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Over the last few years, the Isle of Man has been unwavering in its mission to become a centre of authenticity and excellence for all things esports. It is hard to argue that it has not done an excellent job in making itself seen and heard within the esports ecosystem. It solidified its commitment to esports with the creation of a dedicated esports department within its government along with being the home to EU Masters competing organisation, X7. 

With the Island already recognised and respected in a number of sectors, including shipping, insurance and eGaming, there are already a number of providers who can service the esports businesses coming to the Island.

Launched in 2021, Capital International Bank offers a modern, digital corporate banking solution. Onboarding is digital, the look and feel of the user interface is fresh and intuitive and accounts are opened quickly.

Greg Ellison, CEO

Crafted with feedback from respected individuals within the esports sector, the banking solution offers account opening within 10 working days, access to 20 currencies though the Capital Call Account as well as a dedicated Relationship Consultant to walk organisation owners through the entire onboarding process. 

Greg Ellison, CEO of the Capital International Group, explains why he and the team are excited to service the esports industry:

“We understand that a large part of the esports industry is still very much in start-up mode. We see this as a positive. Having over 200 employees ourselves and offices in different jurisdictions, we take the same agile and forward-thinking approach as a lot of start-ups. Our esports offering has been created with the needs of esports organisations in mind. The esports industry moves at such a fast pace. We pride ourselves on being a swift and relationship driven digital bank, which is why we think it is a great fit for the industry.”

Luke Adebiyi, Business Development Manager

Having attended a number of esports networking events, conferences and tournaments, Capital International Bank Business Development Manager Luke Adebiyi said:

“We have already opened accounts for a number of esports clients and we’re keen to build a reputation as the go-to bank for esports organisations.”

Ready to open an account? Get in touch with our specialist Business Development Manager, Luke Adebiyi at l.adebiyi@capital-iom.com  

Capital International Bank Limited is a wholly owned subsidiary of Capital International Group Limited (www.capital-iom.com) a privately owned financial services group based in the Isle of Man.

Capital International Bank Limited is licensed by the Isle of Man Financial Services Authority and operates as a non-retail, restricted deposit taker under a Class 1 (2) licence. Deposits are not covered by the Isle of Man Depositors’ Compensation Scheme and terms and conditions apply. 

Disclaimer: The views, thoughts and opinions expressed within this article are those of the authors and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit

Welcome to the Quarterly Investment Review for Q2 2022.

Our Investment team have put together a range of resources to update you on what has happened in markets across the second quarter of 2022. Here you will find: 

  • High-level, global equity performance analysis
  • Soundbites from our team of investment experts
  • A written summary covering the quarter's main market events

Global Equity Performance Analysis:

The graph below shows global equity performance across the quarter and plots world events along the performance line to indicate their impact on markets.

Hear from our Team - Investment Soundbites

Hear from our team of Investment Managers as they each explore an important topic from the quarter, be that the likelihood of a recession, soaring energy prices or inflation.

James Fitzpatrick, Head of Funds: Have we Entered A New Energy Era?

Chris Bell, Investment Manager: Inflation Running Riot: What Will Central Banks Do Next?

James Penn, Head of Equity: Are We Heading For Recession?

Greg Easton, Business Development Manager: ESG in Q2: Is It Good News?

Summary & Outlook - Q2 2022:

It has been a difficult first half of 2022 and we have seen significant retrenchment across most asset classes. Despite rebounding in the aftermath of Russia’s invasion of Ukraine, equity markets have given back most of their 2021 gains. US and European equities fell into a bear market in June and end the half down 21% and 20% respectively. The decline has been most notable in the growth-and-technology-oriented NASDAQ index which has fallen 29%. The UK has provided some refuge with the FTSE350 falling only 5.8%, reflecting its higher exposure to energy companies and the much lower relative valuation of its constituents.

What, in December, was the gentle beginnings of a pivot in central bank policy has rapidly accelerated through the first half into a full-blown clamp down on inflation. Inflation which has not only proved to be far more persistent than originally anticipated but has been further exacerbated by Russia’s invasion of Ukraine which has curtailed the supply of commodities into developed economies. On reflection, the Federal Reserve was too far behind the curve and have created additional volatility by not acting much sooner.

