Author: itsupport

World Finance Corporate Governance Awards 2021

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Every so often, the corporate world is faced with apocalyptic societal events in which burying your head in the sand, as a strategy, becomes suicidal. In recent times, the COVID-19 pandemic and the time bomb of racism that finally exploded have shaken the mantle of corporate governance like never before. While companies tend to sit on the fence in moments of public upheaval, in the current crises remaining neutral could have been perceived as a sign of excessive pride and failure in governance.

On COVID-19, companies have been forced to respond boldly to a crisis that started as a health problem but quickly metamorphosed into a financial and economic nightmare threatening even their own existence. Across the globe, companies appreciated the need to forego the pursuit of profits to put the safety of customers and employees first. They even went further in committing resources to support government measures to contain the pandemic. In all aspects, companies had to bring out their human face.

On racism, the brutal murder of George Floyd in the US reawakened ghosts that corporates across the world can no longer ignore – the need for diversity. The ripple effects have been unprecedented. Not only are companies appreciating the need for diversity particularly in mid-level and upper echelons of management but programmes are being put in place to empower the less fortunate. In fact, being hesitant to take a political stand for fear of alienating customers has become secondary.

The PwC annual corporate directors survey 2020 amplifies this reality. Following the Black Lives Matter protests, corporates are changing policies and renewing commitments to diversity. About 84 percent of directors think companies should do more to promote diversity in the workplace. Retail giant Walmart CEO Doug McMillon spoke for many when he said, “we must work together to actively shape our culture to be more inclusive.”

An active role in diversity awareness
The need to be at the forefront in responding to challenges facing society has become the new normal. By all accounts, it is a powerful scale for measuring the belief, and commitment, to the principles of sound corporate governance. The days when companies used corporate social responsibility to camouflage their empathy on societal issues are long gone. In its place, the need to create shared value through environmental, social and governance (ESG) standards is playing a role in narrowing the gap between corporates and the societies in which they operate. In effect, it is helping to eliminate society’s near universal hatred of big companies that are often perceived to be self-serving and self-dealing.

The conscious decision by board leaderships to put the interests of the wider society at the heart of their existence comes with substantial rewards

The conscious decision by board leaderships to put the interests of the wider society at the heart of their existence comes with substantial rewards. In fact, society’s goodwill has proven to have a direct correlation with a company’s success or lack thereof. While it is one of the many factors at play in a company’s success, not currying favour in society can accelerate a downfall. The 18th-century American entrepreneur Marshall Field understood the power of goodwill when he opined that it “is the one and only asset that competition cannot undersell or destroy.”

The COVID-19 disruption and social unrest have also come with vital lessons for C-suite executives. Technology now defines the way of life. In the aftermath of Floyd’s murder, social media provided the tools for venting and calling the world to action. In the aspects of COVID-19, technology’s role was just as profound. Where boards were used to congregating in a boardroom to craft strategies, they are now being forced to meet remotely. Where manual processes seemed to work just fine before, now it’s a race towards digitisation.

A digital world
In fact, digital transformation has quickly become an issue of organisational survival because even post-COVID-19, the world will never be the same again. Bank customers, for instance, will maintain the trend of transacting online or through mobile phones. E-commerce, e-health, e-education and streaming entertainment among other trends will continue gaining prominence. For many companies, employees will continue working from home.

In its future of work after COVID-19 report, McKinsey reckons the pandemic has pushed companies and consumers to rapidly adopt new behaviours that are likely to stick. In essence, remote work and virtual meetings are likely to continue with some companies intending to reduce office space by 30 percent and companies will witness faster adoption of automation and artificial intelligence in their operations and processes. The ripple effects will lead to significant disruption of the labour markets.

For the board of directors, job security is always a live wire. No doubt that technology is forcing realignments of the workplace and in many cases instigating the need for downsizing. But balancing the need to maintain employees and adopt technology to enhance efficiency is never clear cut and is often a hornet’s nest for companies. Yet this is the reality facing boards in the modern era and going into the future. How they navigate could have far-reaching ramifications.

While it’s a no-brainer that technology and digitisation is a game-changer, it is also vital in enhancing transparency and accountability, which are critical components of sound corporate governance. In the wake of minimal physical interactions, the need for watertight checks and balances is paramount internally. Externally, companies must be open to shareholders, customers and other stakeholders. The bar is even higher for publicly traded companies.

Technology giant Apple is a classic case of companies grappling with the morality of transparency. Last year the company agreed to pay $113m to settle consumer fraud lawsuits over allegations that it secretly slowed down old iPhones in the ‘batterygate’ controversy. The company had first denied that it purposely slowed down the batteries only to later concede to deception.

Transparent, accountable and fair
It is important to acknowledge that although companies are taking deliberate measures to entrench corporate governance, policymakers and regulators are effectively playing the watchdog role. Left unchecked, companies can easily cross into ethically questionable territory. In China, fintech firms are feeling the heat of regulatory crackdown ostensibly due to poor corporate governance, regulatory arbitrage, unfair competition and damaging consumer interests.

The Chinese case, to an extent, must be taken in isolation. However, the role of regulators in improving corporate governance cannot be denied. This explains why regulators across the globe are in a constant motion of enacting and reviewing laws to curb poor corporate governance. In recent times, one area that regulators have come out strongly is in enforcing antitrust laws.

Faced with a changing world, and rigid regulators, companies are increasingly acknowledging that what is good for the goose is good for the gander. In essence, by being at the forefront of advancing the betterment of society and helping tackle adversities that threaten humanity, companies are bound to accrue handsome returns. This is well epitomised by the companies awarded in the World Finance Corporate Governance Awards 2021.

World Finance Corporate Governance Awards 2021

Angola
Sonangol

Brazil
CPFL

China
Nanjing Iron & Steel

Colombia
Grupo Nutresa

Denmark
Vestas Wind Systems

France
BNP Paribas

Germany
SAP

Ghana
Stanbic Bank Ghana

Greece
Mytilineos

India
WIPRO

Indonesia
Inalum

Italy
Nexi

Japan
Sony

Jordan
Jordan Islamic Bank

Kuwait
Zain Group

Mexico
Banorte

Myanmar
YOMA Group

Netherlands
Royal Dutch Shell

Nigeria
FBN Holdings

Portugal
Galp Energia

Qatar
Ooredoo Group

Saudi Arabia
The Red Sea Development Company

South Korea
Hana Financial Group

Spain
Iberdrola

Taiwan
U-Ming Marine

Tunisia
Banque Internationale Arabe de Tunisie

Turkey
Enerjisa Enerji

UAE
The Federal Authority for Identity & Citizenship

UK
Candrium

US
Avangrid

Vietnam
Petrolimex

World Finance Pension Fund Awards 2021

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Global institutional pension fund assets in the 22 largest major markets (the P22) continued to climb in 2020 despite the impact of the pandemic, rising 11 percent to $52.5trn at year-end, according to the latest figures in the Thinking Ahead Institute’s global pension assets study. This growth in pension funds was underpinned by ongoing multi-decade themes, such as the shift from equities to alternatives and the rise of defined contribution (DC) pension assets, which now represent the dominant global pensions model.

The seven largest markets for pension assets (the P7) – Australia, Canada, Japan, the Netherlands, Switzerland, the UK and the US – account for 92 percent of the P22, unchanged from the previous year. The US is the largest pension market, representing 62 percent of the pension assets worldwide, followed by Japan and the UK, with 6.9 percent and 6.8 percent respectively. At the end of 2020, the study found that there was a significant rise in the ratio of pension assets to average GDP, up 11.2 percent to 80 percent, marking the largest year-on-year rise since the study began in 1998. The shift to alternative assets continues, with two decades of change in pension fund asset allocation globally.

In 2020, over a quarter of P7 pension fund assets (26 percent) were allocated to private markets and other alternatives, compared with seven percent of assets in 2000. This large shift is due to the expense of equities, down to 43 percent from 60 percent in the period, while bond allocations declined marginally to 29 percent from 31 percent. In P7, defined contribution (DC) assets are now estimated to represent almost 53 percent of total pension assets compared with 35 percent in 2000. Over the past 10 years, DC assets have grown at 8.2 percent yearly, while defined benefit (DB) assets have grown at a slower pace of 4.3 percent.

DC and DB pension assets see their highest proportion in Australia (86 percent), while in the UK the proportion stands at 81 percent, with a dominance of DB pension assets. Marisa Hall, co-head of the Thinking Ahead Institute, said that one of the main challenges for pension funds is the effective stewardship of their assets. “It is clear that the unstoppable ‘ESG train’ is picking up pace and in some cases is being turbo-charged by climate change and the accelerating path to net zero. It is this focus on sustainability that will truly shape the pensions industry in the coming decades.”

“A significant reallocation of capital is expected as the investment world undergoes a paradigm shift in extending its traditional two-dimensional focus on risk and return to one of risk, return and impact,” she added. Better-funded and better-hedged defined benefit (DB) pension schemes, and their sponsoring employers, may have had the opportunity in the last 12 months to buy out benefits, or otherwise take pensions cost and risk off the table. This may have been possible on more beneficial terms than usual owing to the abnormal economic circumstances.

Less well-funded and less well-hedged DB schemes are likely to have seen a hit to their funding position. Where the sponsoring employer’s business has also been adversely affected by lockdown restrictions, employer pension contributions may have been unaffordable for a period and DRCs may have been suspended. DB scheme trustees have had to balance the need for support for the scheme against the need for a sustainable sponsoring employer, where the scheme is not self-sufficient.

John Towner, head of new business at Legal & General Retirement Institutional, said that over the past two years, companies have transferred record amounts of their pension obligations to insurance companies, enabling them to secure the promises they have made to their employees while freeing up internal resources to focus on their core businesses. “With the markets moving as they did in response to the pandemic, we saw increasing numbers of pension plans looking to take advantage of favourable pricing opportunities. This involved engaging directly and collaboratively with insurers such as Legal & General. Working together, we were able to deliver great pricing to pension plans not only in the UK but also in the US,” Towner said.

New challenges
Across DB pension schemes as a whole, there seems to have been increasing use of contingent assets, such as group company guarantees and escrow accounts. Cybersecurity has involved a heightened risk for DB and DC pension schemes in the last 12 months, given an increase in attempted pension scams over the lockdown period. Also, climate change, and the need to take account of the risks and opportunities afforded by climate change, is becoming increasingly important for both DB and DC pension schemes, particularly for the largest schemes. Trustees are giving closer scrutiny to their investment portfolios for the impact on carbon emissions.

However, while an increasing number of companies are aligning their business activities with the UK’s target of reaching net-zero emissions by 2050, pension investments are lagging and significant figures in climate activism have urged that pension funds must set a target of net-zero emissions for their investments if the UK is to meet its climate goals.

As the UK prepares to host the UN climate talks, COP26, in Glasgow this November, several prominent climate campaigners have called for pensions companies to sign up to green investment principles.

Pandemic reaction
The pension protection fund (PPF), a statutory fund in the UK, revealed that on March 31, 2020 its reserves decreased to £5.1bn, reflecting the impact of the markets’ reaction to the pandemic on the PPF’s return-seeking assets. Investments return 5.2 percent – the same as in 2018/2019 – despite market turbulence caused by the COVID-19 pandemic, and assets grew from £32.1bn to £36.1bn. However, Lisa McCrory, the chief financial officer of PPF, said that the PPF expects the macroeconomic situation to be tough for the foreseeable future, after having seen a good recovery in the current financial year. According to the latest data released by the Office for National Statistics, employee contributions to private-sector defined contribution (DC) schemes in the UK grew by 12 percent between Q2 and Q3 2020.

The study found that the market value of pension funds increased by less than one percent from June 30 and September 30, 2020. In the same period, gross assets excluding derivatives of private-sector DC schemes rose by nine percent, whereas DC schemes invested almost entirely via pooled investment vehicles (PIV). Gross assets excluding derivatives of private-sector defined benefit and hybrid (DBH) schemes were £2trn at the end of the third quarter, whose 57 percent were direct investments, 37 percent were via PIV and the rest were in the form of insurance policies.

