Opening a corporate bank account has typically been a lengthy process. It’s not uncommon for it to take weeks or even months for corporates to open an account. The waiting has left individuals, corporates and CSPs understandably frustrated.
Capital International Bank is a digital bank with a human touch, specifically designed in-house with the features that corporates need to better manage their finances. By removing the blockers clients often encounter with older and slower banks, Capital International Bank prioritises a seamless and efficient banking experience, enabling corporates to focus on their growth and success.
While all banks strive for service excellence, the full control we have over our systems allows us to be agile in our response to client needs. We understand that in the corporate world, time is money, and our innovative products and services are tailored to save both.
Capital International Bank, a licensed bank headquartered in the Isle of Man, serving corporates, trusts and high-net worth individuals, is redefining the corporate banking landscape.
Combining the convenience of digital services with personalised client support, Capital International Bank is built with the latest leading-edge technology and cyber security defences.
Our corporate bank accounts deliver all the features needed to effectively manage your business finances with speed and high-quality service in mind.
From day one our vision has been clear: to simplify the account opening process, making it a seamless, efficient and stress-free experience. We recognise the pain points faced by businesses when navigating traditional banking procedures—lengthy paperwork, bureaucratic hurdles and delays. In response, we streamlined the onboarding process, offering digital services that allowed clients to open corporate bank accounts swiftly and securely.
Our streamlined documentation process allows our clients to benefit from a faster, hassle-free experience, while the bank can process applications more swiftly and effectively.
Beyond the initial onboarding, we aim to provide ongoing support.
Empower your business with Capital International Bank – We're here to provide comprehensive banking services tailored to your business, ensuring you have the financial tools and support needed to thrive.
Contact us today to discuss eligibility, costs, and any questions you may have.
We invite you to explore the advantages of a corporate bank account at Capital International Bank.
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. Opinions constitute views as at the date of publication and are subject to change.
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. Capital International Bank is the trading name of Capital International Bank Limited. Capital International Bank Limited is also licensed by the South African Reserve Bank Prudential Authority to conduct the business of a Representative Office in South Africa.
Have you ever considered the Isle of Man as a jurisdiction to open an offshore account?
Offshore bank accounts involve setting up financial accounts with banks located outside your home country. It further allows you to take advantage of global diversification, enabling you to spread your assets across different jurisdictions. This approach also provides an effective way to manage your assets and conduct international transactions, offering both flexibility and security on a broader scale.
Nestled in the Irish Sea, the Isle of Man holds a distinguished position in the financial industry. With a robust regulatory framework, stability, and commitment to international standards, the Island has become a symbol of reliability. This reputation establishes the Isle of Man as a trustworthy option for those seeking offshore banking and financial services, providing security within a well-regulated environment.
This reputation makes it a top choice for those seeking offshore banking and financial services. It stands out for providing a secure setting and a strong regulatory framework, giving you peace of mind while managing your finances.
Robust Regulatory Oversight - The Isle of Man is known for its stringent regulatory framework, overseen by the Isle of Man Financial Services Authority (FSA). The FSA's oversight promotes a secure and transparent environment, giving clients confidence in the safety of their assets.
Global Recognition - The Isle of Man has established itself as a significant player in the global financial services industry, with a particular emphasis on life assurance and investment. This recognition is built on a track record of safeguarding client assets and providing high-quality service. As a result, the Isle of Man attracts businesses and clients from around the world, drawn by its solid reputation for reliability and excellence.
Political Stability - As a self-governing British Crown Dependency, the island has the longest-running continuous parliament in the world, providing a stable political environment. This stability is crucial for offshore banking, ensuring a consistent regulatory framework and minimising the risk of sudden policy changes. `
Industry Expertise - The financial services sector is a cornerstone of the Isle of Man's economy, accounting for about 48% of its total output. This strong industry presence has led to a concentration of expertise and knowledge among the professionals who work in the sector.
Award Winning Jurisdiction:The Isle of Man's excellence in financial services has been recognised with international awards. In 2021 and 2023, the island received the Best International Finance Centre accolade in the International Investment Awards, a significant achievement that highlights its standing in the industry. These awards demonstrate the Isle of Man's commitment to innovation and quality, reinforcing its position as a top offshore banking destination.