As central banks raise interest rates and taper bond purchasing, bond yields are destined to rise. Through the first half of the year, global aggregate bond indices fell 13.5%. Investors have been unable to seek refuge in fixed income assets and, despite proving to be a haven in the first quarter, commodities have underperformed equities since rallying in the week following the invasion. Ten-year government bond yields reached 3.5% from 1.5% in the US, 2.7% from 1.0% in the UK and 1.75% from -0.2% in Europe. The US Treasury curve has significantly flattened, reflecting the contrast between the long-term and short-term expectations for the economy, and twice inverted during the second quarter, signalling an approaching recession.

It’s a difficult balancing act for central banks as monetary policy is a blunt tool. They can ultimately only dampen aggregate demand and may therefore tip the whole economy into recession in an attempt to control inflation in one corner of the market; say, energy for example. The question over recessionary prospects; If, When and How Deep, are important for market direction from here. Bear markets typically last only six months if they coincide with a recession and the average peak to trough fall is not far from what we have already witnessed. Some parallels are being drawn with the 1970s and 1973-74 was a particularly tough extended bear market. However, there were strong nominal returns for equities over the rest of the decade. Our economic research points to the US, UK and Europe narrowly avoiding recession in the immediate future.

The outlook also tilts heavily on the prospects for inflation, of which the largest contributors have been shelter and transport. With the dramatic shift in energy prices already behind us and as demand contracts, housing markets cool and supply-side pressures ease, we could see inflation beginning to wane.

The situation is more difficult in Europe with seemingly no meaningful solution to a natural gas crisis. The US could make the strategic decision to ramp up shale production and bolster the economies of its NATO allies.

Amid the uncertainty, corporate and household balance sheets are robust, banks are well capitalised, credit conditions remain loose, and these should help buoy the economy. The substitution of capital for labour as the wage share in GDP rises, a push for energy security, supply chain independence, net zero and ‘levelling up’ could all be drivers of a Capex boom in the years ahead. It is also important to recognise that we enter this scenario on the back of a strong, overheating economy with China now re-emerging from zero-covid policy lockdowns.

While it is very difficult to remain positive during a bear market, portfolios have already endured a significant but healthy revaluation in the first half. Inflation only needs to ease as central banks will have a preference for higher inflation over economic depression, and this could be the shift in rhetoric that improves sentiment in the second half. We still believe inflation is the greatest risk to your savings and equities are the asset class which will best protect you against inflation over the cycle.

Disclaimer: The views, thoughts and opinions expressed within this article and soundbites are those of the authors/ speakers and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit

The Agile Way of Working
 on 
June 21, 2022
Company News

In a previous article, I highlighted how the agile methodology first adopted by the software developers and technology team at Capital had spread like wildfire, with other departments across the wider Group becoming excited about implementing agile working into their own processes.  

 In this second part of our agile explorations, I want to delve into the elements of agile working environments that were adopted most quickly outside of the technology teams and the aspects that have made the biggest difference to our organisation. Interestingly, in most cases,  these are working practices and ways of thinking that require no investment in technology tools and can be applied to any business.  

 Here are a few examples of agile working methods:  

 Show don’t tell  

The incremental delivery of complex software products demands that teams constantly show stakeholders what they are doing to help refine the requirements. With agile delivery, there is a finite time between releases (termed a ‘sprint’) which, at Capital, is every 2 weeks. This means that on a weekly basis, the team will demonstrate what they are working on currently and what is about to be released to customers.  

a teacher showing a child how to use a microscope

Regular demos lasting 10 minutes provide an overview of what is about to be released to customers. The stakeholders are taken on a journey. We start with the initial design mock-ups, then explore the tweaks made along the way and finally, we arrive at the end product ready for release.This story-telling session is a massively powerful forum, bringing all disciplines together to sharpen their focus on what is still required and to quickly highlight where things aren’t working as first thought.  