Increasing metal allocation
Not many pension funds invested in base metals in the past and now they are looking to shift to a five to seven percent allocation towards the industry. According to a recent study conducted by NTree International and its sister brand Metal Digital, over the next 12 months, 64 percent of UK pension funds expect to go overweight in their allocation to gold, while 42 percent expect to overweight silver.

Around 18 percent of pension firms said they should hold around three to five percent in precious metals, and 66 percent between five to seven percent. For industrial metals, 44 percent said their exposure should be three to five percent, 24 percent said between five and seven percent and 24 percent said seven to nine percent. Founder of Ntree Timothy Harvey said he spoke to 150 EU pension companies with an AUM of $213bn and only two percent of respondents said they thought gold would fall this year, whereas 85 percent of respondents thought nickel would rise and 80 percent thought copper would see gains.

A list of the companies awarded in the World Finance Pension Fund awards 2021 can be seen below.

 

World Finance Pension Fund Awards 2021

Armenia
Ampega Asset Management

Austria
AKP

Belgium
Pensioenfonds KBC

Bolivia
BISA Seguros y Reaseguros

Brazil
Bradesco Seguros

Canada
OMERS

Caribbean
NCB Insurance

Chile
Grupo Sura

Colombia
Grupo Sura

Croatia
PBZ Croatia Osiguranje

Czech Republic
CSOB

Denmark
PensionDenmark

Estonia
Swedbank

Finland
Elo

France
AG2R La Mondiale

Germany
Allianz

Ghana
Pensions Alliance Trust

Greece
Alpha Trust

Iceland
Almenni Pension Fund

Ireland
CWPS

Italy
Solidarietà Veneto Fondo Pensione

Macedonia
Sava Penzisko

Malaysia
Gibraltar BSN

Mexico
Afore XXI-Banorte

Mozambique
Moçambique Previdente

Netherlands
Pensionfonds PGB

Nigeria
Fidelity Pension Managers

Norway
KLP

Peru
Prima AFP

Poland
Pocztylion-Arka

Portugal
Ocidental Pensoes

Serbia
Dunav Voluntary Pension Fund

South Korea
National Pension Service

Spain
DuPont Pension Plan

Sweden
SEB Pension och Forsakring

Switzerland
CERN Pension Fund

Thailand
Kasikorn Asset Management

Turkey
Yapi Kredi Asset Management

US
Teacher Retirement System of Texas

World Finance Islamic Finance Awards 2021

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Nothing on the planet has avoided the impact of the COVID-19 pandemic, and the Islamic finance sector is no exception. As a working paper from the Islamic Financial Services Board (IFSB) reported earlier this year: “Although it is essentially a health crisis, the pandemic has had a devastating effect on the real sector – sectors that produce goods and services – to which the Islamic banking industry is highly exposed. There has been significant disruption to production and sales activities, as well as supply chains, due to movement and travel restrictions, job losses, reduced demand for goods and services, reduced commodity prices etc.”

Pre-Covid, the Islamic finance industry had returned to strong growth, with assets rising by 14 percent in 2019 to $2.88trn, after a slowdown in 2018, when the industry expanded by a more moderate two percent. That level of growth looks unlikely to be repeated in 2020, or 2021. Ayman Amin Sejiny, chief executive of the Islamic Corporation for the Development of the Private Sector (ICD), part of the Islamic Development Bank, said: “The COVID-19 pandemic will have a more severe and deeper impact on Islamic finance, as the current crisis is affecting aggregate demand, small and medium enterprises (SMEs), and low-income individuals particularly hard. Compared to conventional banking, Islamic finance has a larger exposure to SMEs, microfinance and retail lending, especially in Asia. With SMEs facing multiple issues – lower revenues, cash flow issues, high levels of leverage, short-term financing obligations, etc – this will increase the quantum of non-performing financings and vulnerability of Islamic banks’ portfolios.”

However, the comprehensive reforms introduced after the last major catastrophe to shake the world, the global financial crisis of 2008, meant that Islamic banks entered the financial emergency induced by the pandemic relatively better capitalised, more profitable and more liquid than they were 14 years ago. The prediction is that they are likely to exit the crisis stronger than ever, with Islamic finance continuing to expand in Islamic banking, sukuk, takaful and Islamic funds, helped by supportive government policies, strong product demand and deeper market penetration.

Ashraf Madani, a vice-president and senior analyst at Moody’s Investors Service in Dubai, said: “We expect Islamic finance to continue rising in 2021 and beyond, maintaining its now long-established growth trend. The industry generally remains under-represented in countries with large Muslim populations, providing ample room to expand. We forecast global sukuk issuance will stabilise in 2021 to around $190bn–$200bn, following record issuance of nearly $205bn in 2020.”

Moody’s said it expected the takaful insurance market to expand steadily as premiums rise moderately in the next two to three years in newly penetrated markets. Digitisation efforts by banks and regulatory improvements will also help to lift growth. It predicted that the growth in global Islamic funds under management will continue at an annual rate of four percent to five percent in 2021–22, boosted by the growth of Shariah capital markets and resilient demand for Shariah-compliant investments.

Picking up during the year
A report by the ICD and Refinitiv, the market data supplier, said that while there has been a slowdown in corporate sukuk issuance, as the pandemic has made them appear high-risk, issuance is expected to pick up again before the end of the year, given low borrowing costs and mounting economic pressure on corporate entities including Islamic financial institutions. The Maldives, for one, is considering issuing a sovereign sukuk to cushion the economic blow from massively reduced tourism.

All the same, the IFSB revealed that despite high demand for their services, the pandemic has meant that Islamic banks have needed help in coping with the pressures caused by the pandemic. “Regulatory forebearance” by banking authorities in different countries, for example allowing the temporary breach of capital, solvency or liquidity requirements, will ease the pressures on banks caused by the crisis.

The board said that despite the gradual easing of lockdown restrictions and the resumption of economic activities in many countries, most small and medium-sized enterprises’ operational resilience “is being put to the test and many have ceased operation completely.

Households that have been subjected to compulsory leave, pay cuts, job losses or constrained employment opportunities could also default. These implications will only crystallise when the moratorium period is over and governments ultimately withdraw their stimulus packages.” At that point, the IFSB said, Islamic banks “will face increasing non-performing finance volumes, rising costs of risk, declining asset quality and a likely consequential rise in risk-weighted assets, which could also have implications for capital adequacy.”

A changing landscape
The after-effects of the pandemic could also affect the Islamic banking sector in perhaps unexpected ways, the board warned. For example, increasing digitalisation and the wider adoption of the “new normal” of working from home will have substantial implications for the viability of the real estate and construction sectors, which account for about 12 percent of Shariah-compliant financing.

Working from home and digitisation will also directly affect Islamic banks themselves. A survey by the IFSB found that more than 90 percent of Islamic banks said the proportion of their spending on digital transformation was likely to increase because of the pandemic.

This, the board said, “will put immediate pressure on the cost-to-income ratios of the Islamic banking sector.” At the same time, it said, “the digital transformation process requires highly specialised human capital and domain experts. Therefore, Islamic banks will need to retrain and reskill existing talent – staff reduction at this time may trigger reputational risk – even as they make efforts to attract new ones that fit the imminent digital transformation of the banking workforce.”

The ICD-Refinitiv report revealed that several Islamic financial institutions have moved to offer their products via digital platforms so as to better serve their locked-down customers, speeding the advance of technology within Islamic finance. It also said that Islamic challenger or digital-only banks are emerging in non-core markets such as the UK, Malaysia, Kenya and Australia. A new insurance technology development in Malaysia uses blockchain to channel waqf (charitable endowment) funds towards making takaful more affordable to lower-income consumers.

Another perhaps unexpected development has seen Islamic finance education increasingly offered online or through distance learning as the COVID-19 pandemic makes it harder for students to attend classes. Events such as conferences and seminars are also increasingly being hosted online. This makes it easier for students or industry stakeholders from other countries to take online courses or attend Islamic finance events, which will help the industry to grow.

Ultimately, as all good businesspeople know, every threat is also an opportunity. According to Ayman Amin Sejiny, the pandemic is “an opportunity for the re-emergence of certain strong Islamic instruments, such as zakat [alms] and waqf, which could once again play a role in reducing the impact on the most vulnerable segments of the population or on poor countries.

This would not only be in line with the ultimate goals of Shariah but also create a new growth channel for the industry. “The pandemic may serve as an impetus for further innovation in the Islamic capital markets, with instruments specifically ring-fenced to mitigate the health and economic impact of the coronavirus and aid recovery.”

A list of the companies awarded in the World Finance Islamic Finance awards 2021 can be seen below.

 

World Finance Islamic Finance Awards 2021

Best Islamic Bank by Country

Algeria
Al Salam Bank

Bahrain
Al Baraka Islamic Bank

Bangladesh
Islami Bank Bangladesh

Egypt
Faisal Bank

Indonesia
Maybank Syariah Indonesia

Iran
Ansar Bank

Jordan
Jordan Islamic Bank

Kazakhstan
Al Hilal Bank

Kenya
National Bank of Kenya – National Amanah

Kuwait
Kuwait International Bank (KIB)

Lebanon
Al Baraka Bank Lebanon

Malaysia
CIMB Islamic

Morocco
Bank Assafa

Nigeria
Taj Bank

Oman
Bank Nizwa

Pakistan
Meezan Bank

Palestine
Arab Islamic Bank

Qatar
Qatar Islamic Bank

Saudi Arabia
Al Rajhi Bank

Sri Lanka
MCB Bank

Tunisia
AlBaraka Tunisia

Turkey
AlBaraka Turk

UAE
Abu Dhabi Islamic Bank

UK
Gatehouse Bank

 

Individual Awards

Lifetime Achievement in Islamic Banking and Dedication to Community
Sheikh Mohammed Al-Jarrah Al-Sabah, Chairman of KIB

Lifetime Achievement in Financial Technology Innovation
Robert Hazboun, ICSFS Group CEO & MD

Business Leadership and Outstanding Contribution to Islamic Finance
Musa Shihadeh, Chairman of the Board of Directors, Jordan Islamic Bank

Islamic Banker of the Year
Ahmad Shahriman Mohd Shariff, CEO of CIMB Islamic

Kuwaiti Visionary CEO – Development & Growth Driver
Raed Jawad Bukhamseen Vice Chairman & CEO of KIB

 

Corporate Awards

Best Islamic Bank for Treasury Management
CIMB Islamic

Best Stock Exchange for Islamic Listings
Boursa Kuwait

Best Islamic Private Bank
Abu Dhabi Islamic Bank

Best Islamic Bank for Customer Experience
Emirates Islamic

Best Islamic Banking & Finance Software Provider
ICS Financial Systems (ICSFS)

Best Core Banking Systems Implementer, Middle East
Masaref Consulting

 

Special Recognitions

Best Employee Development and Empowerment in Kuwait
Kuwait International Bank (KIB)

Best Customer-focused Islamic Banking Products & Services in Kuwait
Kuwait International Bank (KIB)

Best Credit Card in the UAE
Skywards Black Credit Card of Emirates Islamic

Best Participating Bank for Customer Service Quality in Morocco
Bank Assafa

Best Participating Bank for Customer Service Quality in Turkey
Ziraat Katılım Bankası

Most Innovative Participating Bank in Morocco
Bank Al Yousr

Most Reliable Participating Takaful Insurance Company in Turkey
Bereket Katılım Sigorta

CSR Excellence and Dedication to Community in Turkey
Bereket Katılım Sigorta

Best Takaful Insurance Company in Jordan
Islamic Insurance Company

Best Takaful Insurance Company in Kuwait
KFH Takaful Insurance Company

Best Takaful Insurance Company in Qatar
AlKhaleej Takaful Insurance

Best Takaful Insurance Company in Saudi Arabia
Tawuniya

World Finance Forex Awards 2021

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The world may have been forced to sit at home since March last year, with foreign travel all but halted, but perhaps paradoxically, foreign exchange markets have been booming. The FX and precious metals streaming price provider FXSpotStream said in May that volume figures in foreign exchange markets for the previous month over its network of 15 banks, which include such global giants as Bank of America, Barclays, BNP Paribas, Citi and Commerzbank, hit $48.7bn, up more than 43 percent compared to April 2020.

