2 years ago
Gulf Insider catches up with Yves Bonzon, Group Chief Investment Officer and member of the Executive Board at Swiss Wealth Manager, Julius Baer to discuss their secular outlook, what’s to come in the financial markets, and advice for investors for the second half of 2022. The 2022 market decline has been extremely broad-ranged, from safe-haven bonds to equities. What do you predict is next? The market decline during the first half of 2022 was a broad-based reset for the new paradigm that resulted from the geopolitical situation in the wake of the war in Ukraine. This can be summarized as the ‘end of the era of supply abundance in the Western world’ (cheap labour, capitals, raw materials, energy, cheaply manufactured goods, etc.). For three decades, we were living in a state where supply was never a problem. The central banks stepped in to support the market during every single shock that the Western world has experienced. In the wake of the Ukraine war, the reaction function involved the central banks beginning to change. In the midst of a shock such as this, for the first time, we saw the federal reserve tightening interest rates, monetary policy, etc. This is how […]
3 years ago
Gulf Insider interviews Mark Matthews, Head of Research in Asia at Swiss Wealth Manager Julius Baer. Markets are on a rollercoaster ride. Where do you see this heading? Lower – and I think the roller coaster will continue. So, how much further down really is contingent on the economy? What I mean by that is do we get a recession or not? We can look back in history and see that since World War II, there were eight bear markets that were not accompanied by recessions, and there were nine that were. For the eight that were accompanied by recessions, the average decline was 24%. That’s only about 5% below where we are now. If you were to exclude the Flash Crash of 1987 which was a 37% decline, the average is only about 20%. So, if we’re not going to get a recession, I’m comfortable saying that we shouldn’t go down that much more, maybe around 5%. However, if there’s a recession, then we’re looking at a big fall in earnings. The Fed issued the biggest rate hike in 22 years. What is your view on how it will impact financial markets? Do you think this will help in […]
3 years ago
By Dr. Damien Ng, Next Generation Research Analyst at Swiss Wealth Manager, Julius Baer Bringing together physical and mental well-being Our personal well-being is closely intertwined with the state of our health. For this reason, sages of the ancient world have long taught about the importance of the art of living a balanced lifestyle that combines fitness and health with emotional well-being and relationships. Despite the passing of time since such knowledge was discovered, healthy living remains as relevant as ever for the present-day world. Due to the increasing demands of the modern way of life, however, chronic diseases and other health conditions have been on the rise. An increase in office-work environments and the frequent use of smartphones and computers, add to the growing prevalence of inactivity, not helped by the easy availability of processed foods rich in sugar, salt, saturated fats, and calories, while more stress and anxiety arising from the frantic rush of everyday life, ultimately takes its toll on our mental well-being. “More people are turning to healthier lifestyles to keep their immune systems strong.” Indeed, physical and mental well-being constitute two important components of overall health. Not only can individuals be debilitated by chronic physical […]
3 years ago
Charlie Cooksey talks to Christian Gattiker, Head of Research at Swiss Wealth Manager, Julius Baer on investing in the last quarter of 2021. Are we facing inflation or deflation, and how does it affect investment decisions? We are facing a bit of both. In the long-run, we’re certainly facing deflation, with falling prices in the past 30-40 years and all the more during the pandemic. What changed during this kind of normalisation is that we have had a spike in inflation and the question now is – is it transitory or will it remain this way? Our take is that we’re in a rather intermediate increase of inflation, which is very much related to the fact that lots of things were shut down and now reopened, so there’s a scarcity of some things and that pushes up the prices. Then we see a normilasation. That means we’ll most probably end up where we were before the crisis. Meaning not deflation, but rather pricing should be in time. Why do you believe the extent of the global economic recovery is being underestimated? We suspect that the blueprint is a different one from what we usually have of the growth crisis. The […]
4 years ago
Yves Bonzon, Group Chief Investment Officer at Swiss Wealth Manager, Julius Baer talks to Gulf Insider on how the pandemic impacted secular trends and opportunities going forward. Did you see a major shift in trends from 2019 to 2020 due to the pandemic? The pandemic did not as much shift secular trends as accelerated them, and substantially at that. When we first formulated the key themes for this decade, we hypothesized the end of the neoliberal era was close and envisioned a new unorthodox policy template which places a greater importance on fiscal stimulus and debt monetization, as suggested by proponents of Modern Monetary Theory (MMT). The immediate policy response to the Covid-19 crisis was taken right out of that MMT policy toolbox – with governments rushing to implement massive stimulus programs, backed by central banks annihilating rates to their lowest levels, while pumping liquidity to support asset prices. Recently, the Federal Reserve Chairman, Jerome Powell, confirmed that the central bank will not even think about raising rates until they see the white in inflation’s eye. This is an extreme departure from the old policy paradigm. How has Covid-19 changed how you look at strategic asset allocation? The Strategic Asset […]