Critically, taking this time to show stakeholders what is happening and bringing them along for the journey is effective in getting operational staff to buy into things that have the potential to rock their world.  

Retrospectives  

Another key practice of agile workplaces is the ‘Retrospective’: an honest and zero-blame review of what went well, what went badly, and what lessons were learnt during the previous delivery cycle. Unlike more traditional monthly operational reporting meetings, which still do exist at Capital, retrospectives involve the people doing the work, and the meetings are facilitated by someone with no line-management responsibilities (a ‘Scrum Master’ in the world of tech).  

 This grass roots focus in a neutral environment ensures that lessons are learnt, changes are made, then a few weeks later the impact of these changes are reviewed in a never-ending cycle of continual improvement.  

Don’t sit when you can stand  

At the start of every day, each team will meet for a short meeting (usually 15 minutes) to escalate any issues, talk through priorities and to get aligned for the day ahead. In agile speak, the meetings are termed ‘Stand-ups’, a remnant from the age when meetings were short enough to allow people to physically stand face-to-face although, in this current age, most stand-ups are held with participants sitting down on a collaborative video conference call. Crucially, stand-ups should be short and sweet. It’s not about getting into the nitty gritty. They simply serve as a bitesize update to ensure everyone in a team pulls in the same direction.  

cats dancing in a garden

Can do KANBAN 

Kanban is a simple scheduling system originally developed at Toyota in the 1940’s with the aim of managing work and inventory at every stage of the production line. The system takes its name from the paper cards that once tracked production within the Toyota factories. 

Kanban board as part of the agile way of working

Today, in its simplest form, nothing much has changed in principle. The stages of a process or workflow (e.g. onboarding a client) are drawn onto a wall and paper post-it notes are used to identify the items at each stage in the process. The post-it notes are then re-arranged at the start of every day during a team Stand-up.  

Having such a strong and simple visual representation of an end-to-end process makes it easy to track progress, identify problems and to agree as a team on the resolutions.  

I distinctly remember feeling that the agile working culture we were living and breathing in the tech team was spreading throughout the business when I found out that our Finance and Marketing teams were using Kanban boards. It was then even more rewarding to learn a client onboarding team had unlocked a 500% increase in productivity by aligning on Kanban principles.  

To be clear, the old-school post-it note method has its limitations, not least when teams are distributed across different working locations. At Capital, we use digital Kanban boards which, in our case, have been created using the project management software, Jira.  

Squads not Silos  

One of the biggest organisational and management mind-bogglers when looking at agile organisations is the departure from traditional, department-led teams in which the co-ordination and decision-making happens principally at the director level of management.  

 As a concrete example, historically, the responsibility for onboarding clients in a financial organisation is typically shared across the ‘front office’ Business Development teams and ‘back office’ operational teams, with the overall ownership then sitting at a CXO level.   

If this process were to undergo an agile face-lift, the onboarding of clients would sit with one cross-functional team who are solely focussed on ensuring a great client onboarding experience. One team with one goal, empowered to take their own decisions and held accountable for their performance.  

At Capital, our approach was to reorganise, bringing previously siloed teams together under a single leader, co-locating all team members together to improve communications and the sense of team identity and then managing the team with the help of daily stand-ups, reviewing KPI dashboards and an onboarding Kanban.  

Open alignment  

Agile OKRs as part of the agile way of working

The single most important foundation for building an agile organisation is to align everyone on a vision and common objectives. Based on experiences gained in tech organisations over the past two decades, the most effective way of doing this is to roll out objectives and key results (OKRs) that are openly shared from the CEO through the entire organisation.  

 In traditional companies, objectives are only visible 1:1 between a manager and a staff member. In contrast, OKRs are based on the principle that everyone’s objectives are visible and aligned.  

Having aligned objectives that are visible to all is key to creating a common sense of purpose. Anyone, at any level, can see how their objectives and key results relate to their manager’s and to their teammates’. This openness helps drive a sense of team ownership and pride in hitting their goals and helps to create a better awareness of how other teams are contributing to those same goals.   

Within Capital, my OKRs as Chief Technology Officer are agreed with the CEO, visible to everyone, and linked to the Technology department OKRs which cascade to every single member of the team.   