At least part of the explanation seems to be that because people have been sitting at home, they have been drawn to online dealing out of ‘lockdown boredom.’ Hargreaves Lansdown, the UK’s largest investment platform, revealed a 40 percent jump in net new business for the last half of 2020, adding 84,000 new users, as people stuck at home turned to retail trading platforms. The company’s chief executive, Chris Hill, said a rush of younger investors had pushed the average age of the company’s platform users down from 54 in 2012 to 47, with the average age of people taking out accounts for the first half of the financial year just 37.

The rise of mobile trading
In February, Trading 212, founded in Bulgaria in 2005, which today claims to be the UK’s number one trading and investing app by number of downloads, announced that it had become the most downloaded app overall in the UK, and it would be temporarily pausing new account openings because of the huge demand. Online forex trading platforms have opened up the market to retail investors, with nothing more required to start trading than a mobile phone and an internet connection – it is reckoned that more than a third of all retail FX traders use smartphones or tablets to conduct their business. The size of the market and the ease of making foreign exchange trades, with brokers happy to provide would-be traders with low costs of entry, mean that the number of global players in the FX market is huge.

From an era when forex trading was exclusively in the hands of Savile Row-suited investment bankers and brokers, we are now, in the third decade of the 21st century, looking at a world where technology has democratised the foreign exchange market, and traders in countries such as China and India are able to enter the market on an equal footing with operators on Wall Street or in the City of London.

Investment in infrastructure
The roll-out of 5G mobile network technology is also going to boost the prospects of small traders, with an increase to the speed of transactions, and a better and more quickly updated picture of the global market available on the screens of smartphones.

The pandemic resulted in a huge rise in internet traffic, with hundreds of millions at home, either working or watching movies streamed to their computers, phones and tablets, and the system buckled, with, it is said, average daily traffic volume equal to the weekly volume of the previous year.

Telecommunications companies learnt the lesson and are increasing investments in infrastructure, with developments such as a new optical fibre network based on graphene technology. This will mean an easier life for internet traders, with less risk of missing the right moment to close a position because your connection has suddenly gone down.

But the risks can still be high – and one study found that just 0.4 percent of retail forex traders achieved more than four back-to-back profitable quarters. This means that for every 1,000 traders, 996 will make losses at some point during any given year. The best brokers are those that explain the risks to would-be traders and provide them with the most sophisticated tools, including risk prediction software, automated trading programs, top-notch analytics and the like. This thorough education in the best strategies to adopt helps ensure their clients do not get out of their depth, not least by making sure their investments are properly protected.

They also have the server and data centre technology in place to ensure clients never lose out because of technological problems, for example, if one data centre is overloaded, a client’s trading platform automatically switches to a less busy one. Unfortunately, there are a number of firms around happy to exploit would-be traders, who have been told that involvement in the FX market is the way to make your fortune. With forex markets open 24 hours a day, there is always a deal to be made somewhere, and the sheer size of the market – $6.6trn in 2019, according to the Bank for International Settlements’ last triennial survey – means the temptation for those who enjoy a gamble is enormous.

The results, for those who do not do their homework when it comes to ensuring that they are dealing with someone trustworthy, and that the proper protections and safeguards are in place, can be disastrous. Joanna Bailey of Giambrone Law, which has offices across Europe, from Oporto to Munich, including Glasgow and London, said her firm has more than 3,000 case files related to alleged forex scams. Individual losses ranged from £10,000 to £4m with almost all investors believing their money was protected by the UK regulatory setup, only to discover, after having been hit with big losses, that their investment was made through an offshore company with no UK legal protection in place.

These sorts of rogue operators add to the problems faced by retail traders, who already have to overcome a multitude of problems trying to buck the market and make a profit, when it is estimated that 70–80 percent of retail traders lose money overall while trading forex and other leveraged contract-for-differences instruments. There is a very good chance, therefore, that a trader could lose their entire capital if they do not conduct proper risk management, and even end up owing more than they started with.

Small traders are also likely to come under increasing pressure as big banks, trying to cope with the competition for the fastest speeds and tightest prices in a world of electronic and algorithmic trading, look to outsource their foreign exchange businesses. Observers say this could increase big lenders’ dominance of global currency trading. There is already an increasing concentration in FX market share, with the five top banks taking a 41 percent slice in the first half of 2020, up from 37 percent in 2016.

London calling
However, one aspect of the global forex market that looks unlikely to change is the dominance of London, despite Brexit. Professor David McMillan of the University of Stirling said: “The UK has 43 percent of the global forex market, and this has increased by six percentage points in three years. In forex, London has several important advantages. The location and time zone are a midpoint between the US and Asia. It has scale in having such a significant number of international banks in one city, plus the network of supporting services.” With EU expertise scattered across cities such as Amsterdam, Frankfurt and Dublin, London also has the infrastructure required for state-of-the-art high-frequency trading, not least the transatlantic cabling landing stations and data centres. As a result, Professor McMillan said, London “will probably continue to dominate this market.”

A list of the companies awarded in the World Finance Forex awards 2021 can be seen below.

 

World Finance Forex Awards 2021

Best FX Broker, Europe
XM

Best FX Broker, Asia
FirewoodFX

Best FX Broker, Middle East
HYCM

Best FX Broker, Australasia
XM

Best FX Research & Education Provider
BDSwiss

Best Mobile Trading Platform
Olymp Trade

Best Partnership Program
Just2Trade Online

Best Trading Experience
Exinity

Best Crypto Broker
Stormgain

Best ECN Broker
OctaFX

Banking Awards 2021

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It seems like every 10 years there is a singular, transformative event that dramatically shifts how the entire world works and lives. In 2020 we learnt exactly what that moment is for the coming decade. The COVID-19 pandemic was both completely predictable and totally unexpected; there had been many years of warnings that such an event was possible, but the timing and scale came as a shock. As the virus crept around the world, shutting down economies in its wake, many could only watch and wait until the unstoppable tide reached them.

Banking Guide 2021

Click here to view the World Finance Banking Guide 2021

Today, however, things are starting to look different. Vaccine rollouts are well under way and there is light at the end of the tunnel. While there are certainly months, if not years, of management and mitigation to go, a predictable outcome is emerging that necessitates future planning, particularly in the financial sector. However, the world’s banks have a lot of challenges to contend with. Recognising the extreme financial toll that was put on people and businesses, governments across the globe deployed a multitude of financial stimulus policies to keep economies ticking over.

In many ways, the situation is somewhat similar to what was seen a decade ago during the Global Financial Crisis. While the GFC was self-inflicted by the financial sector, with long-term fixes being largely focused on regulatory changes, the industry-wide scale of the threat is comparable. Although, this financial stimulus cannot go on forever, which poses significant challenges that only the best banks will be able to successfully navigate.

Close a window, open a door
While there are plenty of reasons to be optimistic about the future, it is not without difficulties. A major one is potential credit losses combined with a muted economic recovery. According to McKinsey’s 2020 Global Banking Annual Review, depending on the recovery rate, between $1.5trn and $4.7trn in banking revenue could be lost between 2020 and 2024. This suggests that global banking’s return on investments will not return to pre-crisis levels for at least five years. This poses significant challenges in the medium term.

Another factor is how long the stimulus being provided by governments can continue. Writing for AMP Capital’s 2021 global banks outlook, Andrea Jaehne explained that stimulus packages and regulatory flexibility have played an instrumental role in keeping banks afloat, but at a cost: “However, we believe the unnecessary extension of looser regulation or even a final removal of the improved standards since the GFC could fuel risks that may eventuate over the next years and could lead to negative rating actions, although we expect banks’ management teams to be mindful of the rating implications,” Jaehne wrote. “We believe that current strong capital levels of the largest European and North American banks could weaken once we see actual credit losses start to materialise.”

Calvin Zeng, Deloitte China financial services industry Audit & Assurance partner issued a similar forecast. “According to our forecasts, global banks are expected to provision for $318bn in net loan losses between 2020 and 2022. Unemployment is expected to climb much higher than during the global financial crisis of 2008–2010 as the pandemic continues,” Zend said at the release of Deloitte’s 2021 banking and capital markets outlook: Strengthening resilience, accelerating transformation report. “Meanwhile, yields are anticipated to remain below historical levels. The pandemic is set to pose an unprecedented challenge to banks’ asset quality and profitability. Banks in North America and Europe won’t recover to 2019 levels anytime soon, with APAC banks only getting near 2019’s pre-COVID return on equity of 9.2 percent by 2022.” While banks should be able to rebuild their lost capital, the situation will be challenging in the years ahead .

Exposing the cracks
With in-person business rendered impossible for many throughout the pandemic, people turned to digital systems to get jobs done. While digital transformation has been a work-in-progress at banks for many years now, the pandemic provided an imperative to speed it up. It quickly became apparent which businesses had been successful in their transformations, and which had not. According to Deloitte’s 2021 survey of senior banking and capital markets executives, 79 percent of respondents agreed that the pandemic uncovered shortcomings in their digital capabilities. Additionally, 95 percent of respondents said their institutions are already implementing or planning to accelerate a digital transformation of their services to maintain operational resilience.

You Zhong Bin, Deloitte Consulting Data Science Center of Excellence leader, said the pandemic has been something of a litmus test. “Institutions that made strategic investments in technology will come out stronger, but laggards might still be able to leap ahead if they take swift action to accelerate tech modernisation. In many institutions, digital inertia has faded: there is now more appetite for technology-driven transformation, especially in core systems.”

Still, the value of front-end digital systems remains high, particularly as regulators continue to look at the expansion of financial services provided by non-financial institutions. “If banks can grasp this opportunity and provide seamless digital experiences, in addition to their existing advantages in capital and credibility, they will be able to take the lead in competition,” You Zhong Bin said. Ultimately, it will be up to each individual bank to decide where their digital evolution needs to be prioritised.

Preparedness for the future is a concern for all banks, but the winners in this year’s World Finance Banking Awards are particularly notable in their regions. All of the winners have demonstrated years of best practice, and are in an ideal situation to meet the coming challenges head on. Congratulations to the winners.

World Finance Banking Awards 2021

Best Banking Groups

BruneiBaiduri Bank
ChileBanco Internacional
Dominican RepublicBanco Popular Dominicano
EgyptBanque Misr
FranceCrédit Mutuel
GermanyCommerzbank
GhanaZenith Bank Ghana
Hong KongHSBC
IsraelIsrael Discount Bank
JordanJordan Islamic Bank
KosovoBKT
MacauICBC (Macau)
NigeriaGuaranty Trust Bank
PakistanMeezan Bank
Saudi ArabiaRiyad Bank
TurkeyAkbank
UKBarclays

 

Best Investment Banks

BrazilBTG Pactual
ChileBTG Pactual
Colombia BTG Pactual
Dominican RepublicBanreservas
Hong KongJefferies
KazakhstanTengri Partners
NigeriaCoronation Merchant Bank

 

Best Private Banks

AustriaErste Private Banking
BelgiumKBC Private Banking
BrazilBTG Pactual
CanadaBMO Private Wealth
Czech RepublicCSOB Private Banking
DenmarkJyske Bank
FranceBNP Paribas Banque Privée
GermanyBerenberg
GreeceEurobank
HungaryErste Bank
IsraelCredit Suisse
ItalyBNL BNP Paribas
LiechtensteinKaiser Partner
MonacoCMB Monaco
NetherlandsING
PolandBank Pekao
SpainCaixaBank
SwedenCarnegie Private Banking
SwitzerlandPictet
TurkeyTEB Private Banking
UKHSBC
USBank of America Private Bank

 

Best Commercial Banks

AustriaRaiffeisen Bank International
BelarusBelagroprombank
BelgiumKBC
CanadaBMO Bank of Montreal
ColombiaDavivienda
Czech RepublicCeska Sporitelna
DenmarkNykredit
Dominican RepublicBanreservas
FranceBNP Paribas
GermanyLandesbank Baden-Wurttemberg
HungaryOTP Bank
MacauBank of China
NetherlandsING
NigeriaZenith Bank
NorwayHandelsbanken
PolandBank Pekao
Sri LankaSampath Bank
SwedenHandelsbanken
Turkey (Most Sustainable Bank)Industrial Development Bank of Turkey
United StatesBank of the West
VietnamSai Gon J.S. Commercial Bank

