Capital Markets Corporate

May 25, 2018

Our Weekly Newsletter

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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

Bleak Hopes for the Future

New research shows that only one quarter of UK adults under 40 expect to save enough during the course of their professional lives to enjoy a comfortable retirement. The findings vary based on gender and political belief, with about half of young adults predicting they will be “poorly off” in the future. (From Corporate Adviser, 15 May 2018)

Up, Up We Go

Defined benefit pension transfers volumes doubled last year to £21 billion as the number of IFA firms active in the market has continued to increase. The rise in transfer volumes is in step with a rise in the number of advisers who have gained permission to carry out transfers over the last few years. Rumblings continue that this could be a mis-selling scandal in the making. (From Citywire, 21 May 2018)

Growing the Pot…Not

In 1928, an anonymous donor gave the British state £500,000, with strict instructions that the money could not be used immediately but rather be ring-fenced and invested until it was big enough to pay off the entire UK national debt in one go. Had it been wisely invested the sum of money would have grown enough by 2018 to fulfil the donor’s intent. (From The Times, 22 May 2018)

Martial Manoeuvres to Tackle Cybercrime

Financial institutions are bringing in former government cyber spies, soldiers and counterintelligence officials from Iraq and Afghanistan to attack a new enemy: cybercrime. This criminal activity is one of the world’s fastest-growing and most lucrative. In 2017 it cost companies $445 billion globally. (From The New York Times, 20 May 2018)

Short-Term Strategies’ Long-Term Pain

Most of Wall Street today is too focused on “shareholder value”, though many see this as an euphemism for “get the price of your stock up and keep it going up” regardless of the damage this short-term view can cause to employees, communities and suppliers. Do we need to rethink short-termism for long-term gain? (From The Washington Post, 18 May 2018)

Where’s the turmoil?

At the start of 2018, most market sages were predicting the end of plain sailing. But as we approach the halfway point of the year, all we have seen is that markets have been (mostly) steady. So what happened to the dreaded turmoil? The New Year brought promises of market volatility based on the prediction of interest rate hikes in Europe and the US, trade wars and a market correction of overpriced stocks.

Of course, the fears of turmoil have been stoked by Europe and the US’s less than stable political climate. Brexit, Trump and the strengthening populist governments’ popularity were all meant to have led to a terrible year for markets. In the UK, things were also supposed to have hinged on successful Brexit negotiations.

Rumbles of volatility were heard in February as US markets’ Global Volatility Index (VIX) shot into the stratosphere. In the end though, it all led to little more than a revelation that too many whizz-bang products were tied to the ‘fear index’ as opposed to it being a real bellweather for market disaster.

But rampant turmoil has been largely missing. The FTSE 100 stands at a year high, edging towards 8,000, and bulls are predicting this run could tip markets past 10,000.

Globally, economies are ticking along nicely with solid growth, oil is up and the US has seemingly put its plans for a trade war with China on hold.

And yet, despite it all, soothsayers are sticking to their views. Some have pointed to record levels of share buybacks as the ‘smoke and mirrors’ keeping markets buoyant, while others just think we are treading water before an epic correction in 2019 of as much as 60%.

Only time will tell, but for now better to stick to the one reliable prediction we know of: that markets will always have ups and downs, and that is the only thing everyone can agree on.

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