Getting to know your users  

The use of customer personas is not exclusively part of the agile way of working; rather, it is a user-centred design technique that emerged in the 1990’s as a way for digital product designers to better understand the needs of the customer.

A persona is a fictional character created to represent a customer type that might use a website or product. It is usual to construct multiple distinct personas representing specific market segments or customer types. Personas are useful in considering the goals, desires and limitations potential customers have in order to help guide decisions about product features, interactions, and visual design.  

At Capital, we implicitly knew that our banking and investment products were used by different types of clients: from direct clients, to independent financial advisors, introducers, CSPs etc. For a long time, we had thought of these clients as being users of the same products, but by focussing on the creation of personas, we identified a staggering 22 distinct types of clients, all with differing needs! This shift in thinking has been profound. With hindsight, it seems obvious but from experience, very few internet banks and investment products are customised based on a detailed understanding of who the customer is and what they really need.   

In conclusion…  

Organisations must constantly adapt to be successful. To quote Winston Churchill: “To improve is to change; to be perfect is to change often.” The finance industry is unique in having ‘Change Management’ in many organisational structures, but in leading digital product organisations change is a constant, handled by everyone through agile ways of working — it is not a department.  

The learnings from Capital, a very mature, traditionally structured financial services company, has shown that organisational agility can be improved not through a top-down directive in a Change Department, but from individuals embracing new ways of working that are supported by members of the technology team. 

Agile ways of working are accessible to all organisations. There is no right way to do things, so start small with a few motivated people and empower others to pick up the agile practises that start to deliver results. 

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.

Chairman of Capital International Bank and former MP for Cities of London and Westminster, Mark Field, provides a few thoughts on the implications of yesterday's ballot, which gave Boris Johnson a 211-148 margin of victory:

Any wistful hope that this contest might "clear the air" or even provide a decisive outcome to the leadership question has been thwarted by this outcome.  It will provide succour only to the Conservative Party's opponents.

The fact that over 41% of sitting Tory MPs refused to support their leader (a man who only two and a half years ago delivered the Party its biggest election majority in a third of a century) suggests that today's Conservative parliamentary party is all but ungovernable. Calls for unity will evidently fall on deaf ears and the warring factions will have only been emboldened to continue their battles.

History suggests that the very fact of a confidence vote being called augurs ill for the longevity of the leader concerned. An outcome as close as this makes a further challenge highly likely, especially as there is little to suggest that the economic or political outlook is likely to improve in the narrowing period before the next election.

Where do we go from here? Naturally we now enter the realms of speculation, but I would watch for high profile Ministerial resignations in the weeks ahead. If current senior figures conclude/recognise that the PM will not now survive until the next election, their prospects in any future leadership election risk being irreparably damaged by continuing as members of the administration until its bitter end. It is already clear that several prospective challengers intend to present themselves as "clean skins" untainted by involvement in a government that has lost the confidence of many Conservative supporters.

It is also worth "following the money" - all political parties need to keep their funders content. If several high-profile substantial Conservative donors publicly break with the PM his position will rapidly become untenable.

Openly and bitterly divided political parties do not find favour with the electorate; the outcome means that neither faction can be marginalised and the deep ideological, strategic and personal differences within the Conservative Party will probably only be reconcilable when it is out of office.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.

I’ve had the privilege of witnessing two births in the past year. One of them was my daughter, Eliza, that my amazing wife gave birth to in October. The other was a more metaphorical event, but after a gestation period of over four years, Capital International Bank was born on the 27th May last year when it was awarded its full Class 1(2) banking licence. It was then christened at its launch event in late June.

CEO, Greg Ellison

I won’t overly labour the comparisons between the two events, but at both levels the past year has been characterised by less sleep than I would have wished for and some milestones that I will always remember. Like any new father, the feelings of exhilaration, exhaustion and pride combine to create a potent cocktail that energises you through the challenges of the early days.

