Institutional Asset Manager Newsletter

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NEWSLETTER | 23 Oct 2020

“First you worry about fighting the war, then you figure out how to pay for it”

Debt is at the top of the agenda, with governments and companies seeking ways to hold out as the economic impact of coronavirus continues to put severe pressure on sovereign and corporate finances.

UK government borrowing has passed an all-time-high of GBP2 trillion, while the IMF says that public debt globally is almost at 100 per cent of output this year.

As Carmen Reinhart, chief economist at the World Bank, puts it: “First you worry about fighting the war, then you figure out how to pay for it.”

Already-indebted businesses need further access to capital perhaps even more than they did during the aftermath of the 2008 financial crisis, according to the world’s largest asset manager, BlackRock.

With the pile of sub-investment grade debt more than doubling to USD5.3 trillion since 2007, BlackRock is recommending a rise in allocations toward private credit.

In the UK, Chancellor Rishi Sunak is attempting to prop up struggling businesses by extending support measures for businesses that cannot afford to keep staff employed full-time during the pandemic.

However, this hasn’t stopped investors punishing UK equity funds with heavy outflows as post-Brexit trade negotiations wear on without a deal in sight, and as dividends halve in three months. Deal or no deal, value investors say this is not a time to lose faith, as UK stocks now trade at a significant discount to US and Europe.

On the other side of the globe, Japanese equity funds have started to look appealing, as the balance sheets of Japanese companies are cash-rich and have become a source of strength during the pandemic. Investor sentiment may still be held back by Japan's central bank’s rate review next week, in which it is expected to cut its growth and price forecasts for the current fiscal year.

Meanwhile, the world’s largest asset managers have added 15 per cent more assets to their books in the past year, sending overall AuM to a record USD104.4 trillion.

Madeleine Taylor
Editor, Institutional Asset Manager

Corporate restructuring need creates “historic opportunity” in private debt, says BlackRock

Fri | 23 Oct 2020, 11:12

The scale of the corporate restructuring needs globally “could exceed the previous peak seen after the 2008 global financial crisis”, according to a recent note from BlackRock.

Fri | 23 Oct 2020, 11:12

The tide may be starting to turn for Japanese equity funds, as Japanese companies’ cash-rich balance sheets and improvements in corporate governance reduce scepticism from global investors.

Fri | 23 Oct 2020, 11:12

Finastra and CloudMargin have formed a global partnership to deliver an integrated collateral and margin management solution to market participants of all sizes through a Software-as-a-Service (SaaS) model.

Fri | 23 Oct 2020, 11:12

The Global Digital Asset and Cryptocurrency Association (Global DCA) has launched with the aim of guiding the evolution of this new technology within a regulatory framework designed to build public trust, foster market integrity and maximise economic opportunity for all participants.

Bitfinex supports pNetwork

Fri | 23 Oct 2020, 11:12

pTokens, a cross-chain system enabling assets to move frictionlessly from one blockchain network to another, is to list its pBTC, pETH, and pLTC, tokens on non-custodial digital asset exchange and iFinex brand eosfinex, bringing the top crypto assets to the EOS blockchain through the Bitfinex on-chain ecosystem.

Digital innovation breaking ground in Singapore

Fri | 23 Oct 2020, 11:12

The Monetary Authority of Singapore (MAS) has been proactive and transparent with licensing requirements, compared to other jurisdictions. The Digital Acceleration Grant (DAG) programme incentivises firms to modernise operations, equipping smaller managers with the necessary technology and helping new funds get off the ground. This programme, coupled with geopolitical influences, contributes to Singapore accelerating as a safe-haven for money and financial institutions.

Turning potential into reality

Fri | 23 Oct 2020, 11:12

The ASEAN region has demonstrated itself as a major area for investment and potential growth. However, much of this growth is still on the horizon and yet to be materialised. For the prospects of the ASEAN region to reach their true potential, the current environment requires cost efficiency, scalability and talent. These are critical factors to creating a supportive ecosystem.