The global investment climate is full of risks and opportunities. To help its clients take the right investment decisions, Standard Chartered Bank organised a forum tagged: ‘Outlook 2019: A year to prepare and react’ in Lagos. The bank’s Chief Investment Strategist, Steve Brice, and Head, Wealth Management Nigeria, Simpa Adaba, said the forum was aimed at guiding its priority customers on sustainable wealth creation and helping them to identify investment opportunities and risks in domestic and global markets, reports COLLINS NWEZE.
Monetary policy decisions, inflation, stable exchange rate and global trade tensions, among other economic indicators, play a major role in what an investor takes home yearly. The level of knowledge at the disposal of a bank, its customers and even investors, is also crucial to their investment decisions.
That explains why financial institutions ensure that they equip their clients and investors with the right knowledge that would enable them make the right investment choices.
It was the need to empower its clients with the right knowledge that motivated Standard Chartered Bank to hold a forum entitled: “Outlook 2019: A year to prepare and react” in Lagos.
The event provided an opportunity for its investment and financial market specialists to give insights on key asset classes across global and domestic economies and how to take advantage of the opportunities they present.
The analysts insisted that global growth is likely to slow while inflation remains under control, but central banks are expected to raise rates further. They believe that while bonds are offering increasing value, especially United States (U.S.) dollar bonds, the risk-reward for equities may deteriorate within the year.
Standard Chartered Chief Investment Strategist Steve Brice predicted an increasing value in bonds and cash, especially relative to equities.
Brice said one of the roles of the bank is to advise clients on risks and opportunities in the market.
He said sell-off in equities market and investors going for fixed income securities were normal, and were determined by what the investors consider safe at each point.
Also, Standard Chartered Bank Head, Wealth Management Nigeria, Simpa Adaba, said wealth management is creating a credible scenario for the client.
“So, what really matters to us is that we put clients at the centre of what we do. We ensure our clients invest in things we consider appropriate for the risk capital they have expressed to us. We also have good investors. They do a brilliant job by giving clients context around decisions that they need to take,” he said.
According to him, the bank sees its client as passionate about earning money. “The scenario about saving up for one’s children’s wedding, saving up for school. The last thing they want to hear is that the money is not available. So, these things are created in such a way that we give as much information to clients, and ensure they have everything clear to guide their investment decisions,” he said.
Adaba said the bank will continue to provide investment advice to clients. “If you have a global view on investment, you will realise that people internationally are behaving in a particular way at a particular time. If you are a Nigerian investor and you invested in Treasury Bills (T-Bills), but something just happened and you realised that foreign investors are asking for Nigerian T-Bills. For instance, foreign investors can take a position on emerging markets, and when that happens, Nigeria does not need to do anything wrong, to warrant a selloff except that the country is within the emerging market basket, so it will be affected,” he said.
Continuing, he said what the bank found to be very critical for clients is that, at every stage, someone is talking to them and giving them up-to-date investment information.
“We also want to make access to our products a lot easier. So, this year, we planned to bring to the market, something potentially different like using App to buy T-Bills, or do a Federal Government of Nigeria (FGN) Bonds, and even small ticket mutual fund. So, let these things happen on the platform,” he said.
He said the bank is planning to spend a lot of money on digital technology. “We need to create new platforms and support the ones we already created using technology. There is no doubt that we are committed to this market. It is big market, too big to be ignored. For Standard Chartered, Nigeria is a big focus,” he said.
Adaba said the bank is working very hard to make clients’ experience better. “We are not there yet but there is a lot of money that the bank is investing to make the customer experience a lot better.
‘’You will realise that banking is becoming more of convenience than product. It is not about product, but the convenience you are bringing. So, banking is doing the same thing but making it easier for clients to do banking,’’he said.
Brice also said it is good for investors to diversify their investments to spread the risks, adding that recession is likely to occur between 2020 and 2021. Hence the need to diversify investments both domestically and internationally.
He said the lender is doing everything possible to ensure that international perspective it brings to local markets do not have any difficulty. “I am still talking to the relationship managers giving them the opportunity to ask directly on any faults any concerns, that they have about the environment or about what we are doing,” he said.
On wealth management, Adaba said the Nigerian franchise is still relatively young.
“Our focus is not about the product but the client. I think it is involved in a scenario where we are responding to what our client needs and at this point, our focus in Nigeria and globally is the ease of access to the products. For example, can our client get on the app and purchase our product? We have spent a lot of money as a group to ensure that whatever product we have, our client can access it,” he said.
He said the success of the last general elections gave people confidence on the economy.
On the products that the bank offers, he said: “He said the bank focuses on partnering and checking on what the clients want and then meeting such needs.
On what clients want, he said: “Whether in good times or not, my investment advisors, through our investment management, speak to their clients and give them necessary contents. Because something is going doesn’t mean you should jump out. As we said earlier, if you are clear about why you invested, you might want to put more at that point. And then, we talked about assets. People are saying if you invest in a stock, and it goes down 30 per cent, it’s quite difficult to know what to do, because it could go down after 30 per cent. But if you diversify across, you will manage and it might come back over time.”
He said the bank allows the clients to decide where they want to put their money and their choice is within what we offer and that will really help us create a framework for them.
Other analysts said the lender expects global growth to slow down in the year for the first time in three years, led by the Euro area and China. It also expects growth divergence between the U.S. and other developed economies seen in the second half of last year to continue, adding that U.S. growth is likely to slow modestly, still supported by the tax cuts of 2017, while the Euro area decelerates to trend growth and China slows further.
It said monetary policy is likely to progressively turn less accommodative worldwide.
Heading into the year, they explained that Standard Chartered Bank is more optimistic on bonds than it was at the start of last year and expect them to deliver positive returns. “The yields on offer are higher, valuations are more attractive in some sub-asset classes and we do not expect bonds yields to rise dramatically. Emerging Market (EM) U.S. dollar government bonds are preferred owing to easing headwinds for EM assets, the attractive yield and relative value on offer. We also see better value in Asian U.S. Dollar bonds as we like the credit quality and yield available,” it said.
The bank explained that within developed market for government bonds, it sees greater value in U.S. Treasuries than in other major government bonds given the higher yield on offer and its view that bond yields are unlikely to rise significantly from here.
“We remain positive on global equity markets in 2019, but reduce it to a ‘core holding’ from ‘preferred’. Earnings growths across markets are expected to converge on a high single-digit growth rate in 2019. Equity market valuations have already declined to reflect this growth moderation and are at the most attractive levels for five years. U.S. equities are preferred. U.S. equities, on average, perform well in a late cycle environment. Corporate earnings growth will almost inevitably slow in 2019, but are expected to be in line with the long-term average,” it said.
In the bank’s assessment, U.S. dollar strength should continue into the few months of 2019. Relative U.S. economic outperformance, global trade uncertainty and a likely continuation of real interest rate advantage against Euro and Japanese Yen is likely to underpin the U.S. dollar.
“Our evaluation of the medium-term view suggests that slower global growth and trade will eventually impact the U.S. economy and asset markets, causing the U.S. Fed to slow hiking rates. The U.S. dollar is expected to stabilise as interest rate differentials peak,” it said.