Also like fatherhood, new banks don’t come with an instruction manual, so the past year has been one of growth, challenge and discovery. However, the bank is fit, healthy and has taken its first steps into the world of digital corporate banking. My most pleasing take-away from the past year has been the reception we’ve had from our new banking clients. We built the bank in particular around the needs of the fiduciary and eGaming sectors and whilst there have been a few bumps in the road here and there, the feedback from our clients has not only spurred us on but also contributed to the bank’s development priorities. Much like an iPhone has an iOS update every few weeks, our teams are working constantly to assess and prioritise the interface and functionality improvements that we release every month, guided by feedback from our clients. 

So, one year on, what have we learned?

Well, the first thing we’ve learned is that the business case for our bank remains as strong today as it did when we started pulling the ideas for a new bank together in January 2017. From the 65 research meetings in 8 different countries that I undertook, a few themes came through loud and clear.

One frustration that cropped up time and time again among our target clientele was around opening accounts. We learned that the worst case scenario for clients was the ‘slow no’. If the answer is no, say it quickly. If the answer is yes, have an account open in days not months. Our record so far is 24 hours for an eGaming account from enquiry to account opening and every week we’re turning new enquiries into new accounts within the same week, many within a couple of days.

By extension, this then leads to matters relating to risk. The existence of risk should not necessarily be a blocker to opening an account. It’s about having open communication with the client and leading-edge technology to price and manage risk accordingly. By focusing on sectors and jurisdictions that we understand, backed by leading digital controls, we can take informed, pragmatic risk decisions that support our key sectors of fiduciary and eGaming, amongst others.

We’ve also learned that we didn’t get everything right at the outset. Last month we revisited our fees tariffs, which among other things, served to make our FX offering more competitive and since then, we’ve seen a doubling of the average deal size that’s gone through. For those clients that are going to be trading more than £2m or currency equivalent every year, we’re also happy to look at bespoke pricing so you won’t need to shop around for rates and can trade with confidence directly through our VELTA platform. 

The human touch is also important, even with a digital banking proposition. We’ve recently changed our operating model so that once a Business Development Manager has agreed to proceed with an account application with a client, they will conduct a warm handover of the client to our Relationship Consultants who will act as a single point of contact to assist with the online documentation submission, right through to getting the account open, mandates set up and ensuring our new clients are fully up to speed on the functionality of VELTA. This hybrid combination of leading-edge technology supported by people at key touchpoints is a winning formula.

Like any new parent, I could go on and on…

As Capital International Bank grows, we will continue to learn and adapt. Our mission is to become the dominant offshore bank by 2028. Dominant doesn’t necessarily mean biggest, but we want to become the ‘go to’ bank for clients in the offshore markets that demand something better, something that makes their money work better for them. This passion is what fuels us every day, to make money work better for our clients, for our people and for our communities. And remember, for every account we open, we plant a tree in the Isle of Man and in Africa as part of our Group goal to become carbon neutral by the end of 2025. We plant the trees ourselves, we get our hands dirty.

To our clients, partners and counterparties that have supported us along the way, thank you. We couldn’t have done it without you. To those who want to get onboard with a new force in corporate banking, please get in touch, we’d be delighted to help you. www.capital-iom.com/bank 

Happy 1st Birthday Capital International Bank!

Capital International Bank Limited is a wholly owned subsidiary of Capital International Group Limited (www.capital-iom.com), a privately owned financial services group based in the Isle of Man. Capital International Bank Limited operates as a non-retail, restricted deposit taker under a Class 1 (2) licence issued by the Isle of Man Financial Services Authority. Deposits are not covered by the Isle of Man Depositors’ Compensation Scheme and terms and conditions apply. 

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.

A few months have passed since we last updated you on progress with our Conscious Capital Commitment. We'd like to take this opportunity to share with you some of our most recent developments in this area.

How Sustainable Are We?

In our last update, we touched on the importance of understanding our current position through gathering ESG data. Over the last few months, our ESG reporting team have been busy calculating a new overall score for our organisation using the World Economic Forum's 55 ESG reporting metrics.

These metrics take into account a broad range of activities and are used by companies to align their mainstream reporting on performance against environmental, social and governance (ESG) factors, and to track their contributions towards the Sustainable Development Goals.

