship. By partnering with reputable due diligence firms, Antigua and Barbuda has set a high standard for transparency and security, instilling confidence in both investors and the local community.

The CIP has created an environment conducive to innovation and enterprise

The implementation of stringent due diligence measures is crucial in safeguarding the programme against potential risks such as money laundering, fraud, or security threats. By conducting thorough background checks on applicants, including verification of their financial history, criminal records, and political affiliations, Antigua and Barbuda can effectively assess the suitability of individuals for citizenship. This process not only protects the interests of the jurisdiction but also ensures the safety and well-being of its citizens.

It is essential for Antigua and Barbuda to continuously enhance its due diligence practices to address emerging risks and evolving global standards. The landscape of financial crime and security threats is ever-changing, requiring jurisdictions to remain proactive and adaptable. By staying at the forefront of due diligence procedures, Antigua and Barbuda can effectively identify and mitigate potential risks, ensuring the long-term sustainability and reputation of the CIP.

Emphasis on sustainable development
Antigua and Barbuda’s commitment to sustainable development is a noteworthy aspect of the transformative changes in the CIP. The programme actively encourages investments in projects that prioritise environmental stewardship and social responsibility. The country has invested in renewable energy projects, sustainable infrastructure development, and educational initiatives. This emphasis on sustainability not only attracts socially conscious investors but also ensures long-term benefits for the environment and local communities.

To further drive sustainable development, Antigua and Barbuda can explore partnerships with international organisations and experts to identify innovative solutions and best practices in areas such as renewable energy, waste management, and conservation efforts. By leveraging these partnerships, the country can position itself as a global leader in sustainable development.

Focus on economic diversification
The Antigua and Barbuda CIP has played a vital role in promoting economic diversification within the country. By attracting investments across multiple sectors, the programme has reduced dependence on traditional industries such as tourism and created new opportunities for economic growth. Investments in sectors such as technology, agriculture, and healthcare have not only generated employment but have also strengthened the overall resilience of the economy.

To sustain this momentum, the government will continue to support entrepreneurship and innovation, providing incentives and infrastructure for emerging industries. This focus on economic diversification will contribute to the long-term sustainability and stability of the country’s economy.

Social impact and community progress
The transformative changes in the Antigua and Barbuda CIP have extended beyond economic growth to address social needs and community development. The programme has allocated funds for education, healthcare, and infrastructure projects, benefiting both citizens and investors. By prioritising social impact, the programme ensures that the benefits of investment migration are shared equitably and contribute to the overall well-being of the society.

The Antigua and Barbuda CIP has experienced transformative changes that have reshaped the programme’s landscape and propelled the jurisdiction to new heights. To capitalise on these changes and address future challenges, ongoing collaboration between the government, investors, and stakeholders is crucial. By fostering an environment of innovation, transparency, and sustainability, Antigua and Barbuda can continue to thrive as a leading destination for investment migration, creating a brighter future for its citizens and investors alike.

Investment banking for positive impact and sustainability

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Since its inception in 2005, Alpen Capital has helped businesses across the GCC region and beyond access finance, grow their long-term value and achieve their strategic objectives. Now the company is expanding and consolidating its place in both established and developing markets while also ensuring its transactions make the right environmental and social impact, particularly in supporting agribusinesses, empowering women, and providing access to finance for small businesses and unbanked populations.

What message would you want to give to our readers who might be unfamiliar with your organisation? What sort of customers are you hoping to attract?
Alpen Capital is an investment banking advisory firm specialising in providing customised solutions in the areas of debt, M&A and equity to institutional and corporate clients. Our deep local know-how and regional expertise has enabled us to execute transactions for leading business conglomerates and financial institutions across the GCC, South Asia, Levant and Africa. With offices in Dubai, Abu Dhabi, Doha, Muscat and New Delhi and an operational footprint in 36 countries, our vast network of international investors and funders gives us the ability to structure unique and innovative solutions for our clients.

We strive to work with clients who want to grow the long-term value of their business across various sectors such as retail, healthcare, insurance, hospitality, education and food. We are committed to partnering with companies that focus on environmental social governance and renewable/green energy. We are especially interested in African countries and developing countries too. We also aim to engage with financial institutions that have a green lending book and support in achieving the Sustainable Development Goals (SDGs) outlined by the United Nations.

What is Alpen Capital’s key focus right now in terms of new business development and areas for growth?
Currently, Alpen Capital’s focus is on consolidating its position in its operating markets and at the same time looking for opportunities to venture into new markets, particularly Africa and Southeast Asia. In recent years we have successfully completed numerous transactions in emerging markets like Kenya, Cameroon, Nigeria, Jordan, Bangladesh and Sri Lanka and we are keen to enhance our presence in these regions. We are particularly interested in advising organisations in Vietnam, Indonesia, Uzbekistan, Egypt and Jordan, given the interest from our funding partners in these countries.

To further strengthen our capabilities, we have recently entered into a strategic partnership with IMAP – International M&A Partners, to become its exclusive partner for M&A activities in the GCC. This collaboration will enable us to leverage IMAP’s vast network of over 450 M&A professionals in more than 40 countries. It will further expand our reach, giving us the platform to source and execute transactions in collaboration with other IMAP partner firms worldwide.

Could you describe some recent deals that were especially interesting?
Over the past few years, we have closed several interesting deals in the M&A space. One such deal involved advising Multi-Specialty Healthcare Partners Holding (MSH), a young organisation, in divesting 60 percent of its stake to Gulf Finance House, a prominent regional investor. The transaction included the acquisition of about 21 specialised healthcare clinics based in Abu Dhabi.

Although MSH had witnessed significant growth in its initial three years, the company faced challenges in terms of standardising its systems and processes, which made it difficult to present a consolidated picture to potential investors.

We strive to make a positive impact on the communities and environment we operate in

Alpen Capital worked closely with the shareholders and management to prepare for a private placement of equity, which included creating proforma consolidated financials, preparation for a detailed diligence exercise and structuring the business and operations under a Holdco structure. As a result, the desired equity value was secured and favourable working terms for the owner with the incoming investor were achieved.

In addition to this, we also concluded our first deal in the fintech space where we advised Monument Bank, a leading neobank focused on the ‘mass-affluent’ segment in the UK, to raise funding for its Series B round. Our network of strong relationships with investors across the region helped the bank secure an anchor investment from Dubai Investments, one of the largest investment companies in the GCC. This deal provided a GCC-based investor with a unique opportunity to enter the digital banking space in one of the most advanced and regulated markets at an early stage.

What is Alpen Capital’s highest priority in terms of sustainability, and how do you progress this when assessing the suitability of a potential new deal?
We strive to make a positive impact on the communities and environment we operate in. Our focus has been on working with emerging market clients that support financial inclusion, women’s empowerment, and agribusiness as well as the food and water segments. We partner with Development Financial Institutions (DFIs) and Impact Investing Funds (IIFs) to raise funding for these clients. This in turn supports the SDGs and makes a socio-economic impact in emerging markets.

How did you approach your landmark CSR report, and did you map this against the UN Sustainable Development Goals?
Our CSR report entitled ‘Sound Impact’ has been segmented into four quadrants – marketplace, workplace, community and environment. The marketplace quadrant showcases around 30 transactions that we have executed with financial institutions, DFIs and IIFs and maps them against the SDGs outlined by the United Nations. The remaining quadrants highlight our CSR activities and initiatives.

Development institutions and impact funds invest in sustainable businesses that create socio-economic impact and support in achieving the SDGs. In our report, we have compiled information about all our sustainable finance transactions to present the impact story behind each deal. We have highlighted the SDGs that were supported by the successful completion of the transaction and through our deals we have supported at least nine different SDGs.

Can you give an example of a deal that is particularly notable in terms of its sustainability and impact in a developing market?
Our transaction with Tata International Limited (TIL) is a great example of creating a notable impact across multiple countries in Africa. TIL, the primary trading arm of the Tata Group, has a significant presence in Africa with operations in more than 19 countries. In addition to the trading business, TIL is also a distributor of automobiles, commercial vehicles and agriculture and farm equipment. Traditionally, Micro, Small and Medium Enterprises (MSMEs), farmers and other unbanked populations face difficulty in securing finance from local banks. TIL supports them by offering direct credit and short-term financing solutions to buy commercial vehicles.

Alpen Capital put together a unique funding structure for TIL for on-lending to MSMEs, first-time users, and unbanked populations across Africa facilitating purchase of commercial vehicles distributed by them. The increased sale of commercial vehicles and farm equipment is expected to support local entrepreneurs, farmers and MSMEs in expanding their business, and create economic development at a local level across the African continent. In addition, this is likely to contribute to the replacement of old vehicles, leading to a reduction in carbon emissions.

Why is it important to Alpen Capital to support agribusiness in the regions where you are most active? What sort of deal showcases the type of transactions you have successfully closed in this area?
The development of the agri sector is crucial for reducing poverty, promoting economic growth, and providing employment opportunities for rural communities in underdeveloped and developing countries.

Alpen Capital acted as a strategic advisor to Sahyadri Farmers Producer Company (Sahyadri FPC) and its subsidiary Sahyadri Farms Post Harvest Care (SFPHCL) for over four years. Sahyadri FPC is a prime example of rural entrepreneurship, providing end-to-end solutions to small and marginal farmers.

In 2010, a group of 10 farmers began collectively producing and exporting fresh grapes to Europe, and this initiative has since grown into a leading fruits and vegetable export and processing company that Sahyadri FPC is today.

We have helped Sahyadri FPC secure financing for constructing collection and distribution centres, expanding their production plant and launching retail stores in urban areas. These infrastructure enhancements are expected to boost the agricultural and food processing operations of Sahyadri FPC.

Furthermore, we assisted their subsidiary SFPHCL in obtaining equity growth capital to expand its processing capacity for fruits and vegetables-based products, establish a biomass plant to generate electricity from process waste, and upgrade its infrastructure.

Financial inclusion and female empowerment are also recognised by Alpen Capital as crucial markets not only ripe for investment, but also for having positive knock-on effects when sustainably supported. Is there a notable deal in this area you would like to highlight?
Providing financial access to women can boost entrepreneurship and broaden the scope of financial inclusion in the unbanked sectors of developing countries. Alpen Capital has played a part in this by helping IndusInd Bank raise funding for its Microfinance Division, which provides loans to small groups of women borrowers working mainly in livestock and small trade sectors. IndusInd Bank has a wide presence across India and offers a range of products and services to individuals and corporates.

The financing raised by Alpen Capital for IndusInd Bank’s Microfinance Division is expected to enable the bank to increase the number of microcredits allocated to women entrepreneurs in severely poor rural areas in India. This is expected to provide access to microcredit for approximately 250,000 women, contributing to the development of women’s entrepreneurship and financial inclusion in some of India’s most vulnerable regions.

