As shocking as the 2008 global financial crisis was, what was perhaps as unexpected was just how long the economic recovery would take. Almost a decade on, and post-crisis recovery still continues, restricting growth in countries around the globe and prolonging the pressure applied on numerous markets and industries.
While this state of affairs continues in 2017, we are seeing growth broadening out in more economies, prompting the global economy to draw on greater strength than it has done for years.
This is therefore a key year for investments, with the investment management market undergoing a transition of sorts. Key trends earmarked by Goldman Sachs include the rising tide of anti-globalisation sentiment, climbing inflation rates and a general shift towards fiscal spending on both sides of the Atlantic.
Navigating this transitioning landscape is no small feat for investment management groups, yet there are those that do so with apparent ease. In recognition, the World Finance Investment Management Awards name and celebrate the very best the industry has to offer. The awards look in particular to those firms that have shown fortitude over the past year when it comes to shifting economic conditions and stagnant growth. Our winners have proven themselves agile by combatting a climate that is constantly changing. In doing so, they offer their clients a sense of stability, even in spite of such rough waters.
The current transition towards fiscal spending can be attributed to a backlash after years of austerity measures
The globalisation backlash
For decades, globalisation has pushed forward, driving growth and commanding adherence from economies both large and small. Those who shrank away from economic integration did so at their own peril. Those who embraced it wholeheartedly, on the other hand, witnessed phenomenal growth and a leap forward in their economic development. Just look at China.
Globalisation has made this vast world a much smaller place; it has made trade between even the furthest corners of the Earth easier than humankind has ever known. Rapid advancements in transportation, logistics and technology during the 19th and 20th centuries helped this trend, enabling nations to hone in on the industries and services in which they excelled. Prosperity spread, while both companies and individuals were afforded a whole new world of opportunities.
But despite the benefits brought forth by a once exponential increase in the flow of goods and people across borders and seas, the heyday of globalisation seems to be coming to an end. This change in sentiment can be attributed to the slow, drawn out economic recovery that has prevailed since the global financial crisis. With mass unemployment and a resurgence of inequality, populist parties around the world are now gaining traction with their disheartened and desperate audiences. This discontent can also explain the shock election of politically inexperienced and inordinately crass reality television star Donald Trump as the 45th President of the United States.
A growing inclination towards protectionism can also be seen elsewhere, particularly in Europe (as shown by Brexit and the popularity of France’s Marine Le Pen). An unfortunate consequence has been the emergence of protectionist trade policies, something those in the investment management industry are certainly keeping a close eye on.
Great expectations
Fortunately, the gloomy forecasts that resulted from low levels of inflation and disappointing nominal growth have finally been replaced by better expectations. This long-awaited shift is expected to continue throughout 2017. As stated in the Goldman Sachs 2017 Investment Outlook: “We expect concerns around potential secular stagnation to give way to a more inflationary paradigm in the US.”
The US is now also experiencing declining unemployment which, together with a decline in job vacancies, has resulted in climbing wages. This tightening of the labour market, along with the potential for an inflationary fiscal outlook, has helped price and inflation expectations rise from former lows. According to the report: “Modestly higher inflation driven by an improving global growth outlook should be beneficial for assets, but unanchored expectations or a central bank response that is too aggressive could cause upsets.”
Broadly speaking, experts predict this inflationary environment will be positive for equities, though not all markets and organisations will experience the same benefits. While rising wages help to prop up demand, which in turn bolsters revenue, some companies may not be able to bear the brunt of rising costs, particularly if they cannot be passed on to the customer
due to market competition.
Moreover, an inflationary landscape could also be damaging for government bonds. “We think in the US there is a risk of a sudden re-pricing in rates markets. This implies that bonds could become a source of volatility in other markets, such as credit. If rates move higher, we will closely watch their correlation to risk assets”, according to Goldman Sachs.
From one extreme to another
Also apparent in 2017 is a growing divergence of monetary policy across the Atlantic and Pacific Oceans. The US, for example, already raised interest rates in March to one percent, and is expected to do so at least once more in 2017. However, both the European Central Bank and the Bank of Japan are expected to continue with easing policies, stretching them even closer to their limits. As stagnating growth continues to persevere around the globe, a shift in stimulus strategy will take place, which will see a greater inclination towards fiscal spending. This transition can be attributed to a backlash after years of austerity measures, together with a better understanding of the necessity of infrastructure development.
“This transition is important to watch, as it could provide a better policy mix to support growth and corporate earnings, or it could drive debt and inflation sharply higher and spark more volatility in developed or emerging market assets”, the report noted.