Having first measured our business against the WEF's criteria in 2021, we arrived at a score of 59%. Since then, through introducing a number of measures and making positive changes to the way our business operates, we have improved our score to 64%.

This is a promising start which shows that we are on track to achieve our goal of a 70% score by the end of 2022.

Our Journey to Carbon Neutral:

We have recently had our carbon consumption audited for the third financial year which has highlighted a continued reduction in emissions, both in tonnes of carbon per full-time staff member and in totality. Year-on-year, we have seen a reduction of 17% and, compared to 2019, a reduction of 53%. The below table shows a break down of our emissions.

With the staff commute a significant contributor to our carbon footprint, one of the main focuses of the Conscious Capital Forum has been encouraging staff to switch from petrol or diesel vehicles to either active travel, public transport or electric vehicles.

Compared with 2019 (pre-covid levels), we have reduced emissions by 38%, whilst increasing headcount in the same period. We have achieved this through the commitment of our employees, as well as through initiatives such as our cycle to work and electric vehicle schemes. 25% of our staff are now actively commuting to work at least one day per week; a further 18% are car sharing or using public transportation; and 10% of staff now use electric or hybrid vehicles.

One of the four electric vehicle charging points which have been installed at our Douglas office.

In addition to the reduction in our commute emissions, we planted 2,500 native saplings across two sites on the Isle of Man in Q1 2022 and with the winter season fast approaching in South Africa, we will be continuing our planting initiative there with GreenPop. Although we do not use tree-planting as an offsetting measure within our reporting, the contribution to carbon sequestration and enhancement of biodiversity follows a holistic approach to improving the natural areas in which we operate in.

Staff from our Cape Town office attending Greenpop's tree-planting festival.

Capital in the Community:

The Group is sponsoring Hospice Isle of Man’s Big Splash Project, which involves 32 life-size painted dolphin sculptures being placed around the Isle of Man as part of a trail for families to follow.

Colleagues from our Isle of Man office visiting Hospice Isle of Man.

Over the last few months, we have been working closely with a local artist to create an interactive dolphin that will stand out along the trail. Hospice is a charity that many of our employees have encountered at some point in their lives, and we are proud to be supporting their invaluable work in this way.

In South Africa, our support of Cape Town charity, Souper Troopers continued, with Group Chairman Anthony Long, recently visiting the Humanity Hub and the Bo-Kapp Community Garden run by the charity. You can read more about Anthony’s visit in his blog post on the topic.

Employee Wellbeing:

All members of our Senior Leadership team recently undertook Mental Health First Aid Training, enabling them to better understand how colleagues can be impacted by their mental health, what to look out for in terms of behavioural changes and how they can help.

Wellbeing team members, Luke Adebiyi and Olivia Ramsay, with our InsideOut Award.

The wellbeing team also recently picked up a highly commended award from mental health charity InsideOut for the category 'International Employer of the Year'. This is a fantastic accolade which highlights the great work our team are doing in organising wellbeing activities and initiatives for colleagues.

Ethical Investments:

In our Q4 ethical investments update, we featured the addition of three sustainable forestry and agriculture assets into the alternative allocations for Fusion ESG. We did this on the basis that they would provide inflation protection and diversification into an asset class that has low volatility and exhibits negative correlation to equities.

These additions have proven particularly valuable both from a financial and ESG perspective. In particular, the Gladstone Land Corporation position has provided us with significant returns being up 14% over the quarter whilst global equities were down 5.36% (MSCI ACWI NR).

We decided to take the profits from this position and will be building a further position in our ESG alternatives allocation with the addition of Brookfield Renewable Partners. This position will strengthen our direct exposure to Clean Energy, with Brookfield due to add 62 Gigawatt capacity to their existing 21 Gigawatts of operating solar, wind and hydroelectric power.

The Ukraine Crisis has accelerated the demand for clean energy with a focus on future energy security. Brookfield are ideally positioned to benefit from this transition through their growing global footprint.

From an environmental perspective, their ambition is to double their avoided carbon emissions by 2030.