Creating a sustainable framework using low-carbon strategies

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Fubon Life Insurance – the second biggest insurer in Taiwan – offers a full range of life protection, savings, annuity, accident and health insurance for customers. Authorised to conduct long-term insurance business in Hong Kong in 2016, through our strategic partnership with banks and independent financial advisors, we are committed to helping customers in protection, financial planning and the environment and society through our environmental, social and governance (ESG) initiatives.

In recent years, global investment in ESG has grown exponentially. Threats relating to climate change and ageing populations are real, prompting increased action from financiers and banks around the world. As a leading Asian economic centre, Taiwan is part of this trend. In 2020, socially responsible investment in the country grew 32.6 percent year-on-year to NT$17.6trn ($635bn), with its proportion in total assets under management hitting 37 percent, up from 30.2 percent in 2019, according to a report by National Taipei University. With a March 2023 net profit of NT$4.8bn ($156m) and cumulative net profit of NT$7.2bn ($235m), Fubon Life Insurance is in a strong position to invest in its ESG programme.

Insurance policy for the environment
As part of our ESG framework, we pursue a programme of sustainability using four key low-carbon strategies: green procurement, a friendly workplace, paperless services, and environmental protection charity efforts. All of these are in line with the United Nations’ Sustainable Development Goals (SDGs). We use our influence to promote green concepts and hope to achieve our vision of a low-carbon lifestyle and environmental sustainability through encouraging our customers’ participation.

We led the industry with the first ‘Work for Green’ initiative

Carbon saving and environmental sustainability are no longer just slogans. Fubon Life Insurance takes practical action to promote reforestation and protect water sources, and to bring people closer to Taiwan’s rich ecology. In 2022, we collaborated with the Tse-Xin Organic Agriculture Foundation to select tree planting sites with the goal of restoring the natural ecology. We led the industry with the first ‘Work for Green’ initiative, linking green sustainability to performance by pledging to plant a tree every time a tied agent met their target.

Our green finance strategies have now been adopted by more than 460 sales agencies and 20,000 tied agents across Taiwan and we have planted tens of thousands of trees alongside other ecological conservation and environmental sustainability groups in the country. In response to our parent company’s ‘Run for Green’ initiative, Fubon Life Insurance is promoting coastal windbreak reforestation. In 2022, we called on our employees and the public to plant 85,000 trees in order to make our insurance business a driving force for environmental sustainability.

Tackling river waste
We are also instrumental in promoting river conservation in Taiwan, recognising the crucial role of water resources in our health, safety, biodiversity, and sustainable development. In 2021 we began work with the Society of Wilderness (SOW) to lead Taiwan’s enterprises in launching a three-year continuous quick screening survey of river waste.

Over the past two years, Fubon Life Insurance has helped SOW conduct surveys of important watersheds in Taiwan’s central and northern regions. A watershed is a land area that channels rainfall and snowmelt to creeks, streams and rivers, and eventually to outflow points such as reservoirs, bays and the ocean. Supported by the River Management Office of Water Resource Agency under the Ministry of Economic Affairs, the project has convened a cross-agency coordination platform to discuss waste disposal strategies, demonstrate the value of the surveys, and showcase the benefits of public-private cooperation. The project plans to expand the survey to all major watersheds in Taiwan to increase its impact.

Recently, we collaborated with Taiwan’s Commonwealth magazine to publish the River Conservation White Paper. This includes highlights of the waste screening surveys from important watersheds in Taiwan’s central and northern regions, as well as perspectives from various stakeholders in government, industry, and academia. By turning survey data into sustainable action plans, we hope to raise public awareness about the severity of river waste issues, enhance sustainable consciousness, and connect relevant public agencies, local schools, and communities to work together to help the waterways.

Plastic pollution
According to the SOW survey, disposable plastic products are the most common waste in rivers and streams. In addition to continuing to advocate the core concept of ‘reducing plastic at source and stopping river waste from entering the sea,’ the new edition of the White Paper also introduces the perspective of environmental molecular science for the first time, focusing on the relevance of river waste to the overall environment and human health.

Professor and Director of the Institute of Analytical and Environmental Sciences at Tsinghua University, Chou Hsiu-Tsun, said that the bottom sediment pollutants of river waste will cause water and soil contamination, and these invisible harmful factors will return to the human body through the biological chain. Research data also pointed out that the reduction of male fertility is most likely related to the pollution of the water environment. Human power is national power, and the issue of river waste urgently needs the participation of everyone to improve.

Protecting society
We also acknowledge the societal aspect of ESG – Fubon Life Insurance pays increasing attention to Taiwan’s ageing population. Taiwan is facing serious challenges: while the birth rate has been declining for decades, in 2020 deaths outnumbered births for the first time. It seems inevitable that Taiwan will soon join nations such as Japan, Germany and Italy, where more than one in five of the population is aged 65 or older.

Fubon Life Insurance is in a strong position to invest in its ESG programme

In response, Fubon Life Insurance is proactively helping the public to prepare for a potential ‘dementia tsunami’ by strengthening our protection offering against the risk of disability and long-term care, as advised in the Ministry of Health and Welfare’s Long-term Care 2.0 Plan. This plan was promoted by the government in response to Taiwan’s ageing population and has achieved major breakthroughs with regard to raising budgets, increasing care service locations, and upgrading services.

We recognise that the ‘global dementia clock’ is ticking ever faster: in Taiwan, every 40 minutes one more person is diagnosed with this cruel disease. Our cross-generational exchange platform aims to connect ‘Green and Silver’ – the young and the elderly – creating engagement between generations. And, for seven consecutive years, we have supported the Federation for the Welfare of the Elderly, the largest elderly welfare organisation in Taiwan, by promoting its ‘Love Bracelet’ programme, designed to prevent elderly people from getting lost. Together with over 100 medical institutions in Taiwan, Fubon Life has implemented a service of giving away a free bracelet with any doctor’s diagnosis of dementia.

The bracelet helps wearers contact a helpdesk if they get lost; healthcare professionals have been able to track down 100 percent of people thus far. In addition, Fubon Life Insurance sponsors specialised support groups for families caring for a family member with early signs of dementia. The support consists of sharing experiences, expert knowledge, and breathing and relaxation exercises, as well as raising awareness of the disease among the general public. We also promote corporate-wide guardian angel programmes.

In 2022, Fubon Life Insurance introduced the Social Return on Investment (SROI) assessment to highlight the effectiveness of the Love Bracelet programme and its social contributions.

Tech for society
We are also committed to developing the latest search and rescue equipment and promoting dementia recognition and education. By integrating digital technology, we hope to help reduce the risk of elderly people with dementia wandering off. Furthermore, the company has invited a leading Japanese dementia expert to share unique clinical perspectives, creating a platform for cross-border dementia prevention and care experiences, and leading Taiwan towards becoming a dementia-friendly and inclusive society.

For Fubon Life Insurance, the United Nations’ Sustainable Development Goals and ESG are not just popular buzzwords, but policies that require action and real effort. Fubon Life advocates for environmental sustainability and care for the elderly with dementia. We work with industry, government, academia, and related organisations to expand care efforts and uphold our brand spirit of positive influence. We will continuously strive for societal balance in economic development, environment and culture, and create more possibilities through our actions and our promotion of sustainable insurance and financial values.

Branching out to bring banking to the people

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After more than 81 years as a catalyst for the Dominican economy, Banco de Reservas de la República Dominicana is now taking firm steps towards internationalisation. The opening of our first representative office in Madrid, Spain, last January represented a milestone; this year the largest bank in the Dominican Republic, Caribbean and Central America plans to further expand with an additional two international offices, in Florida and New York.

The representative offices are information and processing units whose main objective is to reach clients with economic interests in the Dominican Republic residing in other countries. By linking these individuals into the Dominican banking system, we are providing banking services to the Dominican diaspora, which totals more than two million migrants and their descendants born abroad, who have strong links to their parents’ and grandparents’ country of origin. These offices will also provide support to the exports of large, small and medium-sized companies.

The Spanish and American offices will replicate all the banking services offered by other banks in the places where they operate, but the financial transactions themselves will be carried out in the Dominican Republic. This will enable and expedite banking procedures in their country for Dominicans residing abroad.

This expansion by Banreservas is the first time that a Dominican bank has appeared before the Central Bank of Spain to request its approval to be part of the Spanish banking system. The office in Madrid is located on Paseo de la Castellana, one of the Spanish capital’s major thoroughfares, giving our institution a strong, bold presence in the city. Numbering over 45,000 residents, Dominicans make up just one percent of Madrid’s population, but seven percent of the population of foreigners in the city.

Our objective is to bring our services as close as possible to where the majority of Dominicans reside

During this first stage of the bank’s internationalisation process, Dominicans will be able to apply for mortgages, acquire housing and other properties in the Dominican Republic, and open new accounts and financial instruments. The Banreservas office in Madrid is also making agreements with construction companies in the Dominican Republic to promote housing projects. The office affirms Banreservas’ position as a facilitator to attract foreign investment to the Dominican Republic.

Customers in Madrid will also be able to manage their insurance needs, with Banreservas acting as a second-tier bank for procedures with other affiliates of the Reservas family, such as Inversiones y Reservas, and Seguros Reservas.

The second representative office will be located in Miami, Florida, across the street from the Dominican Consulate on Brickell Avenue, one of the most illustrious addresses in the state. Around 72,000 Dominicans reside in the Miami-Fort Lauderdale-West Palm Beach metropolitan area, the largest concentration in the US, aside from New York-Newark-Jersey City with 641,000 and Boston-Cambridge-Newton with 81,000. The office in New York will be in Washington Heights, Upper Manhattan, where Dominicans account for some 60 percent of the immigrant population, with a local population of over 48,000. With these choices of location, our objective is to bring our services as close as possible to where the majority of Dominicans reside. Both US offices will open in the second semester of 2023.

Business opportunities
This business strategy can bring the Dominican diaspora in the US, which numbers some 1.4 million US residents either born in the US or reporting Dominican heritage, even closer to the Dominican Republic. This will result in better investment opportunities in businesses with capital produced by Dominicans abroad and facilitate the transfer of social security and medical pension benefits back home. We will also offer processing facilities for banking services in the Dominican Republic, such as accounts and credit services.

We plan to develop mortgage programmes to enable property purchases in the Dominican Republic, with services to formalise procedures available within the Banreservas offices. Hitherto, these sorts of transactions have required travelling to the Dominican Republic in person or empowering a third party to act on your behalf, so our services will save customers both time and money. Given that Dominicans in the US have lower median household incomes than both foreign-born and native populations, the arrival of such services could have a significant impact for the community.

The Dominican diaspora, from residents to business owners and from community leaders to campaigners, has been clamouring for a way to maintain investment links with and send money back to the home country for a long time now. The internationalisation of Banreservas will satisfy that need, bringing convenience, peace of mind and wealth-making opportunities to our communities in Spain, the US and here at home in the Dominican Republic.

