Fund Industry Maps out Brighter Future
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POLITICS MARKETS INTERVIEW Good news, bad news Investors are urged to Christian Dargnat, approaching as Labour eyes up new splash the trillions they what will be his last six months City friends. hold in cash. as President of the European Fund and Asset Management Association, talks to Dan Atkinson about what has been achieved so far in his two-year term and what he still hopes to accomplish. Establishing trust, he says, is the key. THE HUB BY DAN ATKINSON NOVEMBER 2014 SHARP FOCUS ON THE WORLD OF FINANCIAL SERVICES INSIDE: TOP STORY NEW ASIAN HERO plans HIGH RISK $650M GAMBLE PAGE TWO BUSINESS CLUB: FOREIGN Banks face Fund industry maps out NEW Rules FROM UK TREASURY DAN ATKINSON PAGE THREE brighter future LONDON MONEY MATTERS: Europe’s fund-management industry has some way In the medium term, he believes, social and LORD Hill’S NEW plan to go to restore public confidence after the economic demographic trends are highly favourable, and he crisis, and financial education has a big part to play in predicts that assets under management in Europe will FOR EUROpe’S SINGLE this, says Christian Dargnat, President of the European reach $100 trillion by 2020, up from $21 trillion in 2013, MARket Fund and Asset Management Association (EFAMA). Mr Dargnat says he hopes financial supervisors are PAGE THREE aware that the asset-management industry can play a “We are at the beginning of a process of persuading vital role in improving the flow of funds to the small and ABOUT HUME BROPHY our citizens that we are to be trusted,” he says, in an medium-sized enterprises that are essential to Europe’s interview ahead of his final six months in office. recovery, provided regulatory barriers are removed. Hume Brophy is a specialist Financial education has been a key theme of his international Financial Services, presidency to date, and he sees it playing a pivotal A major theme of his last months in office will be Public Affairs and Public Relations role in rebuilding public confidence. “In addressing the pressing for a fair deal for European asset managers company with offices in London, question of trust, we have to do it through education. in the United States. “Europe has the most open Brussels, Dublin, Paris and We have to address young people.” asset-management market in the world,” he says. “But Singapore. The views expressed it is not the same in the US market. Trying to sell a in The Hub are not necessarily As the financial-services sector emerges from the European product in the US would be much tougher those of the company. Informed economic crisis and recession, Mr Dargnat sees the than selling an American product in Europe. contributions are welcome. industry “making the bridge” between savers and “We need a level playing field at a world level. That is something to press for in the year to come.” Follow us @Hume_Brophy borrowers, with an increasingly important part to play in www.humebrophy.com raising finance for business. Interview Back Page DAVID HENRY DOYLE EU Transaction Tax stalls as deadline looms BRUSSELS The political deadline set for end-2014 to reach a modest first step with a much reduced scope. weeks to break this impasse. However, a a deal on an EU FTT is rapidly approaching. The second wishes to have the broadest possible legislative agreement on FTT is becoming less However, a breakthrough currently remains out of scope, including derivatives. likely with every day that passes. reach as the 11 participating countries continue to disagree on fundamental aspects of the proposal. The insistence on a broad scope stems from All eyes are now on the December meeting of These include whether to include derivatives in concerns that a tax with a dramatically reduced Finance Ministers. If no last minute breakthrough scope alongside equities and how to redistribute scope could cost more to implement than it will can be found in the coming weeks the fate of the revenues collected from the proposed tax. generate. There is also the hope that additional FTT is deeply uncertain. There remains a real There are currently two camps among EU Member tax revenues would help supplement national danger that some national capitals may no longer States participating in the FTT. government budgets. Several political and wish to take part in a tax that is too watered down The first, dominated by larger countries, wants diplomatic moves have been made in recent and therefore unprofitable. GLOBAL REACH. LOCAL INFLUENCE. THE HUB | NOVEMBER 2014 Good news bad news as Labour eyes City CAROLINE ESCOtt LONDON CASUAL attendees at this year’s Labour Party Conference in Manchester could be forgiven for thinking that the Party still does not really ‘like’ financial services. Delegates heard of plans for a tax on bankers’ bonuses to Ed Miliband’s pronouncements on hedge funds and tax loopholes. However, behind the rhetoric, ChallenGes: Indonesian President Joko Widodo now faces massive macro economic problems there