 

Best Retail Banks

AustriaBAWAG Group
AzerbaijanAccessBank
BelarusBelarusbank
BelgiumKBC
BulgariaPostbank
DenmarkNykredit
Dominican RepublicBanreservas
FranceBNP Paribas
GermanyDKB
GreeceEurobank
HungaryOTP Bank
ItalyIntesa Sanpaolo
MacauBank of China
MexicoBanorte
NetherlandsING
NigeriaGuaranty Trust Bank
NorwayHandelsbanken
PakistanMeezan Bank
PolandBank Pekao
PortugalSantander Portugal
SpainBanco Bilbao Vizcaya Argentaria
Sri LankaSampath Bank
TurkeyGaranti BBVA
UzbekistanAsakabank

 

Most Innovative Banks

AfricaGuaranty Trust Bank
Asia Hong Leong Bank
Europe QNB Finansbank
Latin America Banco Popular Dominicano
Middle EastMashreq
Greece Most Innovative Savings BankEurobank
Macau Best Cash Management ServicesBank of China
Nigeria (Most Sustainable Bank)Access Bank
Thailand (Most Sustainable Bank)Krungthai Bank

 

Banker of the Year

AfricaSegun Agbaje, Guaranty Trust Bank
Latin AmericaRoberto Sallouti, BTG Pactual

Sustainability Awards 2021

Posted on by itsupport

If the pandemic has taught us anything, it is that all kinds of organisations can collaborate to achieve near-miracles if the situation demands it. As the Bank of England’s Sarah Breeden, an authority on climate scenario analysis, pointed out in a speech in mid-May 2021, in a remarkable endeavour, scientists, academics and universities joined forces with pharmaceutical companies and governments to develop COVID-19 vaccines “at unprecedented speed.”

Back in March 2020, this task was seen as nigh on impossible, but it happened because the partners brought to it “urgency, innovation and collective action.” Now though, the same resourcefulness and urgency needs to be invested in the race to net-zero emissions by 2050 in what she describes as “a multi-decade marathon in which we need everyone to finish.”

And the financial sector finds itself right in the middle of this marathon, not as an observer but as a participant with almost immeasurable responsibilities. As Breeden explains, the world is relying on banks and insurers to manage the transition of high-emitting businesses to net-zero by providing not just finance but also risk-management solutions while also supporting new green companies and technologies that take the world in the right direction.

There’s only 30 years to go, but what might be called the Biden factor is accelerating the momentum towards the kind of sustainable financing that the state of the planet requires. Within the first 100 days in office, his administration approved a nearly $2trn spend on climate-virtuous actions in the next four years and recommitted the US to the Paris goals in a complete reversal of President Trump’s repudiation of them.

Washington is backing up this gigantic budget with some serious human firepower. The new president’s climate executive is Brian Deese, the director of the National Economic Council, who was one of the architects of the original Paris Agreement. And his ‘climate czar’ is John Kerry, the special presidential envoy for climate change who has made it his job to ginger up laggard nations.

Right on cue, the market for sustainable investment has held well through the pandemic and looks set to grow rapidly. ESG-focused assets significantly outperformed the market in the wake of the COVID-19 crisis, according to Bloomberg. Of the more than 2,800 ESG-themed funds that it tracks, the average year-to-date decline by March 13, 2020 – approximately the mid-point of the big pandemic-triggered sell-off – was 12.2 percent, less than half the decline of the S&P 500.

But that was in the early stages of the pandemic. Later data interpreted by FE Analytics, a research organisation, confirms that trend. The average ESG fund delivered a 10.1 percent total return during the latter half of 2020 while non-ESG assets averaged a total return of just 4.09 percent.

A sense of urgency
The message is clear. As the Biden administration, the EU, UK, Scandinavian and other enlightened governments embed net-zero goals into all their actions, ESG investment will gather momentum. “Companies will undoubtedly be subjected to an increasing set of non-financial reporting requirements – such as disclosing their ESG impact – which will in all likelihood adversely affect the ability of poorer performers to raise capital,” argues a thoughtful white paper, released in early 2021, by global asset manager Janus Henderson Investors.

Triggered by investor demand, the volume of ESG-type assets is growing. According to PwC, in the third quarter of 2020, 105 new ESG funds were launched, bringing the total to 333, a record. There’s no sign of the momentum slowing. By 2025, ESG funds are predicted to have a higher value of assets under management than their conventional counterparts. If that happens, it would represent a 28.8 percent compound annual growth from 2019.

Yet as private enterprise struggles free of the pandemic, there is a grave danger it could be deflected from planet-saving behaviours. That’s because there are so many irons in the fire of sustainability that the biggest threat may not get the total attention it requires. Namely climate change. Currently, the definition of sustainability is so broad that it comprises the integrity of supply chains, employee welfare, social responsibility, levels of remuneration, gender balance and enlightened governance as well as the all-important environmental considerations.

With the best of intentions, a variety of global organisations are contributing to this confusion. For instance, the World Health Organisation insists that businesses have a responsibility to eradicate depression and anxiety among their employees, which, it estimates, costs about $1trn in global productivity every year. But private enterprise cannot be held responsible for everything that is wrong with the world. After all, its primary responsibility is to turn a profit, which is nothing more nor less than the price of survival, as Peter Drucker, the founder of management theory, always pointed out.

If lenders get it right, they can make a huge contribution to net-zero while boosting employment, productivity and profits

Banks and insurers cannot afford to be distracted though. As Breeden explains, the financial sector needs to look a lot further ahead than they have been accustomed to doing. In practice, central banks will insist that it takes a much more proactive and thoughtful view of lending practices so that climate-damaging projects don’t attract funds.

The scale of the financial sector’s new-found role is enormous. By 2050, emissions from the biggest activities on earth – surface transport, heating of buildings, manufacturing, food production and electricity grids – must be almost completely eliminated. Simultaneously, the earth’s breathing power must be massively increased, for instance by planting more trees. This means that banks and insurers will be required to pour credit into projects that involve renewables, substitute fuels such as hydrogen and carbon capture among numerous others while steadily phasing out support for harmful activities.

If lenders get it right, they can make a huge contribution to net-zero while boosting employment, productivity and profits. However, the challenges are daunting. As Breeden notes, there will be uncertainty about which are the best green investments. “Markets will not allocate capital perfectly and, without certainty about policy and technological outcomes, there may be bumps in the road as they absorb news about our path,” she warns.

Committing to net-zero
The clear implication is that lenders can’t be just lenders, merely allocating capital in the expectation of a return. Fundamental to the task will be an understanding of science and technology so they can reach an informed assessment of the likely contribution of a particular project to the ultimate goal of net-zero. Also, it is inevitable that some projects, particularly those based on evolving technologies, will be difficult to evaluate.

Help is at hand though. In the UK and elsewhere, the financial sector is working closely with government organisations to understand the science and technology that will underpin the race to net-zero. As Bill Gates has said, some of the solutions will emerge from technologies we have not yet heard of.

After all, as recently as a decade ago few gave much credence to the emergence in sufficient scale of electrically powered vehicles, the production of biofuels, hydrogen-driven trucks and trains, or wind-powered ships. Yet all of these ‘green swan’ events are happening as the transport revolution gathers pace.

Enlightened shareholders are also contributing to this mission. As Hortense Bioy, director of sustainability research at Morningstar, points out, investors are pouring into assets that rate well on ESG measurements. According to Morningstar, nearly 60 percent of sustainable funds delivered higher returns than their conventional counterparts over the last decade. It’s sobering to reflect that sustainable investment, originally labelled socially responsible investment, was considered wacky even as late as the millennium.

Collective push
Prodded by shareholders, some of the world’s biggest companies have made a pledge to convert to climate sustainability. The RE100 initiative, a group of global companies pledged to be powered entirely by renewable electricity by 2050, is growing rapidly. Membership has rocketed from a little over 200 in 2019 to more than 300 in April 2021.

Countries are signing up too. No fewer than 110 countries have committed to net-zero. Some 60 central banks are on the case, working with climate scientists and global organisations such as the network for greening the financial system (NGFS) to make scenario planning work in the real world. The more engaged governments are wielding formidable weapons such as fiscal policy (taxes and subsidies) while supporting public and private research. Although not all governments are moving at the same speed, the leadership of the US, following the departure of climate-change denier Donald Trump, is expected to rally the laggards. As Breeden notes, some nations will need help. And here the financial sector, which is by default an international activity, will be called upon to keep governments honest.

Responsible central banks will expect lenders to develop their own climate scenario as part of “business-as-usual risk management,” in Breeden’s words, and embed climate risk management within day-to-day decision making. Thus there is the strong likelihood that the financial sector will provide some useful and practical insights into the global net-zero project. In short, agents of change. And the race has already started. “Time is running out,” says Breeden. “Perfection tomorrow cannot be the enemy of progress today.” A list of the companies awarded in the World Finance Sustainability awards 2021 can be seen below:

World Finance Sustainability Awards 2021

Airline
Wizz Air

Aviation Communication Technology
SITA

Beauty
UpCircle Beauty

Biomass
Enviva

Brewing
Molson Coors Beverage Company

Building Products Supplier
AZEK

Coffee Processing
Nespresso

Dairy
Aurivo

Electronics
TE Connectivity

Engineering
WSP Global

Financial Services
Infrastructure Guarantee Credit Company

Food Processing
JBS

Footwear
CCC

Glass
BA Glass

Life Sciences
Getinge

Lighting
OSRAM

Logistics
Convoy

Mining
Hindustan Zinc

Mobility
SA Taxi

Pharmaceutical
Drogaria Santo Remédio

Pulp & Paper
Suzano

Real Estate
EQ Office

Semiconductor
ON Semiconductor

Solar
Goldbeck Solar

Sports Apparel
Bjorn Borg

Transportation
Canadian Pacific Railway

Tropical Fruit Supplier
Mission Produce

Utilities
EDP Energias de Portugal

Waste Food Technology
Munch Europe

Waste Management
Ideas For Us (Mauritius)

Water Treatment Technology
European WaterCare

Wine Products
Corticeira Amorim

Fubon Life is leading the race in insurance services

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In spite of the COVID-19 pandemic spreading globally, the effects of which have drastically changed people’s lifestyles, Fubon Life Insurance actually grew against the headwind of 2020. Not only did its total assets exceed the NT$5trn (£128bn) mark, but the annual after-tax net profit also reached NT$61.04bn (£1.5bn), marking a substantial increase of 130 percent over the same period in 2019. Its overall premium income also exceeded NT$540bn (£13.9bn), making it a leading brand in the Taiwan insurance market. With the support from policyholders, and the trust and affirmation of investors, Fubon Life adheres to the strategy of flexible product portfolio and diversified distribution channels. It promotes insurance protection, continuous evolution, pursues excellence and practises the vision of enriching people’s lives with positive energy.

Benson Chen, President of Fubon Life, said that after experiencing the challenges surrounding an ageing society, the transformation of insurance products and the COVID-19 pandemic, insurance has become a substantial foundation for Taiwanese people’s health and medical protection and retirement life. This year marks the 60th anniversary of Fubon Financial Holdings and, as a subsidiary, Fubon Life aims to continue leveraging the value of insurance protection, provide services through the integration of resources with its ‘Five Ring Strategy,’ and fully implement the three pillar principles of ‘abiding by the law,’ ‘treating customers fairly’ and ‘implementing ESG.’

These principles are shaped within the culture of the company for continued growth of the company. Fubon Life demonstrates the far-reaching influence of the people’s brand, and at the same time, through a stable layout strategy, deepens the operation of overseas markets, and strides forward to the goal of becoming a first-class financial institution in Asia.