A licensed, digital bank with a human touch, Capital International Bank stands at the forefront of offshore banking services. Headquartered in the Isle of Man, our licensed bank caters to corporate, trust and high-net-worth clients worldwide. Our offshore corporate bank accounts offer comprehensive features to efficiently handle your finances.
Low-Risk Banking Option: Unlike other banks, we do not have a lending book or invest in long-term securities / complex financial instruments to seek a return on client deposits. The monies clients place with us are held with highly rated counter party banks and financial institutions, making Capital International Bank a low-risk solution.
Profitable Banking Solutions: Our goal is to make money work better. The suite of interest-bearing solutions we offer allows our clients to more than offset their fees, earning a profit from their banking relationship.
Human Touch: In an era where many banks rely on automated systems, chatbots, and outsourced call centres, Capital International Bank takes a different approach. We believe in the importance of human interaction, especially when it comes to financial matters. We do not have chatbots and outsourced call centres. We understand the importance of being able to speak to a human when clients have an enquiry.
Swift Account Opening: Capital International Bank understands that time is valuable, which is why we strive to streamline the account opening process. We aim for account openings within weeks, not months, streamlining the process for clients.
Rapid Decision-Making: When you apply for an account with Capital International Bank, you won't be left waiting for weeks to hear back. We commit to providing a response quickly, allowing you to know quickly whether your application has been approved or if additional information is needed.
Multi-Currency Options: Capital International Bank offers clients the flexibility to hold and transact in multiple currencies. With access to major global currencies like GBP, EUR, and USD, you can manage your financial operations across borders with ease.
FX Transactions: In addition to offering various currency accounts, Capital International Bank enables clients to perform foreign exchange (FX) transactions directly within our banking platform. This feature supports over fifteen different currencies, giving you the freedom to convert funds as needed without relying on third-party services.
Effortless Application: At Capital International Bank, we believe that opening an offshore bank account should be a straightforward and hassle-free experience. Our streamlined digital onboarding process allows you to complete your application online, reducing the need for physical paperwork and simplifying the submission of required documents.
Interested in the advantages of offshore banking in the Isle of Man? Get in contact with a member of our Business Development Team to learn more about opening a bank account in the Isle of Man.
Start your journey with Capital International Bank today: https://www.capital-iom.com/get-started/bank
We're here to help you navigate the process and explore the opportunities that suit your financial goals.
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. Opinions constitute views as at the date of publication and are subject to change.
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. Capital International Bank is the trading name of Capital International Bank Limited. Capital International Bank Limited is also licensed by the South African Reserve Bank Prudential Authority to conduct the business of a Representative Office in South Africa.
It suits each and every incoming government to claim that their economic inheritance is worse than anticipated in order that it can blame its predecessors for any early tough decisions it is forced to make.
So, the new Chancellor of the Exchequer, Rachel Reeves, in her first major parliamentary speech in office, was arguably doing little more than following a much-travelled traditional path. But for a number of reasons there was more to it than that.
One of the curiosities of this month's General Election was how little scrutiny was paid to any aspect of the programme that the Labour Opposition was proposing. The former government's calamitous and error-strewn election campaign arguably crowded out much other meaningful coverage. Labour's slogan was 'Change', but most voters seemed happy that this applied simply to the personnel in government; after the political dramas and turbulence of recent years there was arguably little appetite or enthusiasm for radical policy reversals. Nevertheless, the general election campaign was when Starmer and Reeves ought to have set out their stall - it is worth noting that the single biggest item making up the £22bn black hole they now complain about arises from their decision since 4 July to honour in full the recommended public sector pay awards.
The one economic message that the Starmer/Reeves government has been keenest to get across is that it is not hostile to capitalism. Meanwhile one of its key insights is a determination to tackle what it describes as 'market failure', especially in those privatised industries (such as the water utilities and the railways) where regulation has fallen short. Expect to see in the months ahead much more about protecting and enhancing consumer rights. The Financial Conduct Authority has already hit the ground running as it seeks to intensify Consumer Duty as the first anniversary of that initiative approaches; it would come as little surprise if this concept became a cornerstone of legislation well beyond the world of financial services.