is evidence of a more nuanced Labour policy approach to the sector. NATION PROFILE Shadow Ministers continue to engage with financial services stakeholders, emphasising that a well-functioning The $650bn Far Eastern City is vital to the economic recovery and policy proposals have focused on restoring trust to the sector, making it SIMREN PRIESTLEY fairer and boosting lending to the real planning gamble SINGAPORE economy. Indonesia is about to begin a major structural There have been, however, significant efforts to With Ed Balls’s neoclassical economics overhaul which will soon see it launch an intensive improve Indonesia as a place to do business. The background and a senior Treasury international campaign for inward investment. country has been actively encouraging foreign direct team with City experience, a Labour investment (FDI) and a number of leading international government will probably avoid In a remarkable display of true democracy in largely groups are moving in. Toyota and Honda already implementing some of the more extreme authoritarian Southeast Asia, Joko Widodo, a once manufacture here; global banks are servicing a growing anti-City rhetoric that it currently uses small-time furniture exporter, has been sworn in as middle class and private equity groups including KKR to appeal to its core vote. However, President. His ascension of the political ladder has and Carlyle are all making investments. one noticeable exception could be the raised hopes both domestically and internationally of proposals to cut tax avoidance by the implementing economic reform in Southeast Asia’s This investment is widely seen as the most promising sector. biggest economy. way to build and sustain momentum and Mr. Widodo Most Labour speeches on financial Given the size and diversity of the country he is has voiced his plans to return growth to 7% by 2019. services mention a shake-up of banking presiding over will certainly have his hands full in This will come from increasing investment, especially partly through proposals which include managing the challenges that lie ahead.Not only must in the country’s infrastructure sector. This means separating retail and investment banks he battle with this divided electorate, but he needs to cutting red tape and stamping out corruption. and favourable comments made on work with 580 local governments to push through his An endemic issue in Indonesia, removing corruption alternative finance sources include peer- plans for development. and increasing State transparency, has been cited as a major priority in an effort to attracting investors. to-peer lending. Banking reform will A drop in growth to 5% in Q3 this year, after five Mr. Widodo is keen to implement consistent regulation, almost certainly make it into Labour’s years of progress due to a fall in commodity prices reduce graft and streamline tender processes to manifesto and could be a key part of any and decreased demand from China is likely to remain improve competitiveness. coalition Programme for Government. so. Monetary policy has been tightened to stem capital outflows, and is preventing the current account deficit Currently ranked by the World Economic Forum as Proposals from Labour’s Business from widening. Depressed commodity prices combined 61st out of 148 economies in terms of infrastructure, and Pensions teams should also be with the looming lifting of US interest rates and the Indonesian is battling to build roads, railways and ports. monitored closely. Under plans to potental outflows that will result, mean that Mr. Widodo However, slow decision-making is seriously hampering boost economic growth from Labour and the Indonesian Central Bank must find other the process. Peer Lord Adonis, BIS would become sources of financing. a more powerful and strategic department. Their headline corporate governance proposals, including those on remuneration and takeovers, will Big plans from a quiet man therefore be key, as will plans to boost small business lending and finance. Indonesia requires $545 billion to deforestation, terrorism and the Far East with a high level of in capital over the next 5 human trafficking.. acceptance. George Osborne’s Budget 2014 aimed to years to improve the country’s However, he has had significant The investment pipeline is reform pensions and Labour’s Pensions infrastructure. But the dynamic success as Governor of Jakarta healthy: Korea’s Samsung team have been correspondingly active new President, Joko Widodo, and has developed a strong Electronics plans to make phones in their response; proposing a review of is confident about his plans to reputation among world leaders locally next year; Philippines’ the reforms within six months and also deliver 2,000 km of new roads, and local farmers alike as a Jollibee said it would attempt promising further action on the legal 10 new seaports and bridges dynamic individual already to re-enter the market after duties of pension and other fiduciaries to linking the many islands of the fighting for major reforms.