Sticky situation for the EU

Forever criticised for having all the flexibility of a mega-tanker manoeuvring in treacle, the EU is once again in the spotlight for a likely delay to the commissioner hearings.

Originally scheduled for the end of this month, a rush of late nominations means the hearings will happen later than planned and the new Commission will not be in place until the end of the year.

On the plus side, this gives the nominees longer to prepare and to digest the deluge of policy recommendations from those hoping to influence the political and financial framework for the coming five years.

Among them is the EU Principal Traders Association (FIA EPTA), which believes the EU needs to "urgently bolster its capital markets to achieve its strategic objectives for a safe, green and prosperous future".

The Association says the EU’s capital markets lack sufficient depth and diversity of liquidity, arguing that the region falls short of its developed market counterparts.

Piebe Teeboom, Secretary General of the FIA EPTA, says the EU is "underperforming relative to the US and is increasingly falling behind other global markets. This perception contributes to declining capital allocation towards European markets and the migration of share listings elsewhere".

Unsurprisingly a key focus for the FIA EPTA is centralised, harmonised and simplified regulation.

The disparate and uncoordinated supervisory approach across the Union – and its lack of cohesion with Switzerland the UK – are major hurdles which Teeboom says must be overcome if the EU is to stay competitive.

The Association recommends enhancing the attractiveness and global competitiveness of EU markets by setting clear competitiveness objectives, fostering greater competition, streamlining regulatory processes and simplifying regulatory regimes.

This sounds sensible but whether it is realistic is another matter.

In other news, reasons for the hedge fund world to celebrate. Preqin’s July hedge fund report highlights that Preqin’s All Hedge Fund Index was up by 1.61 per cent in July 2024, only 17 basis points off the MSCI World Index, at 1.78 per cent – the closest gap between the two indices since July 2019.

Charles McGrath, lead author of the report, notes that the "unusually close gap" between the two indices was driven largely by the bond market and small-cap equities’ outperformance working in hedge funds’ favour, following the prospect of central bank interest rate cuts globally.

But celebrations could well be short lived, according to McGrath, who warns that the wider hedge funds universe is expected to see continued volatility as it moves into September.

Key contributors include the Bank of Japan’s July 31 rate hike, and managers’ reduced major technology holdings as second-quarter filings began to be released, which could leave them on the outside should August’s rebound remain on track when the month-end data comes out.

Finally, IAM is very pleased to announce the opening of the voting process for the Institutional Asset Manager service provider awards for 2024. Follow this link to place your votes for your favourite firms.

Voting is open until 25th October, 2024 and the awards event will be held on 4th December in central London.

Gill Wadsworth, Editor, Institutional Asset Manager

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