Thursday 18th October 2018
Mobile operator EE has said it will activate the UK’s first live 5G trial network in London’s Tech City in October –The UK government says organisations that are aiming to establish themselves or expand as Public Service Mutuals can now apply for a share of £1 million in funding -- India’s central bank raised its benchmark interest rate for the first time since 2014 to curb rising price pressures and calm financial markets as policy tightening in the US rattles emerging markets – A new report from South Africa's Reserve Bank (SARB) contains exception results for a trial of its blockchain-based system for interbank clearance and settlement. According to a release yesterday SARB says it has completed a 14-week "realistic" proof-of-concept that managed to settle the country's typical 70,000 daily payment transactions within two hours, taking an average of 1–2 seconds for each transaction while preserving full anonymity. Absa, Capitec, Discovery Bank, FirstRand, Investec, Nedbank and Standard Bank are among a slew of banks that participated in the exercise. Even so, despite the success claims, SARB says its proof-of-concept doesn't mean it plans to replace the existing real-time gross settlement (RTGS) system with a live blockchain implementation, yet – According to Mickhail Shlemov, VTB’s Capital’s head of research today, “With the demerger of Bank of Georgia Group’s investment business to Georgia Capital PLC, we have revised our forecasts for Bank of Georgia Group so that they now include only the banking business. We expect the bank to benefit from this demerger amid an acceleration in corporate loan growth (although retail lending is likely to decelerate), with the total loan book expanding at a CAGR of 11% in 2017-21F. However, NIM performance headwinds are likely to stay intact. Management has reiterated its strategic targets, and we also expect the bank to show ROE of more than 20% in the next three years, with a 40% dividend payout ratio. As a result, our new 12-month Target Price is GBp 2,300/share. This implies an ETR of only 14% (the stock is up 10% since demerger day).” On May 29th, Bank of Georgia Group (BOGG) announced the completion of the demerger of the Group’s investment business to Georgia Capital PLC. As a part of the process, the bank has issued 9.8mn shares (up to 19.9% of the total share count) to Georgia Capital. Yet the capital will also be diminished by a special dividend payment of some GEL 120mn (GEL 3.10/share), similar to the proposed BGEO Group payment – Reuters reports that European parliament member Danuta Huebner says that London’s call for EU access after Brexit under mutual recognition will not work. Equivalence would let the EU set the rules – Scott Eaton, the former chief operating chief for Europe at MarketAxess has been appointed CEO of Algomi following the departure of co-founder Stu Taylor earlier this year. Eaton has taken over the role with immediate effect and will focus on developing Algomi’s fixed income services, including data aggregation and the Algomi ALFA market surveillance tool – The FCPA Blog notes today that banking giant Credit Suisse Group has agreed to pay a $47m penalty to the US Justice Department to end an FCPA investigation into hiring practices in Asia -- The Securities and Exchange Commission (SEC) voted Tuesday to approve a proposal to modify the Volcker rule, the last of the five agencies responsible for the rule to do so. The proposal is now open to a 60-day public comment period. Treasury Secretary Steven Mnuchin called the move "an important first step" and noted Treasury's support for "better tailoring the application of the rule, preserving liquidity during periods of stress, decreasing unintended compliance burdens and encouraging capital formation." --

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Kathleen Hughes

Kathleen Hughes

Emerging Market (EM) corporates are as varied as the language, climate and cuisines of their home countries. Investors should consider a structural allocation to EM corporate debt, a growing, diverse and high-yielding asset class that we believe has earned its place at the global investment table. Exposure to EM corporate debt makes sense in the current market environment and offers relative value versus other fixed income sectors. By  Kathleen Hughes, European Head of Institutional Sales and Global Head of Liquidity Solutions Sales, Goldman Sachs Asset Management

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Tuesday, 04 July 2017 09:53

Secular Reflation: The Long-Term View

Inflationary trends are likely to dominate markets in the months and years to come, as a range of influences that have suppressed prices over the 10 years reach inflection points. Nevertheless, two important exceptions will continue to exert downward pressures: an expanding workforce in services and increased competition as a result of technological disruption. Kathleen Hughes, European Head of Institutional Sales and Global Head of Liquidity Solutions Sales at Goldman Sachs Asset Management, explains.  

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Thursday, 27 October 2016 08:05

Has monetary policy reached its limit?

In Japan and the eurozone, it increasingly appears that monetary policy easing is effectively at its limits, thinks Kathleen Hughes, head of European Institutional Sales, Goldman Sachs Asset Management

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Thursday, 29 September 2016 08:18

Finding opportunity in market disruption

Kathleen Hughes, head of European Institutional Sales, GSAM writes that disruption is often associated with a breakthrough technology that challenges existing business models. The same connotations exist in investing and a wide variety of disruptive forces are at work in equity markets today. We are constantly sizing up changes and competitive threats that could create new winners and losers and recognise that in times of change, sentiment and valuations can overshoot in either direction, creating a wealth of opportunities. An understanding of how disruption plays out across sectors is central to identifying the best investment opportunities.  Three sectors that could feel great pressure from disruptive new entrants are: Technology, Financials and Real Estate Investment Trusts.

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Emerging Markets are a potent force in today’s world. According to the IMF, Emerging and Developing Economies account for 61% of world GDP and figures from JP Morgan suggest that EMs now have a 30-35% share of global bond markets. A frequent question I hear concerns flows in and out of Emerging Market debt (EMD).  The typical narrative centers on the “tourist money” that flooded the sector post-Global Financial Crisis in search of higher growth, and seeking an escape from the over-levered balance sheets of developed market countries.

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Over the past year corporate credit spreads over Treasuries have adopted a widening trend. This has been driven by a range of indicators, including weak commodity prices, concerns over growth in China, diminishing returns from central bank easing and fear of a US recession. Based on current spreads and those seen in previous recessions, the market is pricing in about a 30% probability of recession this year. Kathleen Hughes, head of global liquidity sales and European Institutional Sales at Goldman Sachs Asset Management, discusses whether credit markets are predicting a downturn.

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Thursday, 28 January 2016 18:08

GSAM: The Data Revolution in Investment

Every so often, a new buzzword or phrase enters the lexicon as if from nowhere. Its definition is often vague but that doesn’t stop its swift and widespread appropriation, sometimes to confusing effect. 

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Tuesday, 10 November 2015 16:24

Clearing the roadblocks to LDI

At its most basic level, liability-driven investing (LDI) began as a strategy for reducing the exposure of defined benefit (DB) pension plans to the volatility of unfunded liabilities, which could potentially require the sponsor to contribute to the plan. This relatively straightforward hedging exercise was often accomplished by shifting a portion of plan assets from equities to long-duration fixed income, or using derivatives to overlay duration while maintaining larger exposures to return-seeking assets.

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