A revolution in retirement planning for the Philippines

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Almost everyone has a clear idea on what they will be doing after retirement from work. Unfortunately, most have not taken any concrete steps to prepare for retirement. As is often the case, planning for retirement takes a backseat compared to taking care of other members of the family and even the extended family. Filipinos tend not to actively prepare for eventual retirement and greatly depend on either the mandatory company retirement payout or through the state-sponsored retirement systems, the Social Security Services (SSS) for private citizens or the Government Service Insurance System (GSIS) for government employees. A good number depend on their children to help them with their finances upon retirement. Unfortunately, dependence on any one, or even all three, methods is not sustainable in the long run.

In a recent survey, Filipinos believe that savings equivalent to 2.1 years’ worth of personal income is enough for their retirement, which is way below the regional average of 2.9 years. If you consider that the average current life expectancy of Filipinos is 72 and the standard retirement age is 60, retirement savings could be short by up to 10 years, maybe more.

The lack of retirement planning is exacerbated by the general gaps in financial knowledge among Filipinos to manage their retirement finance. Either the funds are left in savings accounts, which produce near zero income, or they are depleted due to bad business decisions or spent on unnecessary extravagance. The lack of financial literacy, discipline and annuity type of pension payout can contribute to early depletion of retirement funds.

The state of pension funds
The Philippine Institute for Development Studies conducted a study in 2018 showing that the Philippines will be an aging population by 2032, when at least seven percent of its population will be 65 years and older. This only means that more people will be relying on pension benefits, whether through private or public pension systems. The Philippines, unfortunately, has much to improve upon when it comes to retirement systems. According to Mercer CFA Institution Global Pension Index, the Philippines has the second worst retirement income system among 44 nations.

Today, the Philippines has around 7.6 million Filipinos aged 60 and above. The SSS provides a monthly pension of approximately PHP 5,000–18,000 ($90–$320) to retirees. Considering the increasing cost of living, expected medical costs and other lifestyle expenses, it is safe to say that the pension provided by the state is insufficient.

Republic Act Nos. 4917 and 7641 enacted a corporate pension system for the private sector, designed to augment SSS benefits. Under the law, private companies can establish their own retirement plans that enjoy certain tax benefits including exemptions from investment income and compensation taxes. Currently however, the creation of a retirement fund is not mandatory and oftentimes only the large companies establish such retirement plans for the benefit of their employees. Most SMEs or traditional family-owned corporations still use the ‘pay as you go’ scheme to provide retirement pay as their employees retire.

Considering that these payments are not pre-funded, it places employees’ retirement pay at risk during difficult times for businesses where many employers are in financial straits. Simply put, the current state-sponsored and private pension plans are oftentimes not adequate to provide for 10 years’ worth of living expenses for retirement especially if additional income is lacking.

Revolutionising pension funds
Both the government and private sector have acknowledged that there are serious flaws in the current pension system that need to be addressed. For one, current corporate pension funds are not portable, leaving the burden of retirement planning solely to the last employer. As funding of corporate retirement funds is not mandatory, the majority of companies just provide the minimum mandatory retirement pay on a ‘pay as you go’ basis or in some cases no retirement payments are made. Many companies cite cumbersome and expensive processes to establish formal retirement plans, thus negating the tax benefits granted to formally established retirement programmes. The result is companies fall back to these ‘pay as you go’ schemes. The unfortunate consequence is that retirees are forced to either continue working for additional income, change their lifestyle to reduce their expenses, or depend on family members to finance their retirement years. The worst-case scenario is when retirees are unable to fund their expenses and fall into poverty.

The Capital Markets Development Act of 2021 aims to change all that. The bill has already passed Congress and is currently awaiting the Senate’s approval. If passed, the law will help improve private pension plans and compel companies to redesign current retirement systems to adapt to the law. The objective of the bill is to establish a private retirement and pension system that is fully funded, portable, and more actuarially fair for employees.

One significant change is that the responsibility of deciding and funding for the employee’s retirement benefit will now be shared by both the employer and the employee. Currently, investment decisions and pension payouts are decided and shouldered solely by the employer whether the pension is based on the mandatory retirement pay or based on a defined benefit arrangement. The pending bill allows for the creation of a mandatory, fully funded and portable Employee Pension and Retirement Income (EPRI) account under the name of the employee, created at the start of employment. The EPRI account shall be permanent, owned and managed by the employee regardless of changes in employment or transfer of employer until their eventual retirement. As a benefit of establishing EPRI, employer contributions are allowed as a deductible expense and shall not be considered as part of the employee’s compensation subject to income tax. In addition, all income and gains earned from investments of the EPRI assets, and all benefits and distributions received by the employee upon his retirement shall be exempt from all taxes.

Given the great shift in the age of the population, the corporate pension law as well as the retirement mindset of Filipinos, much more thought must be given to this. Not only do employers need to prepare for and study how to transform their existing retirement plans, but it is just as important to include the beneficiaries of their retirement plan, their employees, in the transformation process.

Finding ways to redefine retirement
We at BDO have been finding ways of reimagining retirement plans in the country. BDO believes in a holistic approach to attain sustainable retirement plans by supplementing corporate retirement programmes with a personal stake in one’s own retirement journey.

BDO is redefining corporate retirement planning through an integrated retirement plan solution, Pension 360. It is designed to assist companies to fulfil their retirement obligations more efficiently, while helping it attract and retain the best talent. Pension 360 combines our core pension services with personal wealth-building programmes to offer a comprehensive approach. Pension 360 consists of four main services: Corporate Pension Programme, Employee Education Programme, Personal Pension Plan, and Personal Annuity Plan.

Corporate Pension Programme: Companies can fulfil their retirement benefit obligations without the complexities of planning and intricacies of day-to-day administration with our Corporate Pension Programme. BDO helps companies design and optimise their retirement plan, whether it’s defined benefit, defined contribution or hybrid plan, to deliver long-term value with prudent governance management for their business.

Employee Education Programme: To empower employees to take charge of their retirement future, BDO provides complimentary financial literacy seminars to employees. The goal is to equip employees with knowledge, information and insights through learning modules designed to help them manage their finances and grow their wealth through investments. Employee education is a crucial step in improving the long-term sustainable financial wellbeing of Filipinos especially in preparation for their eventual retirement. There are currently four financial education modules that match the employees’ level of investment knowledge. One of the four modules is dedicated to retirement planning. A team of professional trainers is assigned to fulfil this notable task.

Personal Pension Plan: Empower employees to take charge of their finances through wealth-building programmes such as the Easy Investment Plan (EIP) and Personal Equity and Retirement Account (PERA). The EIP helps individuals get into the twin habits of regular saving and investing automatically and regularly in various investment funds. PERA, on the other hand, is a long-term voluntary tax-exempt retirement programme provided by law to encourage Filipinos to invest towards their own retirement. Either employees, employers or both can contribute to an employees’ PERA. Moreover, there are tax advantages which are only available with PERA such as exemption from taxes on investments, estate taxes, and five percent tax credits from the annual PERA contribution. Employees can start their investment journey for as low as PHP 1,000 (approx $18) or $500 for dollar-denominated investment funds.

Personal Annuity Plan: Lastly, upon retirement, assure employees’ peace of mind with an income payout scheme with Easy Pension Pay. The plan lets retirees enjoy the fruits of their hard work with proper management and disbursements of their funds as if the retirees are still receiving regular semi-monthly salaries. With this, the retired employees’ retirement funds are safeguarded against unnecessary expenditures and are made productive by investing to earn investment income. Pension 360 includes employees as an integral part of the programme and not just as beneficiaries of the company’s pension plan, thus enabling a truly sustainable retirement programme.

Reaching the retirement goal
For individual clients who have decided to plan for their retirement ahead of time, BDO offers a fiduciary service that allows clients to dedicate a specific investment portfolio for a defined need. The Money Manager is a personal management trust arrangement that allows clients to set amounts for each life goal, such as retirement, and define specific dispositive conditions unique to each client and portfolio. Having a dedicated portfolio for each life goal, whether for retirement, education or wealth accumulation, helps clients deliberately plan for its achievement in the long term.

By allocating funds for life goals, it sets the path for the achievement of such purpose. In addition, the ability to create dispositive clauses under a personal management trust makes this trust arrangement unique and personalised, thus able to address the very specific needs of the client and/or their beneficiaries. The Money Manager is available to clients with different risk profiles and asset allocations. Clients can invest in either Philippine Peso or US Dollars, giving clients the flexibility to invest in local or global assets.

Now more than ever, planning for one’s own retirement must be a deliberate endeavour and a personal engagement. A carefully crafted long-term plan is key to ensuring a comfortable retirement in the future. With the availability of information at one’s fingertips, there are many options and routes to achieve a comfortable retirement, but one must take action to arm themselves with knowledge and tools to help chart the best course of action.

Corporate retirement plans and the government-sponsored pension are good to have, but these should not be the only source of funds at retirement. BDO’s goal is to help build, design and execute a sustainable retirement fund both at the corporate and personal level. We don’t always know what the future will bring, but to paraphrase the poet William Ernest Henley, we must each be the master of our fate and the captain of our soul.

Investing in food production for a sustainable future

Posted on by itsupport

Russia’s invasion of Ukraine in February 2022 highlighted the weaknesses in Europe’s energy system and made energy security a significant issue. After the outbreak of war, energy prices initially rose sharply, and volatility increased – but food prices also rushed to record levels. The consequences were particularly severe in the poorer parts of the world. The UN’s sustainability goal of achieving zero hunger before 2030 has become more distant.

Agriculture and our way of producing and consuming food is, like the energy system, in need of a comprehensive adjustment, both from a sustainability and health point of view. Sustainable food is an interesting investment theme, since food production accounts for around 25 percent of global greenhouse gas emissions. In recent years, we have witnessed a series of disruptions in the global food system from factors such as Covid-19, war, and extreme weather.

Today, we are fully aware of how vulnerable the sector is from a security perspective. In several aspects, we have created an effective but fragile system, which leads to poorer health, increased environmental destruction, water shortages, and reduced biodiversity. These negative externalities risk getting worse without change. As with energy, restructuring the food system requires large investments in the coming years.

Everything is energy
The availability of food has shaped human history and development. It has determined which societies and countries have dominated, often triggering revolutions and shifts in power. Thanks to the innovations of modern agriculture (fertilisers, pesticides, genetic modification, etc), the global population has increased by nearly six billion people in the last 100 years. We have put Malthus pessimism behind us, as agricultural productivity has improved enormously. The most important explanation is access to cheap energy in the form of fossil fuels, which power the machines of modern agriculture and are used as raw materials in the production of artificial fertilisers and pesticides. About half of all food production today is made possible by nitrogen-based fertilisers. Producing these requires large amounts of natural gas, which is why the increase in gas prices after the outbreak of war in Ukraine also made fertilisers more expensive.

