Wise investments in times of market uncertainty

Market volatility is the phrase of our times. Geopolitical tensions, global economic slowdown and calls for new social orders have been shaking up markets all around the world. Global currencies, currently driven down by complex international affairs, are the main factor affecting market dynamics. In the UK, questions around Brexit and turbulent domestic politics have been the primary movers of sterling in recent months. A combination of all these factors is likely to keep markets volatile for the foreseeable future.

Uncertainty is constantly plaguing the investment world, with market downturns occurring frequently. However, it is important to remember that market setbacks are typically followed by recoveries and, when managed wisely, can represent opportunities rather than pitfalls. Investors who position themselves to take advantage of these movements can even benefit from uncertainty and volatility.

Investment trading can seem like a daunting task at times like this. In the latest episode of Cassiopeia Tv Channel FinancialFox, IR specialist Stefania Barbaglio interviews Angelos Damaskos, CEO and Investment Adviser at London-based Sector Investment Managers Limited, to talk about how best to navigate the waves of uncertain markets and the best investment options in the current situation.

Angelos is indeed very familiar with the investment world. Before setting up Sector Investment Managers Ltd, Angelos had 14 years’ investment banking experience with major banks in London, concentrating on natural resources. For 10 years, he was responsible for structuring the European Bank for Reconstruction and Development’s equity and debt investments in commodities, oil transport, food processing and retail projects in Russia, Ukraine and the Balkans. He also managed a portfolio of EBRD assets in the Balkans, Russia, Ukraine and Central Asia, including corporate restructuring and debt recovery.

The Oil & Gas market is transforming

The energy market is being re-shaped by pushes for renewable energy and concerns about climate change. Alternative energy sources have gained prominence in the market, while more traditional methods are losing their share.

It is undeniable that the oil market has suffered a downturn over the years as the economy moves away from fossil fuels, with the boom in US shale production in 2014 pushing prices down and leading to a difficult recovery. While Angelos believes that there are attractive oil and gas opportunities still to be explored in Latin America, West Africa, and Oceania, he says the global outlook for the oil market remains uncertain.

While the future may seem dubious for oil prospects, gas is increasingly gaining the spotlight in the UK’s energy mix. Because of its properties, gas is a more appealing source. There are some interesting UK companies focusing on gas operations and serving the domestic energy demand.

From Full Fact, 2018

Precious metals are the best investment

In terms of opportunities in volatile markets, Angelos is confident that precious metals are the soundest options. Exposure to precious metals is important to safeguard your investment in times of slower economic growth, especially in China and other emerging markets.

Angelos is positive about prospects for gold: “I have been a long-time bull for the gold price.” The main catalyst for gold price rises is geopolitics, says Angelos, as gold is seen as an important alternative investment to equities and a safe haven asset.

The role of gold in the current turbulent scenario should not under-estimated. Analysis of gold performance shows that it holds major importance at times of global currency unpredictability, often the direct result of political battles and fragile macroeconomic climates. Last week, gold prices performed well, amid European recession risks arising from US tariffs imposed on the EU and more tensions in the ongoing US-China Trade war. Gold is likely to remain with further gains in this scenario.

Bloomberg chart showing gold-backed ETF growth

Angelos is also bullish on other precious metals, especially silver, which follows the uptrend of gold and goes even higher, showing more upside potential: “When gold is on the uptrends, silver trends to outperform it.” Orchid Research is expecting a ‘strong’ rebound for silver in October, according to Kitco News.

Of the base metals, which are crucial elements in the supply chain for technology products and gadgets, Angelos says copper is the most important, and one to watch. Copper is versatile and has many applications across various industries, although the slowdown in the Chinese economy could bring a negative effect to its market.

His valuable advice for investors: “A very sensible, well diversified portfolio should have strong allocation to safe haven assets, particularly gold and silver. It should also have some exposure to senior miners, with solid operations with long-standing records of production, as well as exposure to junior companies that are growing in the industry, because these are the companies that control the assets that will be the future supply of the commodity market.”

Cassiopeia Services does not offer investment advice. It is very important to obtain professional advice when seeking investment opportunities. Each individual circumstance requires a specific plan that suits the investor’s needs and profile.

