Ahead of next month’s rate decision, Swiss National Bank policy makers keep reminding markets that there’s room to go lower. So far, the verbal guidance has been successful in stemming the rise of the franc, says Adriano Lucatelli, CEO of Descartes Finance. “People trust the national bank that they will not do it, but they have never been really, really tested by the global currency markets.”
UK stocks surged and the pound shot up on the prospect of Boris Johnson’s victory speeding up Britain’s departure from the European Union. Andrew Milligan, head of global strategy at Aberdeen Standard Investments, explains why investors are celebrating an event that once sparked selloffs.
Taxing empty commercial property units and speeding up the development of idle plots of land in Hong Kong would help resolve the housing crisis, says Richard van den Berg, fund manager at M&G Asia Property Fund. Hong Kong’s housing shortage has been a source of contention for young people priced out of the city’s expensive property market.
With a conservative government in charge, Brexit is more likely to actually happen in 2020. Now that Boris Johnson has the majority, his deal is better positioned to get through, and what businesses want is certainty, says Hadas Gold, European politics reporter for CNN.
Thomas Jordan, head of the Swiss National Bank, seems unfazed by growing criticism of the SNB’s monetary policy, standing firmly behind its “very productive” decision to keep rates negative. “We are exposed to many shocks from abroad,” says Jordan, who dismisses the side effects felt by banks and pension funds at home in keeping the status quo.
After another confirmation of the ultra-low interest rates by the Swiss National Bank followed by the European Central Bank on Thursday, investors should keep an eye on negative side effects. According to René Hermann, senior partner at I-CV, too much money is flowing into corporates. “Certain companies would not be existing anymore without these low interest rates,” he says.
The Swiss National Bank on Thursday cut its outlook for inflation to a mere 0.3 percent this year and 0.6 percent in 2020. The SNB’s goal is price stability, says Rudolf Minsch, chief economist at economiesuisse, adding that Switzerland doesn’t need inflation as such. “What we do need is real growth, inflation-adjusted growth,” he says, “so that the value added in Switzerland will be higher in the future, not just increasing numbers.”
The WTO’s Appellate Body, which has the final say on trade disputes, ground to a halt today after the U.S. blocked the appointment of further judges to its panel. This impasse opens the way for the biggest economies to take “a go-it-alone approach,” warns Pictet Asset Management chief economist Patrick Zweifel. “We are back in the law of the jungle,” he says.
Thanks in large part to Alibaba’s secondary listing, Hong Kong has made more than USD 37 billion in proceeds from IPOs in 2019, more than any other exchange, KPMG said in a report on Wednesday. Hong Kong’s standing as one of the world’s most attractive financial centers remains intact despite six months of unrest, says Cord Hinrichs, head of asset allocation at Corestone Investment Managers. But in other activities, the situation in the region is far from business as usual, he adds.
In today’s global economy, products are put together in one country from components sourced in other countries, and then sold all over the world. That model is about to change, thanks in part to the U.S.-China trade dispute, says Lars Kalbreier, chief investment officer at Vontobel Wealth Management. The uncertainties over trade will spur businesses to invest in technology, such as robotics, in order to produce closer to their consumer base.
Switzerland’s financial supervisor on Tuesday highlighted negative interest rates as a major risk for the country’s banking industry, saying they undermine profitability and business models. It was the first such report from Finma and it comes amid a growing debate over the need for subzero rates to protect exporters. “We’re always happy if the franc is not too strong, but the companies are used to it,” says Eugen Perger, senior analyst at Research Partners. He says many have taken steps to cope, including by diversifying production and hedging.
With many asset classes doing extremely well in 2019, investors are facing challenging decisions. “What you see is a picture that is assuming more positive than negative news,” says Christopher Gannatti, head of research in Europe at WisdomTree.
Switzerland is witnessing a growing backlash to its subzero interest rates even as the Swiss National Bank continues to remind currency markets that it can go lower. The central bank needs to do a much better job of explaining its policies to the public, says Karsten Junius, chief economist at Bank J. Safra Sarasin.
In a bleak year for active funds, asset managers are looking to the insurance industry as a new source of growth for their beleaguered business. In particular, they are trying to persuade insurance companies to outsource management of complex, illiquid assets such as private debt and infrastructure, says Christina Böck, partner at Indefi.
Many large companies and organizations finish off their year with an annual engagement survey. According to Marco Meister, co-founder of Volunty, companies should rather focus on regular pulse checks and ask their employees about their needs in order to measure their engagement. With the current skills gap and a new generation entering the labor market, employee engagement is more crucial than ever.