The food chain also generates greenhouse gases in many other ways. Restructuring the food system is therefore an important part of the larger energy transition away from fossil fuels. This is not an easy task in agriculture either – the transition takes time and requires a new, sustainable but at the same time efficient system. A complete return to organic farming, without artificial fertilisers and pesticides, is impossible if production is to feed eight billion people (as recent experience in Sri Lanka has shown). In addition, the population on earth is growing and people’s living standards are improving – which will lead to an increased demand for food by more than 50 percent up to 2050.

The fragile system
Agriculture has succeeded in increasing the yield of several crops, and thus also food production. However, productivity in the world varies greatly. Large parts of Africa have significantly worse agricultural productivity than North America and Europe. Just like global manufacturing chains, agriculture has made use of increased specialisation and efficiency. Harvests are maximised by focusing on a few standard varieties that are grown where the conditions are best.

It creates an efficient but highly fragile system, which has made more and more countries dependent on imported food. The uniformity of agriculture is also due to the diet becoming more similar in different parts of the world. The processed industrial food of the West – cheap to produce but rich in sugar, fat and carbohydrates with lower nutritional value – has become increasingly widespread. Overweight and obesity-related diseases are increasing rapidly. Over the years, humans have grown 6,000 different crops, but today more than half of all calories come from rice, wheat, and corn.

Specialisation and import dependence make the system vulnerable if the export of important crops, or fertilisers, fails. The invasion of Ukraine broke the supply chain from a region that accounts for nearly a quarter of the world’s wheat exports. At the same time, sanctions against Russia, the world’s largest fertiliser exporter, contributed to rising fertiliser prices. The chain effect resulted in rising food prices globally during the first half of 2022. Some 20 countries responded with export restrictions on certain crops, for example wheat in India and palm oil in Indonesia. Today’s deglobalisation trend makes such ‘food nationalism’ an increased risk for import-dependent countries, especially in poorer parts of the world.

Another risk is climate change with increased occurrence of extreme weather that causes drought, fires, and floods. It can destroy individual crops, but above all lead to the erosion of fertile agricultural land, with poorer crop yields and reduced food production in the longer term. In the UN’s worst-case scenario, the crop yield could fall by 30 percent while demand increases by 50 percent. Already today, productivity growth in agriculture is levelling off in many parts of the world. It is also common to use too much fertiliser and pesticides, which can damage the environment in other ways.

Climate refugees are a politically charged issue. Africa will account for most of the population growth expected over the next 50 years. Many African countries already have a difficult food situation today, with inefficient agriculture and food shortages. If countries’ population growth exceeds resource availability and countries do not build up a better and more sustainable domestic agriculture, climate refugees will become a more common phenomenon. Europe is the geographically closest destination – and we already witness a series of negative political consequences from the refugee flows of recent years. Climate factors could force 216 million people in the world to live in poverty by 2050, the World Bank has predicted.

Modern agriculture has extensive environmental costs. Deforestation, overconsumption of fresh water and overuse of fertilisers and chemicals damage water and land. Agriculture is one of the sectors that has the biggest negative impact on biodiversity. At the same time, agriculture’s future harvests are based on functioning ecosystems with biological diversity.

A large part of food production requires pollination by insects. Studies show that 75 percent of all insects have disappeared in the last 30 years, and according to the UN, 40 percent of all insect species are at risk of extinction within a few decades. Three quarters of all crops that depend on pollination are at risk, corresponding to 35 percent of total food production. We are likely in a sixth mass extinction, where one million animal and plant species could disappear, according to the UN.

World food production now derives from fewer than 200 species, of which nine crops account for two-thirds of total food production. If disease knocks out the harvest for any of these, crisis is a fact.

Investment opportunities
Several catalysts, such as the EU taxonomy, the Kunming-Montreal Biodiversity Framework and increased consumer interest, all point towards investing in the transition to a more sustainable food system. There are several verticals with interesting investment opportunities. Let’s look at five of them.

Foodtech: This area includes everything from vegetarian meat and dairy alternatives to health food, products that improve animal and plant health and natural enzymes, probiotics, and additives. In recent years, a large investment bubble arose in the sector, where many companies had difficulty finding a clear path to profitability. We are therefore very selective in our investments in this segment and prefer exposure to agriculture-related companies in areas such as agritech and fertilisers where valuations are lower.

Agritech: New technology takes on a key role in realising agriculture’s great efficiency potential. Already today, growers could reduce their emissions by nearly 30 percent if everyone behaved like the 10 percent most efficient farms. Efficient and environmentally friendly use of fertilisers is key since agriculture today overuses fertilisers by an average of 40 percent. Precision technology can optimise the amount of fertiliser considering soil conditions, weather forecasts and the current needs of the plants. Agritech includes everything from software that analyses weather and soil data to precision tools for planting, spraying and irrigation.

Fertilisers: Producing nitrogen-based fertilisers is an energy-intensive process and both phosphorus and potassium are limited resources and hence, important to preserve. Despite negative environmental consequences, today it is impossible to feed the world’s population without these raw materials. However, it is possible to use them more wisely and find alternative processes with a smaller climate footprint. If the demand for food continues to increase, however, there is a structural demand for fertilisers. We prefer companies with focus on phosphorus and potassium, where the supply of raw materials is limited.

Biodiversity and circular economy: Improving biodiversity is important for securing our future food supply. There is a shortage of investable companies that focus entirely on biodiversity. However, another sustainable opportunity is the transition from linear to circular production to reduce waste and pollution. Often it is about designing products for easier recycling and a longer shelf life. Both areas are prioritised in the EU taxonomy, and interest from investors is likely to increase in the future.

Agricultural land: Increased demand for food in combination with more uncertain harvests because of climate change and degraded soil mean that there may be a shortage of fertile agricultural land in the future. Private investments in a portfolio with such real assets can be an interesting way to increase diversification.

Facing the markets head-on

Posted on by itsupport

As CEO of the well-established, global brand HYCM International, Stavros Lambouris leads a firm with offices in the world’s leading financial centres, providing forex and CFD trading via a group of individual entities in different jurisdictions. Boasting access to over 45 years’ cumulative operational experience, the group is known as one of the most reputable and trusted experts in the industry, with its UK entity being regulated by the FCA since 1998. Lambouris spoke to World Finance about the state of the US economy, the impact of the recent banking crisis and the prospects for the cryptocurrency market in the wake of the collapse of FTX.

What has been the dominant theme in the markets this year and how is HYCM positioned to serve traders as these themes change?
In the first quarter of 2023 we saw a reversal of last year’s equity story, which was big tech down and energy stocks up. This year, tech is the best performing sector to date with almost 90 percent of the gains in US equities coming from the top 10 stocks. Meanwhile, the energy sector is trading roughly where it was back at the beginning of the year.

This is all taking place against a backdrop of uncertainty regarding whether the US is sliding into a recession. We are also much closer to the end of the Fed’s tightening cycle, which is why the question of hard-landing, soft-landing or no-landing has been so prevalent in recent months.

Inflation is still high; the Federal Reserve is indicating that it plans to stay the course, but market expectations have become disconnected from this reality. Markets not only appear to expect a pause but a pivot to looser monetary policy before the year is out. This uncertainty can be seen in the outperformance of technology stocks but also in the price action of assets like gold, oil and bitcoin.

HYCM aims to be a single trusted venue for investors to gain exposure to all the markets they require. The recent launch of our mobile app, HYCM Trader, is a step in this direction as now our products and services are accessible through a modern, easy-to-use mobile interface.

What do you make of the recent banking crisis, and how has it figured in the market trends you describe?
Recent banking turmoil has heightened fears that monetary policy has become too tight. While these fears have eased recently, there is still concern that the Fed will overtighten, causing something else to break, and then have to quickly reverse policy as it has done in the past.

Tech stocks seem to be anticipating lower rates ahead. Oil appears to be pricing in a reduction in economic activity with OPEC’s recent output cut, perhaps in an attempt to keep prices from sliding lower. Bitcoin surged as regional US banks were failing, which is unsurprising considering it was created as a hedge against the existing banking system. Also, appetites for gold at this time are being driven by this uncertainty, having recently attracted capital both as inflation hedge and safe-haven play. HYCM’s investors appear to have anticipated this dynamic, with gold having been one of our most traded symbols in 2022.

Generally, if 2022 was about markets adapting to the reality of higher rates, then 2023’s narrative has yet to properly emerge because there’s still so much uncertainty regarding the path ahead.

However, I will say that technology is a big theme running through the recent banking turmoil.

Fintech developments over the past decade or so have put us in a completely different world. The speed at which capital can move nowadays is just a few taps on a screen. This appears to have come as a surprise to the US banking system when it came under stress recently. Also, recall that bitcoin hardly existed during the 2008 financial crisis, and today it’s a $500bn alternative.

At HYCM, we are very conscious of being a big part of this movement towards the democratisation of financial access, and the frictionless movement of capital. But we’re also very aware of the risks involved, so it is very important to choose a trusted and regulated provider.

What are your thoughts regarding the possibility of a US recession, and how does this affect HYCM’s plans going forward?
A fight against inflation is also a fight against economic activity. Federal Reserve chair Jerome Powell has probably been the most clear about this fact among his central banking peers. The goal may not explicitly be to cause a recession, but it’s certainly one of the possible outcomes of the fight against inflation. And while inflation remains elevated, the data do suggest some signs that the US economy is deteriorating.

We have recently seen the third biggest miss on record for job openings, according to the US Bureau of Labour Statistics. Unemployment claims have surprised to the upside, and both services and manufacturing PMIs are in contraction, having surprised to the downside. This is all occurring as lending standards tighten, which Powell has acknowledged as effectively a form of tightening in its own right. You also have OPEC’s recent actions, which are inflationary, and likely to make the central bank’s job even harder. It’s important to pay attention to whether the Fed remains resolute regarding inflation as its primary concern, or whether its priorities appear to shift in the coming months.

The upcoming earnings season should also provide more clarity. If there is to be a repricing of equities lower, then disappointing earnings, as well as forward guidance from CEOs to prepare investors for slower growth ahead, could be a catalyst for recession.

At HYCM, we plan to expand our product portfolio and add the possibility of trading stocks with zero commission. This will allow investors to trade within the broader stock market trend by gaining access to individual companies from a diversity of sectors. It also comes at the perfect time: with stocks off their highs, there’s more of an opportunity for our investors to do their research and allocate to the right sectors in advance of the next trend change.

What are your thoughts on the prospects of cryptocurrency markets, and does crypto feature in HYCM’s plans?
Crypto was probably the worst performing asset class of 2022, punished by its correlation to risk assets in a higher rate environment. It also suffered a great deal of negative publicity following the collapse of FTX. Recent activity does suggest that sentiment among crypto investors is warming, but it’s uncertain whether this can be sustained in the current market environment.