4 years ago
With the coronavirus pandemic forcing us all to re-evaluate our day-to-day lives and priorities, the era of conscious consumption has well and truly begun. How the corona crisis impacted consumption In the past year, our view of the world has changed. The corona crisis turned our lives upside down as country after country moved into lockdown. What was normal before was not normal any more, especially for those who caught the virus. As we became locked down, we were forced to slow down. We had to think about what is important in life – health and wellbeing, family and friends. We were confronted with many questions we did not consider when we were caught up in our daily routines. We also realised that, in addition to being places to live, our homes had to accommodate all aspects of our lives. Zooming out from the personal perspective, the biggest challenge of the crisis has been to balance health risks and wealth risks. Focusing on the former while not losing sight of the latter. Thanks to these, consumption in most countries has recovered very swiftly. According to local statistical offices, for seven out of ten of the world’s largest developed and developing countries, […]
4 years ago
By Ahmad Chahidi, Executive Director – Wealth Planning, Julius Baer (Middle East) Limited You think that squeezing all of your family’s assets into the same structure will reduce complexity? In our experience, this doesn’t hold true. We have identified seven common mistakes to avoid when setting up a trust. What is a trust? A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. Julius Baer’s three trust companies have existed for decades. Two of them have been serving clients for over 30 years. The youngest trust company in Singapore will turn ten this year. Throughout this time, we have talked to clients from all over the world about setting up structures for their families. But how to best set up a trust? And what are the things to be aware of? Learn from seven common mistakes made by families around the globe: 1. Mixing up trusts with bank accounts A well-planned trust sets significant funds aside for the longer term to ensure that there is capital for […]
4 years ago
Christian Gattiker, Head of Research and Mathieu Racheter, Strategy Research Analyst Emerging Markets, at Julius Baer take us through eight events that would qualify as “low probability-high impact” in 2021. Thinking the unthinkable Expecting the unexpected does not only defy linguistical logic but also, is a very hard thing to do. After issuing our yearly outlook expectations, we are regularly asked about what could go wrong and what would be the most devastating things that could happen. That usually leads straight into black swan discussions. This is when we throw in that even Nassim Nicholas Taleb, who hammered the term ‘black swan’ into the consciousness of the financial community, has declared that neither the Great Financial Crisis nor the Covid-19 pandemic qualify as black swan events as these types of risks have been known for generations. We therefore settle on the term ‘low-probability, high-impact events’ hereafter to discuss the uncertainties in the months ahead. 1: An utterly dull 2021 disappoints high-flying hopes After coming out of a crisis, investors expect things to continue as least as spectacularly – for good or bad – as during the crisis. History tells a different story. After the heavy interventions of policymakers, markets tend […]
4 years ago
By Diego Wuergler, Chartered Financial Analyst (CFA), Head of Investment Advisory, Bank Julius Baer If investment is a journey, then asset allocation is its guiding star. Here are four steps towards building an investment portfolio that suits your needs. Getting your investment portfolio right requires getting your asset allocation right. When it comes to returns, 80 per cent of the result can be attributed to asset allocation yet many investors don’t realise this. Whether you’ve recently inherited funds, turned a cash profit by downsizing or simply decided to start structuring your wealth, it pays to work through the four steps below. Step one: Map-out your game planWhat would you like to achieve? And by when? No-one invests just for the sake of it – there’s always an expectation driving our investment behavior. But we only know if our expectations are met when we truly understand them. This requires taking time to specify your needs in detail: what are the exact financial and wealth goals you wish to achieve? This can be more wide-ranging than we initially think, spreading past desired profit levels to include philanthropic or entrepreneurial goals, as well as the fulfillment of dreams such as home ownership, renovation or travel. In determining your game plan, […]
4 years ago
By Diego Wuergler is Head of Investment Advisory at Julius Baer. Are you missing out? On average, cash represents 1/3 of the typical investor’s portfolio. It’s not too late to buy, and you should still buy at today’s level. Buying today is not difficult to do, but find out how you can avoid a few mistakes. Most of us trust what we are told. Since COVID-19, we have been constantly informed that we are in the worst crisis ever and that life will never be the same again. Studies have quantified the immense damage. On a daily basis, we are being confronted with stories of human tragedies. It’s no wonder that so many investors are still loaded with cash today. A lot of it. On average, cash represents 1/3 of the typical investor’s portfolio. Ironically, the market has quickly dismissed this challenging news and recorded a tremendous rebound since the lows of September: +60% for the S&P500 and +55% for the MSCI World. What should investors still sitting on cash (and having missed the boat) do today? Is it too late to buy? No, it is not too late. In my view, you should still buy at today’s level. Or maybe […]