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.
(Photo by FAYEZ NURELDINE / AFP) (Photo by FAYEZ NURELDINE/AFP via Getty Images)
AFP via Getty Images
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.
RIYADH, SAUDI ARABIA – Getty Images)
Anadolu Agency via Getty Images
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.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