Recent rallies have been underwhelming in terms of volumes, suggesting that not much new capital is currently entering the space. Despite bitcoin’s recent performance, it’s difficult to imagine a scenario where US equities make new lows, while cryptocurrency prices remain elevated. This is especially the case given how tightly correlated the two asset classes have been. So it appears that the Fed is in the driving seat here too.

The excesses of the previous bull market, which include several prominent failures including the FTX scandal, have also put the asset class under the spotlight of regulators. The current US administration has generally taken a hostile stance towards the entire market, which will act as a ceiling on its potential growth, at least in the short-to-medium term.

HYCM’s strategy regarding crypto has been to offer exposure to a select group of names that we have vetted. The sheer size of the market in terms of individual symbols makes such an approach necessary. As the cryptocurrency market grows and continues to evolve, we will continue adding standout names to our crypto offering that are sufficiently liquid to suit the preferences of our investors.

We also understand that appetites for crypto derivatives are growing, and that CFD providers like HYCM could be uniquely positioned to provide this access in a secure environment.

Finally, how do you view the prospects of the online trading industry as a whole?
We’re in a new world since the pandemic: a more financially literate general public and more demanding demographics. The goal we have always had, of making investing a lifestyle product that’s available to everyone, is closer to being a reality than ever before.

Our aim now is to continue building HYCM as a trusted single point of access for the world’s markets in a safe and regulated way. We are also focusing on innovation, ensuring that however the global macro picture develops, modern investors can have the right technology and products to position themselves appropriately in the market with a reliable provider that is here to support them.

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71 percent of retail investor accounts lose money when trading CFDs with this provider. Cryptocurrencies and zero-commission stocks are not available for trading under HYCM (Europe) Limited and HYCM Capital Markets (UK) Ltd.

Reforming Peru’s pension industry

Posted on by itsupport

Between 2020 and 2022, nearly $24m was withdrawn early from Peru’s private pension system, resulting in a significant reduction of pension funds for millions of affiliates. Early withdrawals can have a detrimental effect on fund performance, and part of our commitment is to provide transparency regarding the amount of pension that affiliates will receive in the future. Currently, more than two million affiliates have no funds remaining for their retirement. Moreover, affiliates who still maintain a fund but have made partial withdrawals run the risk of not having a minimum pension for their retirement.

These issues are among the reasons Credicorp – the leading financial services holding company in Peru, to which Prima AFP belongs – is calling for reform. We believe the current model needs to be readjusted to adapt to the needs and demands of each individual, and we believe it’s our duty to put forward ways to improve the system and ensure its sustainability in the future. Alongside efforts to boost financial inclusion and address the gender gap, it’s one of several actions we’re taking to help support the private pensions system in Peru.

Proposed reform
Our proposal for reform is based on three main pillars, and our aim is to achieve a fairer, more flexible pension system. We want to reformulate how funds are saved and managed, and encourage more voluntary contributions from informal and formal workers. For informal workers, we propose a matched contribution scheme.

Simply put, for every S/1 ($0.27) contributed by the informal worker, the state would also contribute S/1. For formal workers, we propose deductions of up to four UIT in voluntary contributions, applied to their work income (UIT, or Unidad Impositiva Tributaria, is the reference unit set each year by the Peruvian Ministry of Economy, equivalent to S/4,950 ($1,350) in 2023).

We believe the system should be flexible, allowing public and private entities to be permitted to offer the fund management service, under the same regulatory conditions. We’re also calling for a shared risk pension system, in which the fund manager gets paid when returns are generated. These payments would have a fixed component to guarantee the quality of operations and investments, as well as a variable component to provide an incentive for fund profitability.

Financial inclusion: an ongoing obstacle
Action needs to go beyond just addressing the pension system itself, however. Financial inclusion remains a key obstacle in Peru, and we believe the private sector and government need to work together to enhance understanding of, and participation in, the financial system. Unfortunately, a significant number of Peruvians lack awareness about their financial situation and have limited understanding of financial management.

This lack of knowledge contributes to a low level of interest in financial products and services among the population, with the pension system being one of the areas least understood. As a result, fewer Peruvians are able to benefit from access to financial products and services, hindering their ability to achieve their financial goals. The country has made some improvements compared to last year’s figures, but it still lags behind the regional average in terms of access to financial products and services.

In Credicorp’s 2022 Index of Financial Inclusion, the country ranked sixth among the seven Latin American countries surveyed. According to the Financial Inclusion Index in Peru IIF 2022, seven out of 10 Peruvians do not have a credit product, and 43 percent do not have any financial product for savings. The findings also show that three-quarters of Peruvians face barriers when trying to obtain financial products.

The pandemic further highlighted these issues; as a result of the ensuing economic crisis, 73 percent of Peruvians did not save last year, according to the 2021 Credicorp survey. During the crisis, the government provided financial support to hundreds of thousands of people in the form of subsidies for low-income families, but the low level of participation in the banking system made these efforts challenging.

While the financial sector has implemented initiatives to improve access over the years, one of the main challenges lies in the informal nature of the Peruvian labour market; according to data from the National Institute of Statistics and Informatics, the informal employment rate in Peru stands at 76.1 percent of the employed population. This poses a significant obstacle to financial inclusion, while rising inflation and the current economic crisis have also compounded the issues.

Taking action
At Prima AFP, we believe we have a role to play in helping to improve financial inclusion, and in strengthening the financial knowledge of both clients and non-clients. Providing education on the country’s private pension system is a key aspect of our sustainability pillars, and over the years we’ve collaborated with various platforms to achieve this.

One example is ‘El Depa’ – a web series on financial and pension education that we introduced six years ago. Made up of 27 episodes, the series has garnered more than 80 million views on social networks and covers various topics, from fund types to profitability, in a light-hearted way. We also recently launched a new website, ‘Ahorando a Fondo’, designed to inform users about pension basics, address common doubts, dispel myths around the private pension system and provide access to training courses and free workshops.

Promoting gender equality
Financial inclusion differs considerably between urban and rural areas and different socioeconomic levels and age groups – and there’s also a gender gap. Although there has been improvement over time, men still have higher levels of financial inclusion than women. According to the latest Credicorp Financial Inclusion Index, 21 percent of men in Peru have reached a level of financial inclusion, compared to only 14 percent of women.

It’s not only around financial inclusion that this gender gap exists – it’s seen in pension savings too. A recent study by the Pontificia Universidad Católica del Perú revealed a 37 percent gender gap in pensions. This issue is not unique to Peru; research published in 2021 found that women over the age of 65 in OECD member countries received on average 26 percent less retirement income than men, indicating a global trend.

These disparities reflect the broader gender inequality present in the Peruvian labour market, where women earn nearly a third less than men for performing similar work. Addressing these gender gaps and promoting financial inclusion for women is crucial for achieving greater equality and empowering women economically.

Prima AFP is dedicated to promoting gender equality and has taken significant steps to address the gender gap and combat sexual harassment in the workplace. Among the key initiatives is our Equality Now programme, designed to ensure our recruitment processes are as fair as possible and promote diversity within the organisation.

We have also partnered with the ELSA programme, a digital project developed by GenderLab with the support of the Inter-American Development Bank. This is targeted at preventing and addressing sexual harassment in the workplace. We’re also committed to addressing the gender pay gap, actively working to ensure roles and responsibilities are appropriately valued and compensated, irrespective of gender.

Investing responsibly
Our social responsibility efforts extend to wider issues, too – not least climate change. Since 2016, we have been strengthening our commitment to the Sustainable Development Goals (SDGs) and integrating environmental, social and corporate governance (ESG) criteria into our investment processes.

We implemented a climate change policy designed to measure the impact of climate change on our portfolio. These are aligned with the recommendations provided by the Task Force on Climate-Related Financial Disclosures (TCFD) – a working group established by the Financial Stability Board that gives recommendations on climate-related information that companies should disclose to their stakeholders.

We have been strengthening our commitment to the Sustainable Development Goals

We have also implemented a Responsible Investment Policy, which applies to all assets under management. This involves four key tenets: negative screening (not investing in certain activities in order to avoid incurring unnecessary risks in the portfolio); integration, referring to our analysis of ESG factors in our investment decisions; impact investments; and active engagement. By the end of 2021, 62 percent of our portfolio had undergone ESG analysis, which increased to 97 percent by the end of 2022. Our target is to have 100 percent of our portfolio undergo ESG analysis by the end of 2023.

Additionally, we have been actively working on incorporating climate change into our risk analysis through the implementation of a dedicated policy. Separately from this, we also implemented a Relationship Policy, designed to enhance our relationships with companies in which we invest; and a Voting Guidelines Policy, established in 2019 to encourage active engagement from stakeholders.

A global vision
Since 2016, we have also been part of the Responsible Investment Programme (PIR), which seeks to promote responsible investment practices, contributing to the sustainable development of Peru and the wider region. We also became signatories to the Principles for Responsible Investment (PRI) in January 2019 – an international network of investors backed by the United Nations that aims to understand the impact that ESG issues have on investment, and encourage integration of these issues into the investment decisions of its signatories. As signatories, we are obliged to report on our fund management annually; in 2020, we received the highest rating for our integration process in governance and strategy.

In January 2020, we became members of the Carbon Disclosure Project (CDP), a non-profit organisation that seeks to promote the disclosure of information on the impact of climate change, water management and forest management. And in 2021, we joined the Sustainable Development Goals Advisory Committee (SDG Advisory Committee), which provides advice on issues related to investment aligned with the Sustainable Development Goals.

Through these efforts, we hope to not only create resilience in our portfolios and boost our long-term financial performance, but also do our bit for the planet and build on our efforts to support society at large – setting a positive example for others to follow both in Peru and beyond.

The perfect blend for building brands

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This year I celebrate 25 years at Wilfa, with the last five as its chief executive. It has been a bumpy ride at times but with each new challenge the company has picked itself up and returned stronger than ever. Most recently we have been attacking export markets with gusto, starting Wilfa Germany in 2020, and opening up distributors in multiple territories including the UK, the Netherlands and Spain in recent years.

I joined Wilfa after graduating from the Norwegian School of Economics and the University of Trier. From working as a controller in Hong Kong, learning how the factories operated that made the products Wilfa sold, I returned to Norway, taking on a string of roles including product manager, key account manager and marketing manager.

This breadth of experience has given me a complete understanding of the whole company, which I have used to create business where others have been unable to recognise opportunities. Tuning into the needs of consumers, retailers and our factory partners, I have been able to find new categories, develop products at a quicker pace and give confidence to our retailers that we are the experts to be listened to.