 

Promoting business development
Despite the severe impact on the business environment, Fubon Life maintained a stable level of tied agent manpower in 2020. There are nearly 500 agencies in Taiwan, serving more than 4.81 million policyholders nationwide, and this year Fubon Life expects to recruit 6,000 new tied agents. To encourage young people and those who are interested in joining the life insurance business, Fubon Life has the advantage of cross-selling resources, and has established a customer development process with financial holding characteristics, and built a digital event management platform, ‘FBFLi System,’ to enable tied agents to maintain a stable and interactive relationship with customers and keep track of the volume of activity over time.

In addition, Fubon Life also continues to promote the insurance policy review service, scientifically analyses the protection gap through the policy review system to help the policyholders improve the protection plan, and effectively increase production capacity and retention rate while improving the service capacity of the tied agents.

With the rise of the digital environment, Fubon Life has fully integrated online and offline insurance application service to strengthen the digital business momentum and break the boundary between virtual and physical channels. After implementing a long period of effective promotional strategy, Fubon Life has successfully gained the number one market share in 2020. This year, the company will focus on the promotion of protection-oriented insurance products and introduce simple and easy-to-understand products that can be applied for online, such as short-term life insurance, to meet the consumption characteristics of online users and help customers quickly construct basic protection.

 

Preparing for retirement
Facing the super-aged society in 2025, Fubon Life has launched the ‘Four Accounts of Retirement’ insurance protection project that covers medical care, long-term care, pension, and liability protection. It will also cooperate with the Financial Supervisory Commission (FSC) to launch the retirement preparation platform in July this year and continue to raise public awareness for retirement preparation. In addition to medical and health insurance, long-term care insurance and quasi-long-term care insurance, Fubon Life also actively develops retirement-related insurance products to meet the needs of local citizens.

On the other hand, public awareness of health protection has risen significantly due to the pandemic. The market for Fubon Life’s spillover policy is dominated by young people under the age of 35 in 2020, and there are more female policyholders than male policyholders. This shows that the younger generation is gradually accepting the concept of buying insurance for the promotion of good health.

Fubon Life also launched the market’s first diabetes spillover insurance policy, which is the industry’s best-selling diabetes insurance policy. It provides options for people with diabetes who were not easily covered by medical insurance in the past. This year there is also a focus on specific health issues to design and launch insurance products that meet the needs of the public. The policy design encourages policyholders to develop health management habits to achieve the substantial effect of disease prevention.

 

A people-oriented service
Fubon Financial Holdings’ core corporate values are ‘integrity, sincerity, professionalism and innovation.’ With ‘integrity’ as the top priority, Fubon Life believes that it is necessary to implement the principle of fair hospitality and internalise the concept into its corporate culture. Only when corporate culture takes shape can all employees share common beliefs and behaviours. These principles should be implemented from top to bottom to directly serve the company’s internal operations and external interaction with customers.

Caring for disadvantaged groups and striving to promote inclusive finance, Fubon Life gives full play to its functions and values, fully responding to government policies, and providing basic protection for the economically disadvantaged population through the design and promotion of micro-insurance products. The number of people benefitting from these products in 2020 has reached nearly 25,000. For senior citizens and people with limited mobility, Fubon Life has set up a toll-free service hotline at its 24/7 customer service centre, which is dedicated to serving people over 65 years of age. The process is never rushed and time is taken to explain the services in full and all policy-related services are also provided in dialects according to language preference.

 

Improving service accessibility
Fubon Life continues to cooperate with the Life Insurance Association to promote the ‘Insurance Blockchain Alliance Technology Application Sharing Platform.’ It also uses the policyholders’ usage scenarios as the basis for the application of insurance technology. Fubon Life chooses technology with a lower usage threshold to provide easy accessibility to policyholders of all ages. For example, policyholders can use LINE Pay, a social platform with a high penetration rate, to pay the premium or access related security services through mobile phone number MID authentication. They can also walk into convenience stores (such as FamilyMart and HiLife) to complete the verification and certification process of automatic premium payment deduction from the bank account.

Policyholders who live overseas or in remote areas can complete the claim application through the live broadcast feature of their mobile phones. The policyholders can receive the insurance benefit as soon as the same day of application. The use of Insurtech has also played a key role during the COVID-19 pandemic. Fubon Life has launched the ‘Health Checkup Alternative Programme’ with the video survival survey service. During the pandemic prevention period, policyholders do not need to go to a medical institution for a health check and can apply to conduct an assessment through video conferencing to reduce the need to visit a medical institution and in turn reduce the risk of infection.

 

ESG leads the way
An important policy of Fubon Life’s sustainable operation is ESG. In the promotion of green finance, through the four low-carbon strategies of green procurement, friendly workplaces, paperless services, and environmental protection, Fubon Life will work with policyholders to fully implement green actions from within the company. In addition, in terms of green investment, the company will make every effort to support and invest in the 5+2 industrial transformation plan and public construction projects. In 2020, Fubon Life invested more than NT$500bn (£12.8bn) in total to demonstrate corporate influence and focus on the sustainable development of Taiwan’s society.

The 5+2 industrial transformation plan includes industries such as smart machinery, Asian Silicon Valley (IOT), green energy, biomedical, national defence, new agriculture and the circular economy.

In terms of social care, Fubon Life continues to care for the elderly with dementia, and received responses from five counties and cities to join and support the service of giving free bracelets after confirming the diagnosis of dementia. With the cooperation of more than 100 hospitals in Taiwan, the chances of finding lost patients with dementia were significantly increased. This year, the ‘Smart Search Project’ will be promoted to make good use of technology to present humanised and localised care services.

In addition, Fubon Life also strongly supports Taiwan’s four major marathons and inter-departmental college basketball tournaments. The UBA tournament that Fubon Life has sponsored for five consecutive years has become the most popular college sports event in Taiwan. By supporting sports events, the firm intends to promote active lifestyles and strengthen public health awareness.

Fubon Life Insurance’s services have been recognised by professional institutions at home and abroad. It has won the title of ‘Taiwan’s Best Insurance Company’ by World Finance nine times and is awarded the number one insurance brand among the top 100 insurance brands worldwide by Brand Finance. Fubon Life has also won the ‘Insurance Quality Award’ in the categories of highest reputation, best insurance agent, best claims service, and the most recommended, for four consecutive years. Fubon Life has also been selected as the most aspiring employer for finance and insurance major graduates for 11 consecutive years, which demonstrates that Fubon Life’s efforts in sustainable operations and professional insurance services have captured the imagination of the public who the company proudly continue to serve.

Trading forex as a side-hustle

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Forex trading is suitable for anyone, in any job, who wants to get a side-hustle income: with forex markets open 24 hours a day and five days a week, this gives considerable flexibility to trade in term of time and place.

There are over $5trn-worth of transactions every day in forex market, with traders able to trade various currencies pairs to get profit. These numbers are enough to keep forex trading around for a long time. The automated forex trading process has been increasing rapidly, and the ‘side-hustle’ trader is also benefited from this. They can use automated robot trading to overcome the handicap of limited time to execute and manage trades.

The forex market’s high liquidity makes trading potentially highly lucrative for anyone who wants to earn extra money outside their main job. The opportunity to make money is also greatly helped by the leverage forex brokers can offer: with leverage, people can trade amounts that they wouldn’t normally be able to afford. For example, to trade one lot EUR/USD without leverage needs around $100,000: with leverage of 1:1000, a trader can trade one lot EURUSD with only $100, or 1/1000th of the original margin requirement.

Modern technology enables trader to spend less time in the market and makes it easy for traders to make trading a side income. The use of expert advisors is becoming increasingly common for traders to manage positions and even execute trades. In addition, FirewoodFX also provides a ForexCopy feature, where clients can get additional income by following the accounts of more experienced traders. But just one hour a day is enough for analysing, executing and monitoring one’s portfolio.

Of course, basic financial literacy is needed before someone decides to start trading. Financial literacy is the ability to understand and effectively use financial skills including personal financial management, budgeting, and investing. But with a very low minimum requirement to start trading forex ($10 minimum deposit in FirewoodFX), a trader can sharpen their trading skills with limited risk. It is also possible to gain experience by trading in a demo account provided by FirewoodFX, with zero risk.

Nowadays, it’s not hard to get a good education in Forex trading, the resources can be found offline and online, free or paid. But avoid the mentor or firm that promises unrealistic returns: it’s 100 percent fraud, as the forex market necessarily involves risks.

The next step, after acquiring the basic knowledge about forex trading, is to practise and practise at it until you get a trading edge. Do not be afraid to make mistakes, as mistakes mean experience. To minimise the risk while practising, traders can start small. To support beginners, FirewoodFX provides micro-accounts with initial capital starting at $10, and a minimum trading volume of 0.01 micro-lots (100) to minimise the risk for beginner traders while they practise their skills. With the right education and training tools, it may take more time and effort, but it is very possible that a part-time trader can eventually be as successful as a full-time trader.

As they become more expert and confident, traders can move up at FirewoodFX from a Micro account to a Standard or Premium account, which both have more competitive contract specifications. For those who don’t have time or do not like trading activity but want to have an income from forex, we have something called ForexCopy (https://www.firewoodfx.com/forexcopy), where clients can choose to follow experienced traders and copy trades from them.

We provide various type of accounts to suit active traders as well as investors who want to have a side-income from forex. We also provide mobile trading platforms (Android and iOS) to make it easier for clients to monitor and execute trades whenever and wherever they want. And we offer a 20 percent deposit and trading reward bonus: https://www.firewoodfx.com/deposit-bonus-promotion, and https://www.firewoodfx.com/usd-5000-trading-reward-bonus-promotion

Because of the limited time they have to devote to trading, as full-time workers in other jobs, most side-hustler traders use a swing or positioning size trading strategy which will need days or longer to finish. But today most retail traders are considered side-hustle traders.

The COVID-19 pandemic has seen the volatility in markets increasing. For example, gold prices slumped sharply on the news of breakthroughs in the development of COVID-19 vaccines in November last year, after increasing about 28 percent from the beginning of the pandemic in early 2020. This volatility can be good for traders, include the side-hustlers, as profit can only be gained from moving prices.

However, the market’s volatility is not the main factor, it is only an external factor. To be a successful trader, one should trade with an edge, and master the psychology of market and money management.

Will commodities be the best investment of 2021?

Posted on by itsupport

The geopolitical events of the last year seem to have been the perfect storm in the commodity complex. Whether it was COVID-19 lockdowns disrupting supply chains and causing bottlenecks in everything from semiconductors to transportation upon reopening, or the enormous amounts of coordinated monetary and fiscal stimulus stoking inflation fears, has this confluence of events led to a situation where commodities are ripe to outperform all else? In other words, have we entered a commodity supercycle?

At HYCM, we’ve been working tirelessly throughout the pandemic to ensure that our clients have all the information they require at their disposal. Our goal is to distil what the big conversations are so that our clients can update their outlook on the markets in this fast-paced and volatile environment that appears to be the ‘new normal’. Our aim is to update our traders on what is shifting in the world of finance, as well as providing the means for them to take a position in relevant markets with the award-winning trading conditions and support that we offer. For example, we’ve prepared an update for our Middle-Eastern clients – for whom commodities make up a significant portion of their portfolio – regarding where copper, crude oil, and gold find themselves in the broader macro picture.

 

Copper
What’s most interesting about narrative-driven commodities like copper, is that they have already benefited from all of the above, but are also receiving a bid as it dawns on investors just what an enormous undertaking the green revolution will be, and how costly in terms of the commodities required to make it.

Copper is definitely one of these commodities, as it will not only be the cornerstone of the new electric grids but is also heavily used in all green energy technologies, from wind and solar to geothermal and hydroelectric. Copper wire demand is expected to grow at a Compound Annual Growth Rate of five percent by 2025 according to MarketInsights’ reports.

Copper has been one of the biggest commodity success stories of the past year or so, having gone on a staggering 144 percent run from trough to peak since April 2020. It set a higher low at $4.48 at the end of May and is now heading back up to test the highs at 4.80. If copper price manages to breach this level and stay above it in the coming weeks, it could be an indication of another move higher.