But back for a moment to the politics of the blame game. One of the key lessons that the Starmer administration has learned from the last change in government in 2010 is the importance of controlling the narrative. The then incoming Chancellor George Osborne held an emergency budget within six weeks of assuming office where he set out a damning critique of the previous government's spending record and laid out a strategy of austerity across much of the public sector. It mattered little that until the very eve of the financial crisis, Osborne had pledged to keep to the very same spending plans that he now condemned as ruinously profligate. What mattered at the time (and it should be noted that having gone into Opposition the Labour Party, like today's Conservative opposition, immediately embarked upon a protracted and distracting internal leadership election, which gave the new government a virtually free hand) was that Osborne's narrative became the accepted conventional wisdom.
As it happens there were a few of us in the Noughties making the case that for all of Gordon Brown's talk of 'investment' in the public services, government spending at the time had risen in line with the rapidly increasing tax-take from the financial and professional services sector, and that it was unwise to assume this would go on for ever. But it was at least arguable that the seeds of the global financial crisis arose from an overheated US property market and the explosion in risky derivatives and other forms of financial engineering.
There is an equivalent counterattack to the incoming government's claims that its Conservative predecessor has failed recklessly to make proper provision either for those public sector pay settlements or the redress for a succession of high-profile public scandals such as over contaminated blood, the Post Office....with presumably Windrush and Hillsborough, amongst others, to follow. However, the risk for the Conservatives is that their justifiable defence that the state of the public finances owes much more to the costs of the pandemic and the energy crisis since the invasion of Ukraine will fall on deaf ears.
If Rachel Reeves can indeed control the narrative in this way, then we can confidently expect her to signal increases in the rates and extent of Capital Gains and Inheritance Tax as well as paring back on tax and pensions reliefs at her first budget on 30 October. That will also be the platform for the new government's growth agenda with expectations already high that supply side reforms in planning, managed migration and lighter touch regulation are in train. But the flip side of aggressive accusations about fiscal black holes in the public finances is a clear warning to the restless backbenchers in her own party that there will also be some very tough spending decisions ahead.
It is worth pointing out that there is one key difference between 2010 and today. The establishment of the Office for Budget Responsibility took place under the coalition with the intention that all aspects the public finances should be more transparent and open. So, it really is rather absurd to suggest that an incoming government has as little idea about the state of the public finances as a hapless accountant grappling with due diligence on the acquisition of a dodgily run private company.
A final thought or two in this briefing about the General Election earlier in the month. Political historians will, I suspect, conclude that the results were some of the strangest in British electoral history. Voter volatility and demographic change means that almost a quarter of the seats that the Conservatives won on 4 July were not held by the party even in their 1997 defeat (and by the same token some 60 of today's Labour constituencies had never previously been won by that party). Yet the Labour Party in securing only 34% of the vote ended up with a massive landslide victory second only in the post-World War Two era to Tony Blair's first triumph. I reckon that the universal confidence that it was heading for a massive victory saw some of its prospective voters in safe Labour seats either stay at home, vote Green or support a variety of Leftist independent candidates (five of whom also got elected). The Labour vote rose more consistently in seats previously held by the Conservatives; it is also worth remembering that the Tory vote share rose at each of the next three elections after its return to office in 2010, so the 34% base-line may prove to be a more solid foundation of Labour support than it seems.
For the Conservatives with an all-time low of 23% of the national vote and 121 seats there were painfully few straws of consolation - other than their success in the Hindu community which resulted in an unexpected gain in Leicester East and swings in its favour in parts of Northwest London. As the election approached, I reminded a few old political friends of the gallows humour doing the rounds in East Prussia exactly eighty years earlier, 'Enjoy the war, because the peace will be terrible'. Much will now depend on holding the party together with a credible agreed policy platform during and in the aftermath of its current leadership contest. It will also need to develop a narrative in its relations with Reform UK that does not lead to a prolonged split in the right-of-centre vote.