Those skills have come in very handy not just in the good times, but also during difficult periods when a couple of our market-leading brands that we’d built up decided to go it alone. We’ve had a bumpy ride, with some years of strong profits and others with heavy losses, but we’ve come back each time, more resilient in the face of future challenges.

As part of that, we decided to focus on building our own brands, launching E-way electric scooters, a full assortment of kitchen knives and pots and pans under the name of EGO, and a host of other new Wilfa products. Our strategy now is not to have too much risk in foreign brands, only taking them on in categories we can’t do ourselves. But these relationships have given us a good understanding of the market, knowledge we can implement in our own practices, combining the positives of larger companies with the flexibility of smaller ones.

I am a leader who is very much involved across the organisation, especially in recent years, as the team has grown to help us achieve our goals. By sharing both our strategic aims and the challenges facing the business with every staff member we ensure that everyone is clear on their contribution and therefore able to pull together most effectively for the good of the company.

Making better coffee
Wilfa has an extreme focus on customer experience. While most of our competitors are just making another coffee maker, we ask ourselves, ‘How can we help consumers make better coffee?’ Less focused on cost than we are on finding the right solution for customers, we often end up with a more upscale product, but this strategy has paid off: in 2022 we won 32 ‘best-in-test’ awards.

Our focus on the environmental sustainability of our products is another way in which we stand out from our competitors

Wilfa still sources and distributes products made by other firms but are doing so less and less. With Chinese factories going direct to market, such a strategy is becoming unsustainable. For those products we do import, we strive to challenge the market leaders within each category, whether that’s Oral-B on electric toothbrushes or Kenwood on kitchen machines, to bring consumers the best possible product. Wilfa is already the market leader in many categories, from waffle makers – nine years in a row – to coffee grinders, blenders and humidifiers.

Our focus on the environmental sustainability of our products is another way in which we stand out from our competitors. We implemented FSC paper on all our instruction manuals, gift boxes and cartons, improved our products so as to be able to offer five-year guarantees and removed 18 tonnes of polystyrene. We are also doing life-cycle analysis on our products in an attempt to become CO2-neutral by 2025.

There are many challenges currently facing the global economy: freight costs are extremely high, raw materials are getting more expensive and the current situation in Ukraine is putting pressure on energy and petrol prices. Even so, I’m optimistic about the future of our business. In 2021, we had a turnover of €55m and our target for 2025 is to reach €100m. This growth will be driven mainly by new markets, new categories and taking market share by launching more products. We will also move many of our products over from mechanical products to app-based products with a consumer-friendly solution. Even after 25 years at Wilfa, I can’t imagine a better place to be.

Financial inclusion in a digital world

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The fintech revolution is promoting financial inclusion and democratising access to global markets by providing users with cutting-edge trading tools. According to the World Bank, digital payments saw significant growth in 2020, particularly in emerging markets and developing economies, where the volume of transactions is growing at an impressive rate. Sub-Saharan Africa emerged as a leader in mobile money transactions, fuelled by non-bank entities like fintechs, brokers and more.

As users transition from basic phones to smartphones, app-based financial companies are replacing older interfaces, offering enhanced functionality, speed and convenience. This rapid expansion of digital finance is making global financial markets more accessible to individuals from diverse backgrounds, fostering financial inclusion and democratising opportunities for wealth creation.

However, this financial inclusion also brings with it certain risks and challenges, both for the financial system as a whole and for individual users. While easier and faster access as well as lower costs all benefit users, it is essential to address potential issues such as security, privacy and financial literacy. In this article, we will explore the advantages and challenges associated with the growth of financial inclusion driven by digital finance and examine ways of harnessing its potential while mitigating the risks involved.

Financial inclusion for a global economy
Traditionally, participating in global financial markets has been the exclusive privilege of institutional investors and high-net-worth individuals. However, advancements in technology have made it possible for the average person to access these markets, increasing financial inclusion and levelling the playing field.

The rise of digital currencies and blockchain technology has opened new doors for financial inclusion

In this new environment, the democratisation of financial services and education is crucial in fostering financial literacy and responsible investment practices. An OECD survey from 2020 reveals significant variations in financial competencies across economies and groups. Low levels of financial literacy and high financial stress highlight the importance of integrating educational elements into fintech services.

By developing comprehensive educational resources such as webinars, articles and video tutorials, fintech companies can help users build a strong foundation of financial knowledge, empowering them to make informed decisions and take control of their financial future. By making these resources accessible to a broader audience, fintech firms are helping to create a more financially inclusive and equitable global economy, allowing individuals from all backgrounds to seize the opportunities presented by global markets.

At Olymp Trade, we’re creating a platform that caters to both experienced traders and newcomers. Our research on users in South-East Asia and Latin America showed that a majority of them want to achieve additional income through trading. Even though most of these people estimate their income as average, trading expenses account for a significant portion of their budget.

A failure in trading can have dire consequences for such households, so they must be aware of the risks associated with being active in the financial markets. That’s why we believe it’s essential to maintain a robust educational resource centre while promoting risk management and mindful trading.

Even though there’s already a wealth of information online about common trading mistakes and position sizing, traders still suffer from reckless decision-making and overconfidence. That’s why trading platforms should engage users in financial education. We are constantly working on new innovations, such as trade analysers and in-app tips, so our users can more easily gain the knowledge required for trading safely. As a result, we ensure that as barriers to entering the financial market break down, people get guidance that helps them explore and use this new world to their advantage.

Harnessing the power of AI
The evolution of trading analysis has come a long way since the days when individuals relied on printed or hand-drawn charts to interpret market trends. As technology has advanced over the years, computer-based indicators have revolutionised the way traders analyse data, by streamlining the process and providing more accurate insights. Now, we have entered the era of artificial intelligence (AI), which is transforming the trading landscape once again. Harnessing the power of AI has the potential to optimise trading strategies, enhance decision-making and improve the overall efficiency of financial markets.

In today’s fast-paced financial landscape, access to real-time data and analysis is crucial for making informed trading decisions. Innovative platforms are already taking advantage of AI and machine learning to provide users with advanced analytical tools and insights that can help them stay ahead of market trends. For instance, AI-driven sentiment analysis evaluates news articles, social media posts and other data sources to gauge market sentiment and predict price movements.

Beyond delivering real-time market insights, AI is also revolutionising the way investors manage their portfolios. By leveraging AI-driven algorithms, fintech companies are offering users access to robo-advisory services and automated trading solutions.

These tools can evaluate large datasets, identify patterns, and develop tailored investment strategies based on an individual’s financial goals and risk tolerance. This level of personalisation and automation not only saves time and effort for users but also helps minimise the impact of emotional biases on trading decisions. As a result, investors can enjoy a more efficient and objective approach to navigating the complex and ever-changing financial markets.

By incorporating AI-powered features, companies like Olymp Trade ensure that users receive timely and relevant market analyses that can enhance the performance of their trading strategies. Additionally, these platforms offer customisable risk management tools, enabling traders to minimise potential losses while maximising their potential gains.

As AI technology advances, the boundaries of autonomy may widen, allowing for more sophisticated trading strategies. Along with these successes, however, come potential issues. For example, AI trading machines are trained on past data and may lack a broader perspective.

In addition, the algorithms may evolve so much that human developers can only partially understand them. Finally, regulatory challenges will undoubtedly arise as lawmakers step into uncharted territory. As a result, it is essential to recognise and respect the limitations of AI, ensuring that human oversight and understanding remain integral parts of the trading process.

Embracing digital currencies
Digital currencies and blockchain technology are benefiting individuals from all socioeconomic backgrounds, including those with limited financial resources, by providing access to essential financial services and opportunities. Faster, more affordable and accessible remittance services enabled by digital currencies are particularly important for low-income individuals relying on remittances from abroad.

Blockchain technology allows for the creation of decentralised finance platforms that remove intermediaries like banks and lower costs and barriers to entry. This democratisation of access enables people with limited resources to participate in saving, lending and borrowing programmes, which were previously restricted to those with traditional banking access. Digital currencies also offer financial privacy and autonomy, empowering individuals to manage their finances without third-party involvement, and providing an alternative store of value and means of exchange for those in countries with unstable financial systems or high inflation rates.

The rise of digital currencies and blockchain technology has opened new doors for financial inclusion, allowing people from all walks of life to participate in the global economy. Fintech companies are increasingly embracing these innovations, offering traders and investors access to a wide range of digital assets and decentralised financial services with lower financial barriers for entry.

We have entered the era of AI, which is transforming the trading landscape

They are staying ahead of the curve by continuously expanding their offerings to include popular digital currencies and incorporating blockchain technology into their infrastructure. As a result, users can diversify their portfolios and tap into the growing potential of this emerging market. With Olymp Trade, for example, it’s possible to make deposits and withdrawals in cryptocurrency as well as trade some of the most popular crypto assets.

Overall, it is essential to acknowledge the challenges that blockchain technology faces, such as scalability, energy consumption, security, complexity and interoperability. Addressing these problems is vital to ensuring that blockchain can fulfil its potential as a game-changing technology. By understanding and working towards resolving these issues, fintech companies can contribute to creating a more sustainable and efficient financial landscape for all users.

The future of financial inclusion
As fintech continues to revolutionise the financial industry, more and more people will have the opportunity to access and participate in global financial markets. Companies like Olymp Trade are setting the stage for a more inclusive and democratised financial ecosystem, paving the way for a brighter and more financially empowered future for individuals across the globe.

By embracing the latest innovations and focusing on user-centric services, fintech companies are transforming the world of finance, breaking down barriers, and giving more people the tools they need to create wealth and achieve financial freedom. It is important to note that there is still a significant way to go, as a considerable portion of the global population — 35.6 percent as of January 2023 — still lacks access to the Internet.

Addressing this digital divide is essential to ensuring that the benefits of fintech innovations can reach all individuals, regardless of their location or socioeconomic status. By working towards bridging this gap, fintech companies can play a crucial role in fostering financial inclusion and democratising opportunities for wealth creation worldwide.

The impact of a sustainable approach to investment

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At KBC Asset Management, sustainability is so important that it is not part of a separate strategy, but is instead integrated into our overall corporate philosophy. We have embedded our beliefs about sustainability into four distinct pillars. Our priorities are to put our clients at the heart of everything we do, to offer our clients a unique bank-insurance experience, to focus on our group’s long-term development and aim in that way to achieve sustainable and profitable growth. We take our responsibility towards society and local economies very seriously.

At the core of our day-to-day motivation lies our motto: ‘Everyone invested all the time.’ We are passionate about our mission to make investing easy, personal, valuable and reliable. We always ensure that our clients’ interests are our main focus and strive to offer them a high-quality service and relevant solutions at all times. Close collaboration between the asset manager and the bank allows us to deliver a better and faster service to our clients.

Our unique strategy, powered by our business culture and the contributions made by our people, is instrumental in earning, keeping and growing trust day by day, and therefore helps us to become the reference in our core markets.