 

Crude Oil
Oil, which was hit hardest last year, is now trading at levels we last saw in April 2019 and January 2020, before markets crashed due to the pandemic. Technically, it appears as though it wants to move higher, but there’s been a certain amount of hesitation in this specific commodity market due to fears of an Iran nuclear deal with the new Biden administration and what that would mean for oil supply.

The concerns involve whether Iranian oil would have a detrimental effect on the price were it to start flooding onto a market that Iran had previously been prevented from participating in. $66.30 appears to have been an important line of support that had been tested and retested throughout March and May. The price finally broke through this level on May 27 to close at $66.94 on the day. Were it to continue pushing higher, the next lines of resistance are likely to be found between $72 and $77, which were the yearly high watermark levels for 2018.

There are a number of factors that can support oil prices at these levels. Namely, a global economy that’s yet to get back up to full speed owing to disparities in vaccine roll-outs across different geographical regions. This story is playing out across both the developed and developing world, with both Europe and India emerging from lockdowns.

India, a massive crude oil consumer, normally accounts for around 6% of global demand, saw its coronavirus cases and deaths reaching record highs in May. Since these peaks, both metrics have been dropping precipitously as vaccines are distributed and life gradually returns to normal. In the short term, India’s diesel consumption alone is reason enough to be bullish on oil. But looking further out, we see a demographics story unfolding here that’s hard to overlook. A young population of 1.4 billion people with a growth rate that puts Europe to shame, and a demand for energy that’s only going in one direction.

If the path of other developing nations like China has been anything to go by, then it’s likely that India too will prioritise growth first and worry about carbon emissions later, which is to say that demand for crude is only going to increase from here on. One thing is certain; OPEC has been excellent in managing oil prices over the last year. Saudi Arabia has at times taken voluntary deeper production cuts and that has undoubtedly helped oil producers everywhere. It has been a masterly response to a difficult crisis and at this time the oil markets are feeling confident in OPEC’s arms. Even if Iran’s supply does come back online, ING analysts are confident that the rising demand will be more than enough to keep oil prices from falling. As things stand, the Middle East region can look forward to higher oil prices this year and into next.

 

Gold
Gold set its current all-time high on August 10th of 2020 when it touched $2,075 after rallying by more than 14 percent from mid-July. It then sold off in September after hovering around the $1960 level. In November and December 2020, it attempted to reclaim those highs but was rejected from that same $1,960 level on both occasions. After the first attempt to break $1,960, the price dipped as low as $1,765, which was notable because it was the first daily close the precious metal had made below the 200-day moving average since March 2020.

A combination of factors, including a roaring cryptocurrency market and equities back above their former pre-pandemic highs, have led to a scenario where, despite bounce attempts like the retest of $1,960 in January of this year, capital has left the gold market in search of higher returns elsewhere.

Throughout 2021, it has continued to set a series of lower-highs, bottoming out in early March at around $1677 and then retesting this level again later in the month. It is currently staging a bounce from that level and has recently breached the 200-day moving average to the upside. At the time of writing, gold is trading at around $1,905, which is significant because these price levels are very close to gold’s previous all-time high of $1,920 back in 2011.

If you’ve been following the discussions around gold this year, you’ll be aware that crypto in general, and bitcoin specifically, have taken large bites out of gold’s market cap. The past nine months have seen crypto assets soaring in value, with the entire market making echoes of the speculative mania of 2017.

Why is this important for gold? Because now it appears as though the cycle is reversing. Bitcoin’s bull market started when gold’s topped out. Gold has been consolidating the entire time crypto assets have been rallying. It now looks as though bitcoin may have hit a top at $65k as gold attempts to stage a comeback. If bitcoin continues to sell off, you have to expect that some of that capital will flow back into gold. However, the crucial aspect to be aware of with gold is the level of real yields. If real yields keep falling then ultimately that, not Bitcoin prices, should support prices,

Technically, the picture couldn’t be worse for bitcoin or better for gold right now. Bitcoin recently dipped below its 20-week moving average (a typical sign of the end of its bull cycle) and hasn’t looked back, settling lower-low after lower-low. Meanwhile, gold appears to have completed a lengthy consolidation phase from August to April and is back above the 200-day moving average that it failed to hold in January. Look to a successful hold of that moving average as support before the entire market catches on that it’s gold’s turn in the spotlight.

In Dubai sales of gold jewellery have been up 17 percent on last year according to data released by the World Gold Council. If we see inflation concerns rise in the US, but the Federal Reserve keeps on refusing to raise interest rates until 2024, then this demand for gold could grow even further. Gold is a key commodity to watch for sure.

At HYCM, gold remains one of the top traded instruments, making up 31.48 percent of all trades* in May 2021. The other top instruments are US100, EURUSD, GBPUSD and USOIL. In general, HYCM offers highly competitive spreads for more than 300 instruments, including forex, stocks, indices, commodities, ETFs, and cryptocurrencies.**

HYCM is a global company with offices in Dubai, London, Hong Kong, and Cyprus. Regulated in each jurisdiction by the relevant authority, HYCM has a long-standing history and reputation in the Middle East, as well as other regions. HYCM has been the recipient of over 20 awards including Best Forex Broker in the UAE, the Middle East, Asia, and Europe. Traders can attend HYCM’s weekly online webinars and workshops, available to anyone looking to level up their trading, and traders in the Middle Eastern region can also participate in HYCM’s exclusive in-person seminars, typically held in one of Dubai’s breathtaking hotels.

 

*For HYCM Limited

**Cryptocurrencies are not available under HYCM (Europe) Ltd and Henyep Capital Markets (UK) Ltd.

 

About HYCM
HYCM is the global brand name of Henyep Capital Markets (UK) Limited, HYCM (Europe) Ltd, Henyep Capital Markets (DIFC) Ltd and HYCM Limited, all individual entities under Henyep Capital Markets Group, a global corporation founded in 1977, operating in Asia, Europe, and the Middle East.

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How can banks respond to the open banking revolution?

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The success of open banking has been widely documented, with more than two million people and small businesses currently using it in the UK. These services give third-party financial service providers open access to financial data from banks and other financial institutions through Application Programming Interface (API) driven ecosystems. Open banking’s popularity is no surprise considering the benefits it offers customers. It can instantly round up and save digital spare change from consumer purchases, recommend financial products and make cross-border payments cheaper, faster and more secure than traditional bank transfers. What’s more, the need to evolve has accelerated because of the pandemic. In order to thrive in this landscape and retain their customers, banks need to be proactive.

 

What challenges are banks facing?
While the banking industry has advanced in certain ways in recent years, COVID-19 has hastened the need for a real shake-up. As explained in this report by KPMG, the financial sector was one of the industries most greatly impacted by the pandemic, with most banks seeing the price of their stocks slump. This has forced them to look at alternative revenue models by re-evaluating their product offerings and customer needs, setting up a landscape full of opportunity.

“Although COVID-19 may lead to a crisis in the real economy, the impact on the banking system and on the bank-customer relationship can also be defined as a ‘positive discontinuity’ for the purpose of digitisation of the sector and the ability to offer an excellent customer experience,” the report reads. This is something that many banks are already working towards. A recent survey of 300 global banking executives by banking software company Temenos found that 45 percent plan to create digital ecosystems, while 29 percent have open banking initiatives in place. But what of those not being so proactive?

We already know just how big a year 2020 was for open banking, with a Mastercard study finding that 62 percent of respondents across 12 European markets were interested in switching to digital banking. The company’s recent Global State of Play report also revealed that 53 percent of the world’s population use banking apps more than they did pre-Covid. Consumers have come to expect fast, accessible, convenient payments using online and mobile solutions and banks are now under pressure to meet these demands. This is especially true while they face stiff competition from tech giant offerings such as Google Wallet and Apple Credit Card, as well as the fintechs quickly creating sleek, user-friendly apps using open banking APIs.

 

How can banks respond to this shift?
Rather than banks seeing fintechs as their adversaries, it’s much better to make them collaborators. Fintechs can use cutting-edge technology to build streamlined, innovative APIs to replace a bank’s old-fashioned products. They can also do so quickly as they aren’t weighed down by things like customer acquisition and legacy infrastructures. This lean, flexible approach enables banks to reduce costs and give their customers far more seamless experiences with competitive prices. Fintechs also work with banks to find and provide solutions to ongoing security threats. In return, these businesses can benefit from a bank’s trusted name and large customer base.

Such partnerships have been embraced by plenty of banks already, with promising results. HSBC, for example, was the first UK bank to launch a successful standalone open banking application. “That was all done in partnership with other firms, very little of the build was within HSBC,” Hetal Popat, HSBC’s head of open banking and PSD2, explains to Computerworld. “[They] move faster, do things cheaper and bring new ideas and approaches into the firm.” He also notes that the open banking data lets them accept more customers for credit products: “There’s a lot of customers out there in the UK who are perfectly creditworthy, but the data the bureau has on them is limited and therefore, due to a thin file, banks may say no. Now we get more data, we can say this customer is creditworthy and offer a loan.”

However, banks must also ensure that they choose the right fintechs to partner with. That starts by establishing exactly what problem it is they want to solve. As Vince Padua, chief technology and innovation officer at Axway emphasises in an article for Forbes: “For banks, knowing that your customers want all things but that your institution alone can’t be all things for them is key.” Only when they have prioritised their requirements can they find a fintech that will deliver what their customers expect and help out when things go wrong. The open banking trend is here to stay, and partnering with fintechs to offer modern and sleek APIs is necessary to increase customer loyalty and attract new clientele.

Quantum computing is finally having something of a moment

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In 2019, Google announced that they had achieved ‘quantum supremacy’ by showing they could run a particular task much faster on their quantum device than on any classical computer. Research teams around the world are competing to find the first real-world applications and finance is at the very top of this list.

However, quantum computing may do more than change the way that quantitative analysts run their algorithms. It may also profoundly alter our perception of the financial system, and the economy in general. The reason for this is that classical and quantum computers handle probability in a different way.

 

The quantum coin
In classical probability, a statement can be either true or false, but not both at the same time. In mathematics-speak, the rule for determining the size of some quantity is called the norm. In classical probability, the norm, denoted the 1-norm, is just the magnitude. If the probability is 0.5, then that is the size.

The next-simplest norm, known as the 2-norm, works for a pair of numbers, and is the square root of the sum of squares. The 2-norm therefore corresponds to the distance between two points on a 2-dimensional plane, instead of a 1-dimensional line, hence the name. Since mathematicians love to extend a theory, a natural question to ask is what rules for probability would look like if they were based on this 2-norm.

It is only in the final step, when we take the magnitude into account, that negative probabilities are forced to become positive

For one thing, we could denote the state of something like a coin toss by a 2-D diagonal ray of length 1. The probability of heads is given by the square of the horizontal extent, while the probability of tails is given by the square of the vertical extent. By the Pythagorean theorem, the sum of these two numbers equals 1, as expected for a probability. If the coin is perfectly balanced, then the line should be at 45 degrees, so the chances of getting a heads or tails are identical. When we toss the coin and observe the outcome, the ambiguous state “collapses” to either heads or tails.

Because the norm of a quantum probability depends on the square, one could also imagine cases where the probabilities were negative. In classical probability, negative probabilities don’t make sense: if a forecaster announced a negative 30 percent chance of rain tomorrow, we would think they were crazy. However, in a 2-norm, there is nothing to prevent negative probabilities occurring. It is only in the final step, when we take the magnitude into account, that negative probabilities are forced to become positive. If we’re going to allow negative numbers, then for mathematical consistency we should also permit complex numbers, which involve the square root of negative one. Now it’s possible we’ll end up with a complex number for a probability; however the 2-norm of a complex number is a positive number (or zero). To summarise, classical probability is the simplest kind of probability, which is based on the 1-norm and involves positive numbers. The next-simplest kind of probability uses the 2-norm, and includes complex numbers. This kind of probability is called quantum probability.

 

Quantum logic
In a classical computer, a bit can take the value of 0 or 1. In a quantum computer, the state is represented by a qubit, which in mathematical terms describes a ray of length 1. Only when the qubit is measured does it give a 0 or 1. But prior to measurement, a quantum computer can work in the superposed state, which is what makes them so powerful.