At a portfolio level, this position will help us to reduce the carbon footprint of our discretionary assets as well as strengthen our commitment to decarbonisation.

Thank you for taking the time to read our Conscious Capital update. Our drive to improve is something we hope is shared by others and by bringing you along on our ESG journey, our aim is to inspire, as well as reassure you, that we are doing our utmost to ensure our business has a positive impact on the planet and society.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.

Have you ever considered the Isle of Man for opening an offshore investment account

Click play to hear Business Development Consultant, Aidan O’Shea, explain some of the potential benefits of the Isle of Man as an offshore jurisdiction and as a location to hold your assets securely.

Hi, my name is Aidan. Today, we're going to run through why the Isle of Man is a great place to hold an offshore investment account.

1.    Global Access

Holding your assets here in the Isle of Man is like having access to financial suitcase. Rather than dragging that suitcase around the world with you, you can place it here in the Isle of Man, a safe, secure jurisdiction, and you can access that wherever you may be in the world.

2.    Regulation

Capital International is regulated by the Isle of Man Financial Services Authority (or the FSA). The FSA provide the robust regulatory framework, which we must abide by. We are checked independently by external auditors, as well as the FSA on an ongoing basis to ensure a client's assets are held securely and they are also treated fairly.

3.    Stability

Clients often seek a secure and stable environment to hold their wealth. The Isle of Man has the longest continuous parliament in the world, ensuring political stability built over generations, which can be attractive to international clients when they come to consider investment opportunities. 

 4.    Investor Protection

Investor protection is an important aspect of an investment platform. While Capital International has been around for over 25 years, clients want to feel that their assets are safe and secure with us. We utilise a nominee structure to hold client assets segregated away from our own balance sheet. So, in the event of Capital International ever defaulting, your assets can't be touched by creditors or liquidators.

5.    Lifestyle

With the quality of life we have here on the island, you are rarely going to find me in a bad mood on a Monday morning!

Disclaimer: The views, thoughts and opinions expressed within this article / video are those of the author / speaker / presenter, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article / video does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.

It has been a difficult first 4 months of 2022 and while the UK market has held up relatively well, we have seen significant retrenchment across most other markets and asset classes.

In America, the S&P500 broad market has fallen by 13.5%, while the growth orientated NASDAQ has dropped by some 22%. In many respects this is a healthy re-rating of stocks whose valuations had become stretched, and it is important to note that US markets have only actually given up their gains from the second half of 2021 and remain very significantly higher than their pre-pandemic levels (see below).

Source: Trading Economics

By contrast, while the UK main market has achieved modest gains year to date, it remains slightly below its pre-pandemic levels and the positive price movements we have seen largely reflect the much lower relative valuations of UK stocks.

The critical question now is, are we still in the early stages of a more significant market correction or does the current pull back represent an opportunity to build positions in good quality assets at attractive prices?

To help answer this we need to understand key forces that are at play and explore how they might evolve in the second half of the year. So, what has changed so dramatically since December?

The short answer is inflation, but this has its roots in two very different problems.

The past decade has been characterised by what would previously have been considered an extreme monetary policy experiment, combining ultra-low interest rates with quantitative easing - the printing of enormous quantities of money.

In response to the COVID pandemic, the four major western central banks expanded their balance sheets by a staggering $11.3 trillion, bringing the total expansion since the 2008 financial crisis to circa $23 trillion dollars (see chart below). Ironically these novel policies became mainstream in response to the perceived deflationary threat posed by globalisation and have since been used liberally, and arguably successfully, to nurse the global economy through both financial crises and most recently the COVID pandemic.

Throughout the past decade the conundrum for many economists was to explain why all this money printing seemed to have so little impact on inflation. The answer, as is now becoming clear, is that QE was priming the inflationary pump but that alone was not sufficient. It required another trigger to enable inflation to take hold.


That trigger has been a supply side shock to global production.

The global response to the COVID pandemic was almost universally to lockdown. This precipitated a collapse in global demand and governments responded with a huge package of fiscal stimulus, in the form of furlough schemes and financial support packages, while central banks injected massive monetary stimulus with yet more QE.