How we make a difference
We want to go beyond the typical corporate culture of sustainability and really make a difference to society. By going the extra mile, we can create added value and respond to actual societal needs. As part of our sustainability strategy, we have pledged to limit our negative impact on society by implementing strict policies and sustainability guidelines, by reducing our own environmental footprint and by focusing on our approach towards socially responsible investments.

We prioritise increasing our positive impact on society and actively look to make a difference to local communities through our everyday activities. We are conscious of the impact of our operations on society, and respond to societal needs and expectations in a balanced, relevant and transparent manner. In doing so, we acknowledge the special approach in each of the local economies of the core markets in which we operate.

Our people represent our ‘human capital’ and are one of the main drivers to creating sustainable value as a bank-insurer. We encourage all our employees to behave in a way that is responsive, respectful and result-driven.

We consider integrity, honesty and responsible behaviour among our employees as one of the most vital tenets of our business, to the extent that the mindset of all KBC staff should go beyond regulation and compliance.

Our sustainable client offering
We offer more than 200 sustainable and responsible investment funds, which gives our clients the opportunity to invest in companies and countries that recognise their social and environmental responsibility. This allows us to jointly contribute to a more sustainable society and to help limit the adverse impact that businesses have on society. Growing awareness of social, governance and environmental issues has led to interest in responsible investing products among private and institutional investors.

Responsible investing is a way of allowing clients to combine their financial goals with their concerns for the environment, society and corporate governance. KBC has been a pioneer in this area since 1992, the year it launched the first responsible investing fund in Belgium. Since then, we have regularly brought new solutions to the market and our methodology has become increasingly stringent.

In recent years, clients have increasingly wanted to make a positive contribution by investing in a socially responsible way. Currently, KBC Asset Management manages €32bn, or nearly 30 percent of assets, in responsible investing funds. In Belgium, around 70 percent of gross sales in funds go to responsible investing funds. In fact, they are the first option offered to clients. In our other core countries, namely the Czech Republic, Slovakia, Hungary and Bulgaria, responsible investing plays an increasingly important role. We are pioneers in this area and aim to build upon our track record of responsible investing.

In the future
KBC Asset Management moves together with the markets and the preferences of our clients to keep its services up to date. We are constantly striving for innovation and exploring various routes that can help us and our clients. We want to be the reference point and to stay one step ahead of the competition.

Our innovative and personalised approach not only allows us to acquire new investors, allowing people from all walks of life to benefit from capital markets, but also ensures all our clients feel welcome and well looked after as they navigate the markets with us.

The past, present and future of trading

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Gone are the days when trading was exclusive to the richest of the rich, the likes of JP Morgan, George Soros and Warren Buffet. The internet has been the key factor in opening up the world of brokerage to a broader community. Before the dawn of the digital age, trades were made via telephone. An individual would wait for the newspaper to arrive to check the stock prices and then make a phone call. By then, the prices would have shifted, and there was no accurate way to tell whether your positions were making a profit.

Today, powerful online trading platforms have transformed this process almost beyond recognition. Now, anyone can open or close a trade anytime, anywhere, as long as they are connected to the internet. Traders can also closely monitor the live prices of instruments and can thus react in a timely manner to sudden price changes. Stock trading as we know it may have begun with the historic Buttonwood Agreement, created by New York City’s leading stockbrokers to set out the rules of trade in 1792, but we’ve come a very long way since then. With open access platforms such as ThinkTrader, trading is now, finally, available to all.

Global reach, local touch
Established in 2010 by brothers Nauman and Faizan Anees, ThinkMarkets is committed to revolutionising the trading world with cutting-edge technology, world-class service and industry-leading trading conditions. Our aim is to become the largest multi-asset trading and investing platform of choice across the globe. “Our focus has been to make trading accessible to anyone around the world,” says Nauman Anees, who co-founded the company with his brother after becoming intrigued by combining his technology background into the financial markets.

“The mission is to provide beginning-to-end trading solutions that offer a superior trading experience to all.” In our dedication to make trading more accessible, we have expanded our trading services to over 150 countries.

With headquarters in the US and Australia, we have set up regional offices and local hubs in Asia, the Middle East, Europe, and Japan to create a local presence and tailor our services to meet the needs of our clients. Traders, for example, can now fund their accounts using convenient payment solutions exclusive to their location and receive a tailored experience.

ThinkMarkets is currently regulated by nine leading global regulatory bodies including the Financial Conduct Authority (FCA) in the UK, Cyprus Securities and Exchange Commission (CySEC) in the Eurozone and the Australian Securities and Investments Commission (ASIC) in Australia.

In the last 12 months, we have also expanded our services geographically into Japan and New Zealand with authorisation from the Japanese Financial Services Agency (FSA) and the Financial Markets Authority (FMA) to offer CFD trading services in Japan and New Zealand, respectively.

Cutting-edge technology
In the past, trading was a pretty straightforward affair, the interaction between broker and client limited to an order to buy or sell certain instruments and an accompanying confirmation of whether the trade made a profit or a loss. In more recent times, however, brokers have turned trading into an interactive and immersive journey for their clients.

With trading platforms such as our proprietary ThinkTrader, an individual can fit the world of trading into the palm of their hand. They can browse market news, monitor live prices, analyse charts, execute trades, subscribe to Trading Signals and even back-test trading strategies in one powerful trading platform using our Traders Gym feature. Equipped with multiple innovative features, ThinkTrader is transforming trading.

Brokers have turned trading into an interactive and immersive journey for their clients

Whether you’re a beginner or experienced in this world, ThinkTrader can enhance your trading experience, letting you inside the market in a way that hasn’t been possible until now. Our proprietary platform enables manual traders all over the world to access over 4,000 financial instruments including FX, indices, commodities, stocks and more.

Individuals who are always on the go can trade using the mobile app. Downloaded over 550,000 times and awarded over 15,000 five-star reviews, it lets you monitor four charts in real time on one screen. Those who prefer to monitor even more charts might prefer the web or desktop versions of the platform. Either way, all platforms share a single login and consistent interface, making ThinkTrader one of the most convenient ways out there to manage your trading.

ThinkTrader has a wide array of technical analysis tools found inside our mobile platform that has our in house built charting library and platform that is designed to help traders build a data-driven trading strategy.

With 20 chart types, 120 technical indicators and 50 drawing tools to utilise, traders can customise their charts depending on their trading strategy including creating alerts. Traders’ Gym is ThinkTrader’s latest upgrade. This market simulator can be used for back-testing trading strategies using historical data, allowing traders to determine the accuracy of their tactics in a past timeframe of their choosing.

Available to use even during periods when markets such as forex, stocks and indices are closed, such as on the weekends, it’s a great way to hone your instincts, and also to experiment in a fun and totally risk-free way. Another way we look to minimise risk at ThinkMarkets is with TrendRisk, our automated scanning tool, exclusive to the ThinkTrader app, that continuously scans the markets to identify potential trades based on reward/risk ratio.

Knowledge, of course, is key when it comes to trading. That’s why, in addition to the learning opportunities available via Traders’ Gym, we provide a steady stream of news, insights and market updates through our website and platforms that help our traders to make well-informed trading decisions.

For traditional traders who prefer to use a more widely distributed platform designed for automated trading, ThinkMarkets offers access to MT4 and MT5. These highly customisable platforms pair well with ThinkMarkets’ excellent trading conditions of razor-thin spreads and lightning-fast execution, and is accessed via the ThinkPortal. Those wishing to try it for size can open a demo account for free, letting you test drive all the features with €25,000 of virtual funds at no risk.

It should come as no surprise that our relentless focus on providing a high-quality trading experience has been recognised at the World Finance Forex Awards. In 2022 ThinkMarkets was named Best Trading Platform, Best FX Mobile Trading App and Best Gold CFD Provider. These accolades are just the latest in a long line of international awards wins and nominations for both our platforms and outstanding customer service.

Looking forward
But while we have come a long way in 13 short years, the journey is really only just beginning. With co-founders and brothers Nauman and Faizan Anees steering the ship, the future is bright for ThinkMarkets. As traders themselves, the founders are aware that the world of trading is constantly changing and to remain competitive having state of the art technology coupled with a highly automated operation is they key to success. We will look to build on our proprietary ThinkTrader platform and enhance it with unique features designed to cater to traders of all types.

ThinkMarkets will soon be launching ThinkCopy, its own copy trading app. With ThinkCopy, new traders who are inexperienced in creating strategies can set auto-copy orders and duplicate the positions of more experienced traders. Available on both Google Play and Apple’s App Store, the platform is expected to resonate with individuals interested in trading but intimidated by the amount of knowledge required to be successful.

The team is also working on replacing ThinkInvest with its new PAMM offering, a programme which will allow investors to choose money managers to trade for them.

One of the biggest barriers to new traders is the inaccessibility of trading education. There are myriad articles and guides available online of course, but these types of educational materials are often not as beginner-friendly as they could be and are filled with technical jargon that even experienced traders can find difficult to understand.

In response to this challenge, ThinkMarkets has gathered a team of experienced traders and educators to share their knowledge with the rest of the world. With the Trading Academy, we aim to empower a new generation of traders to easily navigate the world of trading.

Anyone will be able to browse through our extensive library of trading guides in different formats. Our regional teams will also offer regular free webinars on trading and investing. Face-to-face seminars where attendees can freely interact with our market analysts for trading tips and know-how will be taking place more regularly too.

There is no telling what form trading will take years from now but one thing is for sure: ThinkMarkets will be part of the team pioneering its future.

Mexico’s momentum for ESG investments

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Investments with environmental, social and governance (ESG) criteria in Mexico are growing fast and Afore XXI Banorte has been at the forefront of this movement. Issuers have attracted resources to promote projects that have sustainable impacts on the development of the country, and investors, especially those seeking long-term returns to savers, like pension funds, find it very attractive to promote projects and companies with ESG practices and objectives.

For an investor, ESG projects help in risk management, but importantly, in periods of accelerated development for such a market as we currently have here in Mexico, it can result in higher returns than other non-ESG alternatives. Additionally, companies and projects following ESG practices in general may perform better operationally, generating higher returns. And when large investors, like pension funds, adopt a cleaner and more sustainable investment strategy, former non-ESG issuers may also start adopting such criteria, which would boost their returns for investors.

Thus, portfolios incorporating ESG frequently perform better in the long term. For example, the firm Morningstar has found that over a period of 10 years, 80 percent of funds with sustainable investments outperformed traditional funds. They also found that 77 percent of the ESG funds that existed 10 years ago have survived, compared with 46 percent of traditional ones.

The issuer side
The Mexican government has greatly raised its issues of green bonds since 2020: its 131.6bn pesos ($7.5bn) of 2022 are equivalent to 16 times the amount issued in 2015. Since 2020 the public sector – federal government, state-owned enterprises and development banks – has increased its issuance of green bonds by 419 percent (see Fig 1).