Perhaps even more significant is the potential impact of deregulation on markets and economic growth. The promises Trump made with regards to regulatory changes focus on improving access to capital, as well as improving the ease of business formation. Over in Europe, the business case for Brexit was driven by what was seen by many as excessive regulation within the EU, against which financial institutions across the region are now beginning to push back. China, on the other hand, seems to be creating a well balanced combination of stimulus and regulation, which is successfully driving structural reform, all the while maintaining growth. Consequently, investment managers will continue to look out for regulatory divergence across the globe, as well as the possibility of competitive deregulation.
As investment management firms continue to weave their way through this changing landscape, naturally there will be those that are simply unable to keep up. Industry players have long been required to keep a vigilant ear to the ground, but it would seem that in 2017 – and for the foreseeable future – expectations are higher than ever. As such, investment managers must have the foresight and forward-thinking approach needed to tackle today’s challenges and come out as winners on the other side.
The World Finance Investment Management Awards offer a keen insight into the investment management firms that have managed to maintain their success, even as the industry transforms around them. Our awards panel scoured the industry from one corner of the globe to the next, while also responding to feedback from our readership, in order to offer a truly global view of the brightest names in investment management today.
World Finance Investment Management Awards 2017
Argentina
Puente
Armenia
Capital Asset Management
Australia
AMP Capital
Austria
Kepler
Bahrain
SICO BSC (c)
Belgium – Equities
Degroof Petercam
Belgium – Fixed Income
Candriam Investors Group
Brazil
HSBC Global Asset Management
Bulgaria
TBI Asset Management
Canada – Equities
EdgePoint Wealth Management
Canada – Fixed Income
Optimum Asset Management
Caribbean
Santander Puerto Rico
Chile – Equities
BCI Asset Management
Chile – Fixed Income
BCI Asset Management
China
China Universal Asset Management
Colombia
BBVA Asset Management
Croatia
ZB Invest
Cyprus
Byron Capital Partners
Czech Republic
Conseq Investment Management
Denmark
Danske Capital
Egypt
CI Capital Asset Management
Finland
LocalTapiola
France
Natixis Asset Management
Germany – Equities
Allianz
Germany – Fixed Income
Helaba Invest
Greece
NBG Asset Management
Hong Kong
BMO Global Asset Management
Hungary
OTP Investment Fund Management
Iceland – Equities
Kvika Banki
Iceland – Fixed Income
Stefnir Asset Management
India
Birla Sun Life Asset Management Company
Indonesia
BNP Paribas Investment Partners
Iran
Turquoise Partners
Ireland
Irish Life Investment Managers
Italy – Equities
Mediolanum Gestione Fondi
Italy – Fixed Income
Generali Investments
Jordan
First Investment Group
Kazakhstan
RESMI Finance & Investment House
Kenya
Old Mutual Kenya
Korea
Korea Investment Management
Kuwait
KAMCO
Lebanon
Blominvest Bank
Liechtenstein
VP Fund Solutions
Luxembourg – Equities Value
Invest Asset Management
Luxembourg – Fixed Income
BCEE Asset Management
Malaysia
AmInvest
Malta
HSBC Global Asset Management
Mauritius
MCB Investment Management
Mexico – Equities
Citibanamex
Mexico – Fixed Income
SURA Asset Management
Netherlands
ING Investment Management
New Zealand
NZAM
Nigeria
FBN Capital
Norway
Skagen Funds
Oman
Bank Muscat Asset Management
Pakistan – Equities
JS Investments
Pakistan – Fixed Income
Al Meezan Investment Management
Paraguay
Puente
Peru
BBVA
Philippines
BDO Unibank
Portugal
Sociedade Gestora dos Fundos de Pensoes
Qatar
QNB Asset Management
Saudi Arabia – Equities
NCB Capital
Saudi Arabia – Fixed Income
JADWA
Singapore
Lion Global Investors
Slovakia
IAD Investments
Slovenia
KD Funds
South Africa
Argon Asset Management
Spain
Santander Asset Management
Sri Lanka
NDB Wealth Management
Sweden
AXA Investment Management
Switzerland
Swisscanto Invest by Zürcher Kantonalbank
Taiwan
Cathay Securities Corporation
Thailand
UOB Asset Management
Turkey
Garanti Asset Management
UAE
Emirates NBD Asset Management
UK
Santander Asset Management UK
Uruguay
Puente
US – Equities
BlackRock
US – Fixed Income
State Street Global Advisors
Vietnam
BIDV Securities