This had the desired effect resulting in a rapid recovery in demand as the threat from COVID receded and economies began to reopen. This can clearly be seen in the left-hand chart below where demand contracted dramatically during the middle quarters of 2020 but has expanded rapidly again from 2021 onwards.


Less obvious, perhaps, was the impact on the supply side of the equation. Global lockdowns forced a global shut down of supply chains and capability, even greater in scale than the fall in demand. What was less understood was that supply capacity is much, much harder to switch back on. Indeed, the chart on the left above shows how supply has continued to contract month on month throughout 2021 and even today with most economies fully reopened, productive supply has yet to begin expanding meaningfully.

The net result of very strong demand coupled with very weak supply can lead to only one thing – inflation. This can be clearly seen in the right-hand chart above showing the double whammy impact of rising demand and falling supply on producer prices.

Central banks initially recognised that the inflationary spike was due to supply factors that would likely unwind naturally and resisted pressure to raise interest rates. This was the correct response. Higher interest rates will do nothing to ease supply side constraints, indeed they are more likely to make matters worse. Raising interest rates would be the correct response if the problem was a booming global economy in danger of overheating, which it is not.

In the end, Russia’s invasion of Ukraine tipped the balance. Putin’s decision to invade not only created a humanitarian crisis in Ukraine and humiliation for Russia, but it also triggered a global energy price shock that has exposed the western world’s foolhardy energy policies over the past two decades, ramped up input costs and exacerbated inflationary pressures.

With headline inflation numbers approaching double digits, central banks have been forced to respond by raising interest rates and tightening monetary policy. But they have a tight rope to walk. If they go too far or too fast, they risk tipping economies into an avoidable recession. With rising interest rates, inflation at 40-year highs and a deteriorating economic outlook, it is not surprising that financial markets have retrenched as they absorb this new reality. 

Looking forward, the balance of risks is finely poised; our view is that they are increasingly now skewed to the upside and the news flow may soon turn more positive. If this is right, much of the bad news is now already priced in.

No matter how good Putin’s propaganda machine, it must be absolutely evident to the higher echelons of Russian society and in the corridors of power that the Ukraine war is a catastrophe for Russia, with a multi-decade decline in prospect. Putin himself must be realising this. Either he finds a way to reverse the situation, or it seems increasingly likely that others will. Either way, there is reason to hope that the war in Ukraine might end more swiftly than most fear and there is a real possibility of more fundamental change in Russia that could enable relations with the rest of the world to stabilise.

Progress in Russia would ease the pressure on energy prices and provide a substantial boost to the global outlook and sentiment. In addition, global supply chains are beginning to ramp up again suggesting that the supply side pressure on prices will ease over the coming months.

This, coupled with base effects working through and a dampening of the excess demand from higher interest rates and higher living costs, should see inflation first peak then start to fall back to much more manageable levels. These positive effects will become clearer in the data over the coming months even though the headline inflation numbers are unlikely to drop significantly this year.

With an improving inflationary outlook, central banks are less likely to overshoot on interest rates and the economic outlook will improve materially.

Meanwhile corporate earnings have remained remarkably robust. Excluding a handful of notable exceptions, the 1st quarter earnings season has been positive with companies demonstrating why they remain one of the best long-term hedges against the effects of inflation.

Better still, those high-quality companies represent significantly better value than they did a few months ago and, with interest rates and bond yields already resetting to much higher levels, the risk from further rises to yields diminishes every week.

One risk to this largely positive outlook is China which remains in various states of lockdown. China is key to the global recovery in productive capacity and global supply chains. The sooner China fully unlocks its economy and reopens its factories, the sooner the global economy will return to health. 

We must expect to see further volatility in financial markets over the weeks ahead but, in our view, the reset is healthy and necessary to create the conditions for the next growth phase. It also provides a perfect opportunity to add to high-quality, long-term investments as valuations become increasingly attractive.

To discuss these opportunities or to review your investment portfolio please contact our Business Development team by email businessdevelopment@capital-iom.com  or by telephone on +44 (0) 1624 654200.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.