Asks about EFG's exposure to the Middle East conflict.
Paul Allen
Giorgio Pradali
Business is booked in Switzerland/Singapore, so limited direct exposure. Humanitarian situation is difficult.
Asks about client conversations on risk appetite and conflict endgame.
Paul Allen
Giorgio Pradali
Markets entered crisis thinking it would be over quickly, now in third week with no end. Concern is clients will stop trading, leading to risk-off. Bond markets are concerning - treasuries going up, not a flight to quality. Situation is fragile.
Asks if cash positions are larger and investors becoming more defensive.
Paul Allen
Giorgio Pradali
Investors becoming more defensive, but evidence is not going back to cash, rather moving to sidelines (risk-off stance). Biggest concern is if clients stop transacting.
Asks if it's a good time to chase dips and buy quality blue-chip stocks.
Paul Allen
Giorgio Pradali
Quality is always good, but very complicated to call because nobody knows how long war will last. More caution in market, not seeing people chasing dips.
Asks what clients are looking for in terms of havens or putting money to work.
Paul Allen
Giorgio Pradali
Actively trading clients are trading volatility via structural products to take advantage of high volatility. Otherwise, it's more tactical than strategic. Geopolitics dominating markets. Seeing flows into safe havens but not really putting money to work.
Asks if stock markets accurately reflect risk.
Paul Allen
Giorgio Pradali
Markets are starting to reflect risks. After three weeks, people realizing situation is more concerning than thought at beginning of month.
Asks about long-term view of Gulf markets post-war.
Paul Allen
Giorgio Pradali
If conflict ends in couple of weeks, situation will normalize over time. Middle East is engine of growth like Asia. Bullish long-term but depends on conflict duration.
Asks about impact of conflict on inflation and growth, particularly in US.
Paul Allen
Giorgio Pradali
If situation persists, damage to infrastructure means consequences will continue even if conflict ends. This creates problems for inflation, which is why bond markets are reacting. Forecasts for lower interest rates on hold; rates went up in some markets. General resetting of macroeconomic situation; risk of global recession increasing (not base case but risk up).
Asks about Fed policy and chance of history repeating (Volcker-style hikes).
Paul Allen
Giorgio Pradali
Things changed from 70s, markets more interconnected. Would be complicated. In unprecedented territory. Advice is to reduce exposure in riskier asset classes and wait. Difficult to make rate calls. ECB might be first to raise, but cannot exclude it happening on other side of Atlantic.
Asks which global markets/economies best positioned to absorb shocks, suggests China.
Paul Allen
Giorgio Pradali
Very positive about Asia. Wealthy clients in this part of world will continue to thrive. At moment, Asia seems area of stability not seen elsewhere. Good place to be.