So what does this have to do with finance? Well, it turns out that quantum algorithms behave in a very different way from their classical counterparts. For example, many of the algorithms used by quantitative analysts are based on the concept of a random walk. This assumes that the price of an asset such as a stock varies in a random way, taking a random step up or down at each time step. It turns out that the magnitude of the expected change increases with the square-root of time.

Quantum computing has its own version of the random walk, which is known as the quantum walk. One difference is the expected magnitude of change, which grows much faster (linearly with time). This feature matches the way that most people think about financial markets. After all, if we think a stock will go up by eight percent in a year then we will probably extend that into the future as well, so the next year it will grow by another eight percent. We don’t think in square-roots.

This is just one way in which quantum models seem a better fit to human thought processes than classical ones. The field of quantum cognition shows that many of what behavioural economists call ‘paradoxes’ of human decision-making actually make perfect sense when we switch to quantum probability. Once quantum computers become established in finance, expect quantum algorithms to get more attention, not for their ability to improve processing times, but because they are a better match for human behaviour.

Light within the darkness

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The World Bank predicted the global economy to shrink by 5.2 percent in 2020 – the worst performance since the end of the Second World War. Unemployment in the US reached a record peak of 14.7 percent in April 2020, and while it’s fallen significantly since, it’s hard to predict how the coming months will play out – especially as the effect of continued restrictions across the world come to bear.

Yet while it’s clear we’re in for some challenging times ahead, it might not all be doom and gloom; because for some, challenging times herald game-changing opportunity.

Researchers have observed a correlation between recessions and entrepreneurship; a Kauffman study in 2009 found that more than half of the companies on the Fortune 500 list were launched during a recession or bear market, as well as almost half of the firms on the list of America’s fastest-growing companies.

According to Dane Strangler, author of the study and a fellow at the Bipartisan Policy Centre in Washington DC, companies that form in those circumstances are often more resilient and nimble as a result. “There’s this trial by fire idea,” he told the BBC in a recent article. “If you get started in a recession, you really have to scrape and scrimp to make that company successful. You are trying to make it when you can’t get financing, and trying to get customers when there isn’t any demand.”

A quick glance at some of the most successful names in tech confirm the trend; Instagram, WhatsApp, Uber, Dropbox, Airbnb, Groupon and Slack were all formed around the time of the 2008 financial crisis. Facebook got its real growth spurt over that period, while Google and Salesforce launched just before the burst of the dot-com bubble.

It’s not just a recent trend, either; Burger King opened its doors in the midst of a US recession in 1953, while CNN began broadcasting in 1980, when US inflation was at a sky-high 14 percent. Hewlett-Packard came into existence just after the 1937–1938 recession – when unemployment hit 20 percent – and FedEx started shipping parcels just as the 1973 oil crisis hit.

In a recent study on ‘necessity entrepreneurship,’ researchers Frank Fossen and Robert Fairlie put this trend partly down to the higher levels of unemployment that inevitably come with recessions.

Fossen, Associate Professor of Economics at the University of Nevada, told World Finance: “Those who have a job are usually reluctant to give up their comparably stable income to take the risk of starting a business. The unemployed do not have as much to lose, which explains why we observe more entry into self-employment during recessions.”

Fairlie, Professor of Economics at the University of California, believes there’s no reason the COVID-19-induced downturn won’t give rise to new businesses just as the 2008 crisis did. “I think people have more time on their hands right now to think of creative ideas that will grow into successful businesses,” he said. “My guess is that anything to do with tech and online shopping will be the most successful.”

To help inspire hope for the coming months and beyond, we look at five of the all-time biggest companies to have formed in recessions in the past, and how, against the odds, they grew into global, billion-dollar behemoths.

General Motors

Formed: 1908

Background: The Bankers’ Panic of 1907

Current value: $140bn

The bankruptcy of two major brokerage firms and a run on all the banks associated with them caused the 1907 Bankers’ Panic and sent the New York Stock Exchange plunging by almost 50 percent from the previous year’s peak, marking the first major financial crisis of the 20th century. While the event itself was short-lived, the after-effects were to last for the following two years, and become one of the key motivations for establishing the Federal Reserve System in 1913.

It was in this climate that horse carriage manufacturer William Durant bought Buick Motor Company, transforming the ailing, debt-burdened business into the biggest-selling car brand in the US. He founded General Motors in 1908 and a string of several rapid acquisitions followed, including Oldsmobile, Cadillac, Catercar and Elmore.

“Industrial leaders realised that there was strength in unity and diversity,” wrote journalist Gerald Perschbacher in an article for Old Cars Weekly. “In the case of both Billy Durant and Henry Ford, a stringent national economic setback paved the way for the promise of fantastic futures in motoring.”

Not all of the acquisitions paid off; General Motors started losing money and Durant was ousted in 1911. At that point he co-founded Chevrolet, then bought a controlling stake in GM and returned to the company as President in 1916 – bringing the new brand with him in a merger. But it was when Alfred Sloan took to the helm in 1923 that the company got its real growth spurt, expanding internationally and buying Vauxhall Motors and a controlling stake in Opel – which remain its core divisions today.

Now the company has a workforce of more than 160,000 and a market capitalisation of $61bn. It hasn’t been without its hiccups in between, but if ever proof was needed that global giants could be formed at the most unlikely of times, this would surely be it.

IBM

Formed: 1911

Background: Sherman Antitrust Act 1910–11

Current value: $28.2bn

1910–11 saw the emergence of another panic, this time caused by the enforcement of the competition-regulating Sherman Antitrust Act. What ensued was a 26 percent plunge in the US stock market. While many businesses suffered double-digit declines over the following year, businessman Charles Flint saw it as an opportunity to merge three existing companies into the Computing-Tabulating-Recording Company – now International Business Machines (IBM). Those three companies had themselves been formed in a recession.

The ‘Long Depression’ of 1873–1896 – caused by a contraction of the money supply following the banning of silver coins and the collapse of several banks – had given rise to the International Time Recording Company, the Tabulating Machine Company and the Computing Scale Company.

They produced equipment to suit the time (literally); “a time clock for recording workers’ hours was needed as industrial production at the end of the century surged,” noted CNN Money. “Also, a tabulating machine was vital during the immigration wave, to tally up the expanding population.” Flint continued to build the company after the merger – albeit by “pulling off scams” with “inflated stock” and “fake capitalisation,” according to author James Cortada in his recent book, ‘IBM History of Computing: The Rise and Fall and Reinvention of a Global Icon.’

But he laid the groundwork for future success; in 1924, Thomas Watson Sr became Chief Executive and rebranded CTR to IBM. Typewriters and computers ensued, and by 1956, revenues had reached $897m, according to IBM Archives. For this reason, many credit Watson Sr with the real success of IBM. “Flint founded C-T-R Company, but I refer to Watson Sr as the ‘traditional founder,” said Peter Greulich, a former IBM employee and author of several books on the company. “Under his leadership, IBM weathered 10 major economic declines, three major wars, and four of the six largest declines in US stock market history. Over time it was Watson Sr who was remembered.”

Yet with brand revenue of $77.1bn and a status as one of the most powerful tech companies on the planet, Flint has clearly left some kind of a legacy – even if the company does look a little different today than when it first launched.

Disney

Formed: 1929

Background: Great Depression 1929–1930s

Current value: $130bn

It was in 1929, at the dawn of the worst financial crisis in history, that brothers Walt and Roy Disney rebranded their existing cartoon studio into Walt Disney Productions.

Six years earlier they had set up shop in their uncle’s garage in Los Angeles, creating animated productions including Alice in Wonderland under the name Disney Brothers Cartoon Studio. But it wasn’t until the Great Depression struck that they shot to global fame, following the debut of Mickey Mouse in the short feature film Steamboat Willie.

The pair continued to build the empire, producing animated shorts of Mickey Mouse and playing on America’s need for joy at a time of national depression. They eventually released their first full-length animated feature film, Snow White and the Seven Dwarfs, in 1938. It took three years, 300 artists and 200,000 drawings to produce – and, at $1.5m (around $26m in today’s terms), went several times over budget.

But the risk paid off; it became the biggest-grossing film in US box office history at the time with revenues of $7.9m (equivalent to $141m) in the first year alone. High costs and low margins for the films that followed, including Bambi, Fantasia and Cinderella, led to growing debt, however. But a turning point came in the 1950s, when Disneyland opened in California and gross income ballooned from a mere $6m in 1950 to a whopping $70m in 1960 (according to Bob Thomas’ book Walt Disney: An American Original).

The rest is, quite literally, history. Walt Disney World theme park opened in 1971; Disneyland Paris followed in 1992. And in March 2019 Disney acquired 21st Century Fox in a $71.3bn deal, adding to its growing list of brands and turning the company into the biggest media behemoth in the world.

The company now has 12 theme parks spread out across the globe, a cruise line and a streaming service among its reams of assets. A Disney Imagineer famously once said, “If you can dream it, you can do it,” and this global megabrand has proven the point – even in times of major economic strain.

Microsoft

Formed: 1975

Background: The recession of 1973–75

Current value: $1trn

When OPEC members imposed an embargo on the US during the Arab–Israeli war – causing the price of crude oil to quadruple and inflation to soar – the world tumbled into a deep, 16-month slump. The stock market crashed, with GDP falling 3.4 percent and unemployment hitting nine percent in the US [according to the National Bureau of Economic Research], causing a rather unfortunate stagflation.

It didn’t stop Seattle-born friends Paul Allen and Bill Gates launching what was to become the world’s biggest software company, though. Microsoft was formed in April 1975, against a backdrop of continued high inflation and low economic growth.

Growth was steady at the start: “In 1975, Microsoft had three employees, $16,000 in revenue and one single software product,” reads a statement from the company.

But in 1980 the real magic happened, with IBM asking Microsoft to create an operating system for the IBM PC – MS-DOS. Daniel Ichbiah, author of a 1995 Bill Gates biography, puts this down to Gates’ “incredible powers of persuasion.” “Some of his actions were exemplary,” he told World Finance. “Especially the way he convinced the giant IBM to ally itself with what was at the time a tiny company.”

Microsoft was paid a royalty for every IBM computer sold. In 1986 the company went public to global enthusiasm, leading 31-year-old Gates to be named the world’s youngest billionaire just a year later. In 1990, the company’s revenues topped $1bn for the first time.

Roll on 30 years – and several Xboxes, smartphones and cloud services later – and Microsoft is, as of 2019, a trillion-dollar company.

Airbnb

Formed: 2008

Background: Global financial crisis of 2008

Current value: $100bn

Among the string of billion-dollar success stories to come out of the 2008 crash was Airbnb. But this peer-to-peer rental giant didn’t start with the aim of becoming a billion-dollar company; instead it was a way for roommates Joe Gebbia and Brian Chesky to pay the bills.

In 2007, a design conference was coming to San Francisco and hotel demand was exceeding supply; so they turned their loft into “a designer’s bed and breakfast, offering young designers who come into town a place to crash,” in the words of Gebbia, who pitched the idea to Chesky in an email as “a way to make a few bucks” [the former showed the email at a TED talk in 2016].

They created airbedandbreakfast.com, bought three air mattresses and welcomed in their first three guests. The initial success spurred them on to turn the idea into a fully fledged business, with the help of a new, third comrade, Nathan Blecharczyk. The start-up launched at SXSW in 2008, but it took nearly a year of investor rejections, a stint on the accelerator programme Y Combinator and a rebrand to ‘Airbnb’ before Sequoia Capital took a chance on the trio and threw $600,000 seed investment into the business.

By 2011, Airbnb was in 89 countries and had one million nights booked on the site. Big-name Silicon Valley venture capitalists poured $112m into the company, propelling its value to more than $1bn and giving it official ‘unicorn’ start-up status.

It hasn’t been without its hurdles since, not least legal battles and a backlash from cities calling for bans, but the company has so far managed to weather the storms, expanding with several new launches and acquisitions, and recording revenues of $4.8bn in 2019.