CASSIOPEIA INVESTOR SYMPOSIUM: AUTUMN EDITION — NATURAL RESOURCES

Angelos Damaskos will also be attending and giving a short speech about opportunities in the mining sector at our upcoming investor symposium in central London.

Registrations are free and open via Eventbrite: https://www.eventbrite.co.uk/e/cassiopeia-investor-symposium-tickets-73161204131

The economic power shift: New global dynamics powered by technology and innovation in emerging…

The economic power shift: New global dynamics powered by technology and innovation in emerging markets

The global economy has undergone fundamental changes over the last 20 years. The financial crisis in 2007–8, technology boom, and fast growth in emerging economies like China and India have all reshaped the economic dynamics around the world.

Commodities have lost their relevance in the global market, opening the way for technology to set new market rules. As a result, IT and consumer-driven stocks have predominantly become the backbone of the new economy.

In the 2007 MSCI Emerging Market Index, energy represented 18 percent and materials 15 percent, and together accounted fully for one third of the total shares, showing that commodities were still highly valuable for the global economy.

However, ten years later, the economic reality has shifted. The 2017 Index shows that those two sectors combined account for only 14 percent. Meanwhile, information technology has risen to 28 percent of the index, from 10 percent a decade ago.

One of the greatest drivers of the technology boom was the shift in mindset that followed the global economic crisis. People and society have become more conscious and as such have geared towards products and services that can provide an added value and have a positive lasting impact in society. Technology is the enabler to build tools and systems that contribute to a more balanced economy, clearly reflected in the market value of technology products.

Technology has challenged the status quo in virtually every sphere — from digital banking to personal virtual assistants, and will continue to do so as it develops. McKinsey estimates that applications of the disruptive technologies technologies could have a potential economic impact of between $14 trillion and $33 trillion a year in 2025. More than creating something new, these technologies are highly focused on increasing consumer and social value, especially in areas such as financial services, healthcare and access to information.

From McKinsey, Disruptive Technologies

The shift to a digital economy also propelled a shift in the global economic power dynamics, which used to be well established in the advanced nations in the north-western corner of the map. This is no longer true: emerging markets may quickly outperform developed nations in Europe and North America, largely due to their strategic economic planning, openness to innovative technologies, and large consumer market.

The PwC World in 2050 report shows that global economic power has been shifting towards Asia for a few years now, a process set to continue over the next few decades. China and India, the largest countries in the world by population, are leading this shift.

According to PwC, these two nations are well placed to lead the way in key areas of innovation linked to new digital technologies.

In the case of China, digital technologies are estimated to contribute anything up to 26% of its GDP by 2030, as compared to a global average of 14% of GDP. This reflects the country’s leading position in areas like mobile technology and e-commerce, its large domestic market and its increasingly highly educated workforce.

At the end of 2007, China accounted for 16 per cent of the Emerging Market Index, and Chinese tech companies 0.3 per cent, whereas by 2017 China had a 30 per cent allocation and China tech accounted for 12.3 per cent of the index.

Neighbouring India is also a tech-savvy nation, nurturing an old tradition of producing world- class computer programmers and technologists who contribute significantly to technological developments around the world.

China and India are just two prime examples of the economic potential held by the populations in developing nations and the vast scope for technologies and services to succeed in those markets. By 2030, 80% of the world’s middle class will be found in developing countries, and they have increasingly more purchasing power. Developing countries are where technology can have a bigger social impact and makegreater contribution to the economy.

Over the coming years, there will be a restructuring of the global economy with non-OECD economies expected to account for 57 percent of the world GDP by 2030. By 2040, the economies of E7 countries, the group of greatest emerging economies China, India, Brazil, Mexico, Russia, Indonesia and Turkey, will be double that of G7 countries.

Of course, such a drastic change in the economic scenario has prompted paradigm shifts and some unwanted consequences, so the need to understanding the opportunities and challenges is urgent.

In order to create a more balanced global economy, governments and organisations are attempting to tackle the aftermath of this power shift, such as the rise of political extremes and inequality, as well as debating how to shape rules and regulations for an economy that is founded on the flow of data and information.

