Alternatives, Illiquidity, Gold and a Financial Engineering Challenge

Stockholm (Ekonamik) – Ahead into the Scandinavian summer lull, we peeked into alternative markets, talked with Innolab Capital’s Peter Smedegaard, noted the ongoing liquidity concerns floating around in the market and reported on the long term challenges Re-Define’s Sony Kapoor described at the TBLI conference.

Echoing a view expressed by Niels Jensen last week, Mr Kapoor argues that developing markets are facing bad headwinds from productivity, demographics and debt and that they should thus turn to emerging markets. We think he overcomes the concerns voiced earlier by Eelis Hein, by focusing on illiquid investments, but as Kapoor notes, our Western financial system is not presently equipped to facilitate this sort of intermediation. Untying this knot is the “financial engineering challenge of our generation”.

The main event this week was the G20, but as we noted in our news roundup that was mainly noise. In Mexico, the central bank held rates constant, while in the USA data releases continued to paint a less-than-flattering picture of expectations. Across the pond, everyone was still digesting Draghi’s comment from the previous week and Pictet turned bullish on European credit.

More concretely, the departure of Apple‘s top designer did seem more substantial as did the continued appreciation of gold. Very little happened in Equity markets where performance was mixed.  The short end of the US Treasury yield curve steeped into further negative territory, of the curve while its Chinese counterpart steepened into the opposite direction. Meanwhile, H2O joined Woodford in being scrutinised about its liquidity and the potential conflict of interest in some of its investments.

On a lighter note, and because the holidays really are upon us, we wanted to leave you with some recommended reading/listening. We have published a list of suggestions about Empires and about Technology and AI that we think you might enjoy during your break.

IN FOCUS: Alternatives

This week, Ekonamik focused on Alternative Markets. In an interview, Innolab Capital’s Peter Smedegaard told us about Innolab Capital Alpha, a beta-neutral fund based on deep learning that aims to deliver exposure to untapped non-linear risk premia.

Our review of Asset managers insights highlighted the views analysts at Pictet, J.P. Morgan, Hermes, Aberdeen, PIMCO, Ares, M&G Investments about private lending and whether it will continue to boom or whether a correction is on the way.

Picture from Pixabay

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