The pandemic has thrown another spanner in the works; how it performs among investors will be revealed during 2021 in the aftermath of its much publicised and delayed IPO. But if anyone can pull through a financial crisis, it’s surely one that came to existence at the height of the worst global downturn in more than half a century. As the other companies on this list suggest, having origins in recession can prove useful training ground for future turmoil – and when the economy does eventually boom again, those who have endured the darkest times will be all the more resilient for it.

Selling off corporate art to stem pandemic losses

Posted on by itsupport

In 2020 British Airways made headlines following its decision to sell off some of the oldest and most valuable parts of its art collection. Struggling with mass redundancies, data breaches and a stream of cancellations, the company began purging artworks in a bid to offset its pandemic losses. Over the past few months, other major corporations have followed suit.

London’s Royal Opera House recently sold a prized David Hockney at auction for £12m and UK travel agent Thomas Cook likewise parted with a 3,000-year-old Egyptian statue, held in its archives since the end of the 19th century. Meanwhile, the Royal Academy is facing criticism for its retention of a Michelangelo during a period of mass staff redundancies.

Corporates selling their art collections is not a new phenomenon, but the pandemic has certainly accelerated that trend. More businesses are looking at where they can extract latent value in assets, which has encouraged bigger collectors to dispose of their collections. Over the summer, BA consequently sold 17 pieces of art that had previously decorated its executive lounges, including works by Damien Hirst and Bridget Riley.

These sales were primarily triggered by BA’s efforts to ‘preserve funds and protect jobs,’ but other corporates have been purging their artworks as a result of changing tastes and an evolution in ideas surrounding corporate responsibility in the arts. Deutsche Bank, which boasts one of the largest corporate collections in the world, for instance, recently announced it would be reducing its art collection by over 4,000 pieces, in part, to improve “the contemporary quality” of its collection. By selling corporate collections made up of household names, the company is freeing up money to invest in young or emerging artists.

 

Playing the long game
In comparison, stagnant collections made up of Damien Hirst or Tracey Emin might look good, but do little to support the long-term art ecosystem. This sort of art is primarily viewed as an investment avenue the value of which is tied up for years on end in the hopes that one day it will return a profit. The sales we are seeing now are a case in point. There is a whole new generation of artists in need of long-term support and mentoring that can only be achieved through the acquisition or renting of new artworks.

It is no surprise then that corporates who are increasingly conscious of their image and brand are purging their household names in favour of collections made up of new, more culturally relevant, artists. The writing appeared to be on the wall with BA’s announcement in June 2020, but in truth the trajectory of corporate collecting had begun to shift before the pandemic.

We have also seen an increasing number of businesses selling their collections all together in favour of art rental, which offers bespoke collections and flexible leasing terms for a small fraction of the cost of ownership. Corporates are able to engage and improve the wellbeing of their teams, meet their social responsibility targets and provide economically sustained support of artists.

Not only is the trend of selling off art collections making physical space in lounges and lobbies for new flexible artworks to be installed, it is also creating space for new names to arise in the industry. Through art rental, artists who are at the beginning of their career are given a viable and sustained income by corporates looking to enhance their CSR portfolio. This is of particular value for those who, due to their background or economic circumstance, may not be able to afford to support themselves until they reach gallery representation or develop a market for their work.

Corporates, likewise, are able to curate collections that can be scaled up and scaled down depending on business and social requirements. With the rise of flexible working, this is something that will become increasingly important post pandemic. Offices are set to be transformed into cultural hubs and will need to be culturally relevant and consistent with business values. With equality becoming one of the defining narratives of 2020, businesses that are championing issues related to sexuality, gender, race and socioeconomic equality – for instance through the very visual displays of artwork – will be the ones that come out on top.

 

Promoting diversity
We are also seeing a rise in the number of companies giving staff creative agency over their working environments. This is particularly important when it comes to art. According to a recent study by Dr Craig Knight, individuals work 15 percent more productively in environments containing artworks and plants, a figure that doubles to over 30 percent for spaces where participants had a say in curation.

It is no surprise then that demand for art rental businesses such as ARTIQ has remained strong during the pandemic. International banking group Investec are shortly to install a recently curated collection of London and South African artists to show their passion and commitment to promoting diversity. Corporate patronage has long been a core part of business identity and will continue to be as we emerge from the pandemic; however the manner in which corporates support the cultural economy is modernising.

The value placed on arts and culture by corporates is being sped up by the pandemic as they try harder to engage all stakeholders in a more visible way. We are thus unquestionably witnessing a marked shift away from how companies have traditionally collected art. Emerging in the place of stagnant collections is a new type of arts patronage, one that can truly support the arts ecosystem and champion diversity across not only the arts, but society as a whole.

Digital innovation presents the dawn of the smart ports

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A powerful drone speeds along an inland waterway near Rotterdam and drops a package of spare parts onto a barge on the move, just the latest development in the global phenomenon known as the ‘smart port.’ According to the port of Rotterdam authorities, the trial delivery in late September 2020 went smoothly and now they are pushing ahead with more flights to fully assess the technology’s potential in making the port, the busiest in Europe, into a more efficient, quieter, safer and less polluted environment.

Rotterdam is one of the world leaders in the adoption of digital technologies that are transforming these maritime hubs. “Drones can have a major impact on traffic and transport,” says Port Authority adviser Ingrid Römers. “The next few years will be devoted to the phased preparation of airspace and drone technology.”

Although only one aspect of the smart port, drones are already being deployed to detect levels of pollution in vessels approaching the coastline, to inspect the contents of stacks of containers rather than sending workers up on cranes, and as at Rotterdam, to save time by delivering packages instead of the crew having to come ashore.

 

Long-term projects
Some ports are turning themselves into centres of innovation. For instance Singapore, the second-busiest in the world in terms of total shipping tonnage, hires the country’s brightest talent to conduct ‘hackathons’, events at which they are encouraged to come up with innovations for its long-term project, the Smart Port Challenge. “The port is working with partners on maritime scale-up initiatives to identify and develop promising maritime tech companies to get them ready when the economy picks up,” chief executive Quah Ley Hoon told the Oceans 2020 conference in early October 2020.

One of the biggest challenges ports face is handling the sheer volume of haulage traffic in and out

Shanghai, the world’s biggest container port, is following the same path by attracting the best researchers from around the world with its own version of Silicon Valley. Similarly, Rotterdam has invited maritime-focused start-ups to base themselves there. A current project is an energy hub that uses artificial intelligence to predict patterns of consumption and production. The result should be more transparent and lower prices for users, predicts Nico van Dooren, director for new business. “This is a solution that will help achieve the goal of a carbon-neutral port.”

 

Smoothing the passage
Digital technology lies at the heart of the smart port. Hamburg, the third busiest port in Europe, has installed sensors, camera systems and smart lights on roads in order to monitor traffic, alert users when a bridge is lifting, and to smooth the passage of working barges and other vessels in busy times. One huge benefit of this is a reduction in the number of accidents.

One of the biggest challenges ports face is handling the sheer volume of haulage traffic in and out, but here digitisation and artificial intelligence are coming to the rescue. About 2,500 trucks circulate every day through Montreal, capital of Quebec, passing in and out of the port, the second biggest in Canada, and causing unwanted congestion and pollution in the city. One solution is an app, Trucking PORTal, that alerts drivers to the volume of traffic at port terminals in real time. And in a trend being widely adopted in Europe, it can also provide the latest schedules for the freight trains, something that authorities see as replacing many haulier movements.

 

Digital communication platform
On the other side of the world, China has embarked on easily the most ambitious of all smart-port projects. Beijing aims to put all the nation’s ports, including Shanghai and their logistics operations, under the umbrella of a single, all-embracing, digital communication platform.

This is a key part of the maritime Silk Road, also known as the Belt and Road Initiative. It is a controversial but bold plan to link Chinese and European ports through the South China Sea, southern Pacific and the Indian Ocean in a vast ecosystem in which ports become hubs in a global supply chain. The entire project relies on digital platforms that harness the floods of data flowing around the world and convert it into information that ports can use. Thus ports become ‘intelligent infrastructures’ instead of mere turntables for cargo. Two ports – Piraeus in Greece and Djibouti in East Africa – are among the first to join the ecosystem.

The maritime Silk Road has its critics though, with doubts raised about the heavy debt that recipient countries are forced to take on. For example, China has seized the port in Djibouti because the country could not afford to pay back loans. Ultimately though, the goal of the smart port is to make them productive but congenial places where people want to live, or at least live nearby. In short, they will be given back to the citizens.

Gibraltar’s financial services will benefit from decision

Posted on by itsupport

Around 90 percent of Gibraltar’s Financial Services business is UK-facing and with Brexit looming, the Gibraltar Government sought and achieved not only inclusion in the Withdrawal Agreement via the Gibraltar Protocol, but also, more recently, a bespoke arrangement that guarantees market access to financial services for Gibraltar-based licensed firms. This commitment is now enshrined in UK law through the Bill, which is the legal framework through which this relationship will be maintained and is aimed to deliver certainty for Gibraltar financial services firms and minimise disruption to business.

Further, the UK Government recently published a Technical Notice for guidance on Financial Services in preparation for the end of the transition period on December 31, 2020. It proposes the introduction of the new Gibraltar Authorisation Regime (GAR), a modernised framework that will offer wholesale and retail market access to Gibraltar-licensed firms.

This new regime will be underpinned by bespoke arrangements for information-sharing, transparency and cooperation between the two governments and the regulators. It will be based on aligned legislation and supervisory practice, as well as high standards of financial regulation.

 

Seizing new opportunities
On the occasion of the introduction of the Financial Services Bill, John Glen, Economic Secretary to the Treasury, said that the country must ensure a regulatory regime that works for the UK and allows it to seize new opportunities in the global economy now that the UK has left the European Union.

“Following the work we’ve done to prepare for EU exit and ensure a smooth transition to a UK rule book, this Bill is the next step in delivering a regulatory framework that boosts the competitiveness of our world-leading financial services sector and ensures that UK consumers are properly protected. It’s part of an ambitious programme to enhance the UK’s first-class standards and our attractiveness as a location for business, both of which will be crucial to help our economy bounce back,” Glen said.

Legislation will deliver on commitments to long-term market access between the UK and Gibraltar for financial services firms

In his Written Ministerial Statement earlier on this year, Chancellor Rishi Sunak said the “legislation will deliver on commitments to long-term market access between the UK and Gibraltar for financial services firms based on shared, high standards.” A spokesperson from HM Treasury pointed out that the UK and Gibraltar have had reciprocal market access in financial services based on the EU Single Market, so having left the EU together they will be committed to continuing as before. This measure will preserve Gibraltar’s regulatory autonomy and enable the territory to choose where it wishes to access the UK market in terms of alignment and cooperation.

The Gibraltar Government is also now consulting on GAR, which could provide permanent UK market access for Gibraltar-based financial services firms. Reciprocally, similar provisions are also being developed in Gibraltar law to enable UK firms to access the Gibraltar market.

 

Challenging scenario
Ros Astengo, journalist at Gibraltar’s public service broadcaster GBC News, said that this is a challenging scenario especially as equivalence between the UK and the EU has yet to be agreed. “It is a unique arrangement between Gibraltar and the UK and does not extend to the Crown Dependencies or other Overseas Territories. It is quite an achievement, and highlights the unique and historic nature of the relationship between Gibraltar and the UK,” she added.

Astengo commented that Gibraltar worked hard to achieve a commitment on market access at an early stage of joint discussions on the impact of its departure from the EU, explaining that there have been countless meetings between the Chief Minister of Gibraltar, Fabian Picardo, and other senior officials, with their UK counterparts over the past four years.

“Keeping open channels of communication, even during lockdown periods, has been crucial. However, at the risk of downplaying the enormous work and detail that has gone into this agreement, I think the historic nature of the UK-Gibraltar relationship, and similarities in regulatory regimes and standards, not to mention language and laws, has been significant,” she said.

“As a result, Gibraltar will retain its position as a well-regulated and attractive jurisdiction for business with unique access to the UK financial services market,” Astengo added. “Of course, the UK has its own challenges with no future relationship deal in place and they have yet to come to an agreement on equivalence with the EU. But that’s a different story,” she concluded.