Felix Brill, chief investment officer of VP Bank Group, presented investment views to members of the press on Tuesday
Photo: VP Bank
The risk associated with China’s transition into the future coupled with the possibility of a US recession: it’s this hypothetical scenario that would most concern VP Bank Group’s chief investment officer Felix Brill.
The exec spoke to members of the press on Tuesday to recap 2019 and present the bank’s outlook for 2020.
“If you look at 2019, this was clearly an exceptional year for financial markets,” Brill said, citing not just the rise of equities and risk asset classes, but also gains on fixed income due to declining interest rates, and the spike in gold--this, despite the uncertainties in the media and among investors.
“A lot of uncertainty is the next global recession, right in front of us,” Brill said. “The picture is clearly a kind of green to red [as economic indicators detiorated], at the same time markets went through the roof.”
Brill also presented three possible scenarios the bank envisions for 2020. In a best-case scenario, economic stabilisation occurs and there’s a de-escalation in international politics, central banks offer support, stock markets benefit. In a negative scenario, trade negotiations fail and lead to a more precarious geopolitical environment, a recession potentially happens, stimuli initiated by the central banks don’t yield impact, and there’s a loss of investor confidence.
A third, “out-of-the-box” scenario was also presented, which included concepts such as a fiscal stimulus for a social and green deal, or the possibility that the weak economy leads to real political change.
Brill admitted, however, that it was “a lot easier to come up with the negative scenario”. But he still seems to remain positive.
While consumer confidence was higher in the US compared to the eurozone for 2019, Brill attributes part of this to uncertainties such as Brexit. “We expect the European economy to gain traction,” he said. “We don’t expect the US to gain a lot of traction, but rather gain its path.”
The lowering of interest rates by central banks has impacted the mood of investors, but Brill adds that, “We, as a bank, feel that as well. It’s hurting our core business in many respects, in the typical business we do, and it’s annoying and has of course an impact on what you typically can expect on what returns a portfolio is going to show in the next five years.”
Recent group gains
But the group has nevertheless seen plenty of recent gains.
VP Bank and VP Fund Solutions integrated into their Kirchberg premises end-2018 Photo: VP Bank/archives
VP Bank (Luxembourg) has had a focus on classic private banking, external asset managers and the fund business. As its CEO Thomas Steiger explained, last year saw the integration of Catella private banking. At the end of 2018 VP Bank and VP Fund Solutions also integrated on one premises on Kirchberg, which Steiger says has received positive client feedback and enhanced communication amongst employees.
The geographical focus ahead will be on Europe, and the group is implementing a hybrid model with a personal advisor for clients backed by technology.
CEO of VP Fund Solutions (Luxembourg) Eduard von Kymmel added that they had set up a “specially dedicated a private equity real estate team due to the huge demand of fund promoters looking for these kinds of services”, and over the last five years it had doubled the assets under administration.