For the Liberal Democrats the election was a triumph, and the party now has its highest seat count since 1923. It benefited from ruthless targeting and often industrial levels of tactical voting in the constituencies it won. The Party has a tremendous track record at embedding its incumbent MPs (as was evidenced by the increased majorities won by each of their four unexpected by-election victors) and without the need to defend a record in coalition there is every reason to believe that the Liberal Democrats can do even better in 2028-29. Ditto the Greens who now have a four-strong phalanx of MPs and an array of urban Labour constituencies in their sights.
Even if Keir Starmer holds to the view that he wants politics to get a little less dramatic, I am sure public policy will be anything but boring in the years ahead!
Disclaimer: The views, thoughts and opinions expressed within the article / video are those of the author / speaker(s) 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. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. CIG, its clients and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute views as at the date of publication and are subject to change.
Capital International Group Limited is pleased to announce the acquisition of Martello Asset Management Limited (Martello), a boutique investment firm headquartered in Jersey. This strategic acquisition aims to enhance the jurisdictional footprint of the Capital International Group (the Group) of companies beyond their current locations in the Isle of Man and South Africa. The acquisition will increase the Group’s market presence and broaden its portfolio of services across Jersey and beyond. The acquisition is subject to regulatory consent in Jersey.
The integration of Martello’s extensive expertise and established client base will significantly bolster the position of Capital International Group in the investment management sector. This acquisition aligns with the Group’s long-term growth strategy to expand its reach and deliver exceptional value to its clients through diversified investment solutions.
Key Benefits of the Acquisition:
“We are thrilled to welcome Martello into the Capital International Group family,” said Head of Investment Management, Antony Kelsey, who has been leading the transaction. This acquisition represents a significant milestone in our growth journey. By combining our respective service offerings, we are well-positioned to expand the distribution of the Martello Global Equity Fund, and the wider Martello proposition into Capital International Group’s extensive relationships with intermediaries and advisers.
Martello has built a strong reputation for delivering exceptional investment management services and maintaining robust, good quality client relationships. The performance track record of the Martello Global Equity Fund speaks for itself and we are looking forward to working with the Martello team to distribute it more widely through the Capital International Group. The seamless integration of both companies will ensure continuity of service and a smooth transition for all clients and employees.”
“We are excited about the opportunities this acquisition brings,” said Gary Hill, Director of Martello. “Joining forces with the Capital International Group will enable us to leverage their extensive resources and expertise, ultimately benefiting our clients with enhanced investment options and services. We have been impressed with the Capital International team throughout our negotiations and we are confident that our team of professional employees and our clients will be well looked after in the future. The team will now engage closely with the necessary authorities to ensure the transaction receives all regulatory approvals as soon as possible.”
Anthony Long, Capital International Group’s Chairman said: “We have been keen to establish a strategic link with Jersey because of the strong investment management industry and community and so we are delighted that we have found Martello to help make a presence in Jersey a reality. The company’s African client base is also a great fit for us as we have 40+ staff across Cape Town, Johannesburg and Durban who are well placed to support and strengthen the relationships Martello have built.”
Disclaimer: The views, thoughts and opinions expressed within the article / video are those of the author / speaker(s) 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. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. CIG, its clients and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute views as at the date of publication and are subject to change.
Regulated investment and banking activities are carried out on behalf of Capital International Group by its licensed member companies. All subsidiary companies are represented under the Capital International Group brand.
Capital International Limited, Capital Financial Markets Limited, and Capital International Bank Limited, are licensed by the Isle of Man Financial Services Authority. Capital International Limited is a member of the London Stock Exchange. 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 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. Capital International Bank is the trading name of Capital International Bank Limited. Capital International Bank Limited is also licensed by the South African Reserve Bank Prudential Authority to conduct the business of a Representative Office in South Africa.
CILSA Investments (Pty) Ltd (FSP No. 44894), trading as Capital International SA, is licensed by the Financial Sector Conduct Authority in South Africa.
Welcome to the Quarterly Investment Review for Q2 2024.
Our Investment team have put together a range of resources to update you on what has happened in the markets across the second quarter of 2024. Here you will find:
Head of Equity, James Penn, shares his insight into potential interest rate changes as well as elections in the UK, Europe and in the US.
