Our first trip of the year took us to chilly Edinburgh to catch up with the Scottish wealth management community, writes Libby Ashby.
We spent two days meeting industry stalwarts including Rathbones, Turcan Connell, Quilter Cheviot, Cornelian and Adam Bank. We were also lucky enough to attend Investec’s seminar for its intermediary clients, where the firm shared their vision for 2014.
Many of these firms are expanding their Edinburgh branches, demonstrating the healthy growth of the industry in the north. A range of themes were discussed but particularly interesting were the varying views on where the opportunities lay in the recovering global economy.
While some wealth managers were bullish on developed markets, Investec also maintained its optimism in emerging markets, acknowledging it is a contrarian view in the short term.
John Haynes, Investec’s head of research, argued opportunities lie in gaining exposure to emerging markets through shares in developed markets.
He cited the pharmaceutical industry as an example: ‘UK and other Western pharmaceutical companies have the potential to do very well because they are well respected in this industry in terms of their science, their manufacturing quality, regulatory compliance and their established distribution capabilities.
‘They are well placed to satisfy the increasing demands in emerging markets driven by the establishment of state-funded social safety nets alongside the natural demand growth associated with a larger population that can afford such treatments.’
With my keen interest in the environment, I was particularly interested to hear Haynes say he believes environmental investing is on the rise again. ‘We want to do more in this space and it now has more opportunities than ever before with new technologies, particularly within the agriculture, water and energy industries.’
He showed us a slide of Beijing’s air quality. On a typical day in January last year, air pollution in the Chinese capital peaked at just over 800 micrograms per cubic metre – almost as much as the levels caused by the 2004 wildfire in Fairbanks, Alaska. With such dangerous risks to health and the environment, there is a need for improvement – and thus a great opportunity to invest.
Turning the focus closer to home, Turcan Connell’s chief investment officer Haig Bathgate outlined his concerns about the Bank of England’s current monetary policy.
‘Low interest rates have created lots of zombie companies, which are characterised as having excessive levels of debt, but low interest rates are keeping these companies alive. Essentially, there is no natural cleansing of the system as companies are being propped up artificially.’
Regulation was another cause for concern for some. While recognising its benefits, many found it difficult to justify the costs.
Marcus Brooks, director at Cornelian, was forthright. ‘The costs are becoming ridiculous. Regulation can be a good thing but it has been heavy-handed. The constant cost, change and initiatives are out of proportion to the underlying issues,’ he said.
And what is the Scottish wealth management community’s view of this year’s referendum? Rathbone’s Evangelos Assimakos told us: ‘Although the current odds are for a “no”, the outcome is far from decided and, in any case, inevitable changes may catch many north and south of the border unawares.’
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