The year 2019, a year filled with hot headlines such as heatwaves in a desert. The economic downturn and fear of recession were the top concerns amongst smart money and family offices. These concerns were on the back of the tumultuous trade war between the U.S. and China. This trade war kept the global central banks on their toes and they took a weapon of mass protection out, once again—the dovish monetary policy.
This monetary policy drove bond yields to the ground, the Treasury yields in the U.S. touched levels that haven’t been witnessed in decades. The feeble global growth and lower bond yields have shifted the investment focus among family offices and High Net Worth (HNW) individuals. They struggled to find bonds with positive yields and the scarcity of these assets altered their investment strategy. They have started to favour “impact investing”.
At its core, impact investing combines financial returns with social impact or a friendly environmental outcome. Since 2018, this term has been more of a buzz word. However, this niche investment attracted the attention of the new European Central Bank’s head, Christine Laggarde. The ECB’s new asset purchase program is going to include green funds—funds focused on investments that have a friendly environment outcome.
Smart money and family offices have paid close attention to this trend and they believe it is likely that central banks may expand their umbrella of investment from green funds to other funds with a different social impact. They believe that impact investing will attract more capital flow into 2020.
Sir Anthony Ritossa from the Ritossa Family Office who held the 10th family office event in Dubai said “family offices are deeply committed to supporting philanthropic causes where they can improve society. Impact and social responsibility are definitely at the top of our minds as we enter a new year with new opportunities to make a difference. Family offices have generated tremendous multi-generational wealth through the years by cherry-picking the best off-market co-investment deals.”
Ahmad AR. BinDawood, CEO of Danube & BinDawood, BinDawood Family office said “for us, it is imperative that any investment we make has a social angle. Our current investment is having a positive impact on 10,000 households (employees) in Saudi Arabia and we are making sure that our employees have full educational support because we promote employees to top roles within our organisation.”
Other areas of considerable thought among family offices are megatrends. Saudi Arabia sits on top of this ladder. Since Crown Prince Mohammed bin Salman announced Vision 2030 in 2016, various economic and social reforms are geared to diversify the economy away from its traditional dependence on oil.
The reason that family offices are interested in Saudi Arabia is that Vision 2030 aspires to grow household spending on entertainment to 6% by creating a SAR 30 billion market. Saudi Arabia has already eased off the process of tourist visas and this is the direct result of Vision 2030 which aims to develop more Saudi historical and heritage sites. The plan is to double the number of sites that are currently registered with UNESCO. This means a massive new infrastructure development to support tourism.
Ahmad’s family group, the BinDawood family office, is making an investment to support the tourism industry through its investment in hospitality in the Kingdom and as well as BinDawood Holding’s networks of supermarkets across the kingdom.
Mr. Ritossa said “global attention is on Saudi Arabia as a true powerhouse with tremendous future business potential. Aramco’s IPO’s massive valuation is indeed a big win for Saudi Arabia and further solidifies the region’s position as a strong and transformational economy. Also, we envision more major deals and IPOs in the coming year as the region continues to expand.”
To conclude, the exuberant volatility and feeble global economic growth have altered the habits of family offices. Impact investment and megatrends are their focus. In my opinion, this investment strategy is going to become more famous in 2020. They see the European Central Bank’s involvement in the impact investment area as a positive sign. Finally, they are also ready to bet on the Saudi tourist and entertainment industry given the potential of Vision 2030 and the outcome of Aramco’s IPO.
Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts
NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.
Apple supplier Foxconn aims to double India jobs and investment
Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.
Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.
V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.
He did not give more details.
Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.
In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.
The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.
Taiwan election: Foxconn’s Terry Gou taps star-powered running mate
Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.
He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.
The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.
Foxconn to double workforce, investment in India by ‘this time next year’
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