The Fintech Boom: Technology brings obsolete financial systems up to date

The merging of financial services and technology birthed the fintech industry, one of the fastest growing markets over the recent years, which is not only improving financial services but also spurring economic growth and development in many parts of the world.

We haven’t even reached the end of 2018, and this is already a record year for global Fintech investment. Just in the first half of 2018, the global fintech sector accumulated $41.7billion — up from $39.4bn in 2017.

The introduction of technology into the once obsolete financial system meant that service providers are now taking heed of customers’ needs. This has created systems which are faster, cheaper and more convenient, and understandably, has made customers turn their heads away from the old institutions which had once dominated financial services.

Banks and well-established financial services providers are now turning to tech developers looking for ways to innovate and improve their products and services. In North America alone, it is reported that banks spent nearly $20bilion on new technologies in 2017.

Fintech is indeed one arm within the Fourth Industrial Revolution, whose core aim is to deploy innovative technologies to empower individuals over their own finances and information.

The expanding pace of the fintech market shows that customers adopt fintech systems quickly. Research from PwC revealed that customers are increasingly more open to non-conventional ways of managing finance, with 30% of consumers planning to increase their usage of non-traditional financial services providers. The growing demand has also led venture capitalists to invest substantially in fintech projects, with investment in fintech companies up 41% over the last four years according to PwC’s data.

Fintech and Development: The case of Africa

The disruptive power of fintech applications is even stronger when applied to address the needs of the populations in developing economies. A very evident example is seen in African countries, where vast adoption technology has spurred the movement of leapfrogging, accelerating economic and GDP growth.

Africa has been at the forefront of fintech over the past few years, with an impressive number of startups using technology to address the most fundamental problems across the continent.

Mobile banking is said to be of one of the most successful and impressive cases of the evolution of Fintech; this is especially true in the case of Africa. Because of the incredibly high rates of financial exclusion in Africa, mobile money came to fill in this gap, providing affordable alternatives for managing and transferring money to millions of Africans who had never before had access to banking services.

The contribution of the fintech industry to sub-Saharan Africa’s economic output will increase by at least US$40-billion to $150-billion by 2022, according to Financial Sector Deepening Africa, a development finance organisation.

The fintech sector is currently employing about 3 million people in Africa, of which mobile companies account for a great part. “If you look at the value chain, most of that money is coming out of mobile phone companies,” says Evans Osano, director at FSD Africa Financial Markets.

“So from the other support services the contribution is not much, but is expected to increase as fintech develops to address the financial needs of people or making services more accessible.”

Switzerland: The European hub for Fintech firms

In the developed world, we see that Switzerland is shaping up to become one of the fintech hubs.

“In Switzerland you’ll find long-term vision. Switzerland has the most decentralised political system in the world and its citizens are in full control of the system. This guarantees extreme stability on the one hand, and on the other hand competition among the cantons and its municipalities. This results in very friendly and flexible social and business rules, low taxation and high service delivery,” says Swiss entrepreneur and fintech expert Marc P. Bernegger.

“While Switzerland has not been a well-known global hub for start-ups, I think we can now see some very positive changes such as political and public discussions around incentives for startups, the launch of incubators and accelerators, and not least a change in perception of what it means to be an entrepreneur. “

In fact, Switzerland has shown itself to be open-minded and friendly to new technologies. The country is home of one of the hottest spots for crypto and blockchain matters in Europe, the Crypto Valley, in Zug.

The presence of the Crypto Valley combined with the country’s tax-free policy for crypto investors has given Switzerland the reputation as the number one most blockchain-friendly country in Europe.

Fintech+ is a new Fintech initiative in Switzerland, where big fintech names come together to realise their mission of transforming Switzerland into a global hub for tech innovation.

The 2018 edition will focus on the disruptive nature of AI in fintech and sustainable finance. You can see the agenda and speakers here. For more information, get in touch with us at info@cassiopeia-ltd.com

Our Director Stefania Barbaglio will be discussing with John Hucker, President of Swiss Finance + Technology Association (SFTA)the importance and role of Fintech in next week Financial Fox TV show

Stay tuned and make sure you subscribe to our Financial Fox channel