Within this trend one can highlight the second issuance of BONDES G sustainable bonds by the Ministry of Finance and Public Credit (SHCP), the first issue in Latin America of a green bond by FIRA/Banxico, and Banobras’ placement of two sustainable bonds with a gender perspective, the first by a development bank devoted to infrastructure financing. The private sector has experienced a similar growth in recent years; the amount issued in 2022 represents 37 times that of 2017. In general, since the creation of labelled bonds, in 2016, they went from a share of two percent to 44 percent of the total debt issued in the market according to the Integrated 2022 annual report of the Mexican Stock Exchange (see Fig 2).

Regulation on ESG investments
This year the SHCP presented the Sustainable Taxonomy of Mexico, a key financial public policy tool that aims to encourage investment in economic activities that reduce social gaps and protect the environment in the country. The Sustainable Taxonomy of Mexico is a unique initiative worldwide, and considers social objectives in its design, defining gender equality as a priority objective.

The Sustainable Taxonomy of Mexico seeks to create a reliable classification system, legitimate, unified, and based on science that stands for the outline of economic activities that can be considered sustainable. The result will be an increasing investment in projects and economic activities that promote compliance with the country’s environmental and social objectives, reducing the risk of greenwashing. Its implementation is voluntary.

Previously, the pension fund regulator in Mexico, CONSAR, had also carried out in recent years a series of actions to incorporate into the legal framework obligations regarding ESG factors and the ways in which these have an impact on the risks and opportunities of the investment strategies developed by pension funds. Since 2022 it is mandatory for social security pension funds to take into consideration ESG criteria in the process of investing the retirement savings of their clients.

The investor side
Regarding some of the first impacts of the regulation, according to CONSAR reports, in 2022 the AFOREs (Retirement Fund Administrators) invested 110.4bn pesos ($6.3bn) in ESG bonds, while in 2021 they had invested only 1.1bn pesos ($62m). Afore XXI Banorte, the largest pension administrator in Mexico and in Latin America, has been a pioneer in the implementation of ESG criteria, even before the new regulations, and may claim to be the leader of the industry on this aspect of investments. To start with, Afore XXI Banorte’s objective is to promote the implementation of ESG practices in the operating processes of the promoted firms and projects in its portfolio.

Thanks to this, 20 large issuers from diverse sectors have signed engagement letters regarding the incorporation of ESG factors into their businesses in order for XXI Banorte to provide long-term funding to them.

Furthermore, due to the ESG criteria implementation different social impact strategies have been promoted – educational projects, donations, workshops, development programmes, and others – that have benefited millions of people.

And it has made a difference in the Mexican economy. For instance, through investment in sustainable electricity production Afore XXI Banorte helped to generate more than 1,112mw per year, equivalent to 3.4 percent of the installed energy capacity nationwide. The company also supported the construction of 2,398km of highways and paved streets, equivalent to 1.4 percent of the National Road Network. It funded producers of 47,740 tons of harvested foods for human consumption; contributed to the generation of 1.62 million jobs (direct and indirect), that is, nearly three percent of the Mexican economically active population.

In addition, it has exhaustively promoted gender equality and equal opportunities both in Afore XXI Banorte and in the companies financed. Through its investments in Structured Equity Securities (CKDs), it has allowed the granting of credits to 2,123,695 women to start their own businesses, among other examples of the impacts of Afore XXI Banorte’s ESG investment strategy.

Afore XXI Banorte’s objective is to promote the implementation of ESG practices

Among its goals for 2030, Afore XXI Banorte considers that 50 percent of the projects in the real estate sector in which it invests will have to incorporate some kind of sustainable building certification. With regards to its carbon footprint, the Afore will increase its investments in issuers that disclose information of carbon emission practices to 80 percent, including reduction goals and strategies to reduce carbon emissions. In terms of water, the company will raise to 80 percent the selected issuers that disclose practices of water consumption and involvement in the supply chain.

And regarding the inclusion of women, 30 percent of the portfolio on corporate instruments must be on companies that have at least 30 percent of women participating in their boards, by 2030.

As of December 2022, Afore XXI Banorte’s investments in sustainable financial instruments according to ESG criteria were 22.7bn pesos ($1.3bn) in thematic bonds, 8.5bn pesos ($485m) in Sustainable Exchanged Traded Funds (ETFs) and 22.8bn pesos ($1.3bn) in alternative instruments.

All of this has helped Afore XXI Banorte position itself as the leading Afore in the market for providing competitive, reliable, and timely services, as well as for improving the performance of its retirement fund portfolios, under a responsible investment strategy. We reaffirm our position in developing sustainability by being active investors in instruments that generate positive impacts on society and the environment.

The gateway to an open financial market

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Bay areas have become important growth points to regional economies around the world, and have played a crucial part in technology innovation, talent aggregation and resource allocation. In recent years, China has attached great importance to the Guangdong-Hong Kong-Macao Greater Bay Area development strategy, which is part of the Belt and Road Initiative (BRI) and a national-level economic strategy following the Beijing-Tianjin-Hebei coordinated development strategy and the Yangtze River Economic Belt strategy. The Greater Bay Area aims to be a hub of talents, commodity and capital, to promote regional prosperity, and contribute to the transformation and upgrade of the Chinese economy. It injects new impetus into economic growth, and shows China’s determination to expand its opening-up.

Trans-regional cooperation
The Greater Bay Area has a vast economic hinterland consisting of Hong Kong, Macao and nine cities of the Guangdong Province, including Guangzhou, Shenzhen and Zhuhai. It has an open economic structure and advanced international exchange networks. In the year of 2022, its permanent residents numbered more than 80 million people, and its economic output reached nearly $2trn. The Greater Bay Area aims to establish a world-class city cluster and technology innovation centre, and set an unparalleled example of China’s high-quality development.

The financial industry is highlighted as a core sector of the Greater Bay Area, and enjoys enormous opportunities in trans-regional cooperation. Through providing services across the region, financial institutions can better meet the demand of traditional manufacturing plants in Guangdong with resources from open capital markets in Hong Kong and Macao, and facilitate the industrial application of scientific research findings at a wider range and higher efficiency by joining different parties together. The trans-regional financial cooperation will serve to establish a more competitive modern industrial system in the Greater Bay Area. It enriches the implementation of China’s ‘One Country, Two Systems’ initiative, and will bring about the opening-up of China at a higher level.

As a region consists of three separate customs territories following ‘two systems,’ the Greater Bay Area also encounters many challenges in financial cooperation. Although the three neighbouring parts within the region, Guangdong, Hong Kong and Macao, share a similar culture and have worked together in various fields, they still need to resolve the divergence on financial supervision and legislation, the restriction of cross-region capital flow, and their gaps in talents, funds and preferential policies. To promote financial cooperation across the region, all parties need to join hands together to create a highly open, unified and competitive market, and improve on related economic mechanisms and institutions.

Integrating industry
To improve financial cooperation of the region, institutions need to focus on how to better serve and benefit from the trans-regional flows of capital, information and commodity, and achieve a higher level of integration. Looking into the future, the financial cooperation of the Greater Bay Area requires greater action, as I shall now explore.

All parties need to join hands together to create a highly open, unified and competitive market

We need to strengthen the top-level design of economic institutions, and reconcile both the coordination and autonomy of market entities. Development of both emerging industries and traditional sectors is needed, and the participation of both large enterprises and SMEs, as well as integration of the competitive industries of each city to create more opportunities for financial business. For example, combining Hong Kong’s booming financial and trading business with Guangzhou’s time-honoured commerce and cultural industry, together with leading technology enterprises in Shenzhen, high-end manufacturing plants in Foshan, Dongguan and Zhongshan, and the tourism industry in Zhuhai and Macao.

We need to improve economic mechanisms to achieve coordinated governance of the market by Guangdong, Hong Kong and Macao official institutions, take full advantage of Hengqin, Qianhai and Nansha strategic platforms to promote the deregulation of cross-region capital flow including foreign exchange, and facilitate the unrestricted movement of different productive factors within the region. Establishing a coordinated supervision mechanism is important, as well as attracting different investors and improving financial infrastructure to help Hong Kong and Macao investors to participate in projects in Mainland China, and promote a more balanced development of cities along the Pearl River.

Finally, we need to foster an industrial cluster led by the high-end manufacturing sector and innovative technology enterprises, and encourage the financial industry to better support the development of real economy.

A financial gateway
Through regional co-operation, Macao will be able to create fresh opportunities for its economy, and continue to play a crucial part in both the regional and national development process. As an important platform of the group’s international business, ICBC (Macau) has seized the opportunity to play a leading role in the financial cooperation and innovation of the Greater Bay Area.

Looking into the future, Macao, a gateway between China and other BRI countries, is expected to be a commerce platform to deepen China’s cooperation with other BRI participants and Portuguese-speaking countries. ICBC (Macau) promotes its collaboration with other institutions of the group, and continues to support international cooperation through its professional services.

The financial industry in Macao is deepening its participation in the Greater Bay Area market, and especially in the Guangdong-Macao in-depth Cooperation Zone, which is designed as a pioneering area of trans-regional financial cooperation. Through establishing innovative mechanisms in capital flow and foreign bonds, and sharing similar tax policies with Macao, the Cooperation Zone aims to create a more open financial market in line with international regulations. In this way, financial institutions in Hengqin and Macao are presented with opportunities to develop further cooperation, and make attempts at cross-border capital movement, investment and financing, and a higher level of financial opening-up. ICBC (Macau) attaches importance to its development in the Greater Bay Area, and strives to develop cooperation with financial institutions in the Hengqin region.

A leading bank in Macao
As the largest locally registered financial institution with a full bank license, ICBC (Macau) plays a leading role in trans-regional financial cooperation, and optimises its cross-border financial services in the Greater Bay Area and key regions of Mainland China. It makes efforts to improve its cross-border linkage mechanism with domestic institutions of the ICBC Group to jointly provide efficient financial services, including trade financing, project financing and syndicated loans, and leverage its advantage as a platform spanning Macao and Mainland China.

In addition, serving as the flagship of ICBC Group’s overseas business, ICBC (Macau) continues to work with domestic institutions of the group to provide joint services, expand its base of key customers, and play its part in supporting the implementation of China’s Go Global strategy and a high-quality development of the Belt and Road Initiative.

In terms of business development within the Greater Bay Area, ICBC (Macau) has fully implemented the group’s regional strategy to provide local enterprises with comprehensive financial services including deposit, loans, remittance, equity investment and bond underwriting, and firmly support their participation in global business. Moreover, ICBC (Macau) also strives to provide innovative and high-quality financial services for residents of the region, and make its contribution to trans-regional integration and development of the Greater Bay Area.