Listen for an overview of the recent elections in South Africa.
The next episode of the podcast will see Lerato and Tatenda joined by well-known journalist, author and broadcaster, Mandy Wiener.
Click this link to subscribe and listen to the podcast on your preferred listening platform.
Inflation has been at the forefront of macroeconomic events, causing headaches for central bankers worldwide. In addition to the well-known inflation contributors, we have experienced post-pandemic and as a result of the Ukraine-Russia war, a new inflationary phenomenon has emerged. The demand for Taylor Swift’s record-breaking Eras tour has been significantly impacting local economies since its launch this year. Not only does the tour generate substantial revenue, but the increased consumer spending on hotels, restaurants, and flights is driving up prices, entrenching service sector inflation.
Despite inflation hitting the 2% target last month, the Bank of England has been hesitant to start cutting rates. Markets are anticipating the first rate cut in August. However, the spending by concertgoers, combined with the seasonal increase in summer holiday travel, may push service inflation to undesirable levels. The UK leg of the tour, taking place in June and August, is expected to add £1 billion to the British economy.
Taylor Swift is not alone in this impact. Legends like Bruce Springsteen, Sting, and Pink are also contributing to increased consumer spending on services, extending this inflationary pressure to the Eurozone and affecting the European Central Bank as well.
Interestingly, Taylor Swift has left a lasting legacy by adding terms like "Swiftflation" and "Swiftonomics" to the economic dictionary.
Global equity markets had another strong quarter, solidifying their one-year performance rebound. Key drivers of this positive trend included the continuation of the disinflation narrative, central banks beginning to cut interest rates, sustained earnings strength, and increasing positive sentiment surrounding Artificial Intelligence (AI). This was particularly notable in the United States, where the "Magnificent 7" further reinforced their dominant market positions.
In the second quarter of 2024, total equity market returns remained positive. The Nasdaq was the best-performing index, achieving an 8.5% return, followed by the S&P 500 with a 4.3% return in local currency terms, while the main UK index returned 3.7%. In contrast, Europe retreated by -1.6% largely due to political uncertainty in France. Rising pressures from the far-right National Rally party led by Marine Le Pen forced French President Emmanuel Macron to call a snap election causing France’s CAC 40 index to fall by -6.6%.
Large-cap stocks continued to rally, especially in the US technology and communications sectors, which are major benefactors of AI optimism. Nvidia briefly overtook Apple and Microsoft to become the most valuable company in the world, with an estimated value of $3.3 trillion. However, valuation ratios such as the Price to Earnings ratio have expanded in the US to 28.5x, compared to the long-term average of 24x, leading some market commentators to view the US market as potentially overvalued.
Political uncertainty was abundant during the quarter. Snap elections were called in both the United Kingdom and France, while in the United States, the first televised election debate resulted in a notable swing toward Donald Trump. Concerns were raised over Joe Biden’s performance, which was perceived as incoherent and rambling. Additionally, Donald Trump became the first former US President in history to be convicted of felony charges, receiving 34 counts of falsifying business records.
Fixed income markets came under further pressure as expectations around the commencement of interest rate cuts were again called into question, particularly in the US, due to continued economic strength. The European Union initiated its first interest rate cut of 0.25%, with expectations of an additional cut before year-end. The UK did not cut interest rates in the June meeting, despite increasing calls to do so. The expectation is now for the Bank of England to make its first interest rate cut in August, with another cut anticipated before year-end. Global government bond yields have been volatile, as the bond market attempts to forecast the forward interest rate path amid uncertainty around inflation data and central bank rhetoric, which fluctuates between dovish and hawkish tones.
The market’s digestion of both inflation data and the resulting central bank response continued to be a major focus of macroeconomic analysis. At the end of the quarter, major developed market inflation rates for the US, EU, and UK were 3.3%, 2.6%, and 2.0%, respectively. There is less reason for the US to cut interest rates compared to the EU and UK, largely due to differing economic situations. In May, the UK economy emerged from a technical recession, posting a GDP increase of 0.6%. The UK also achieved its target rate of inflation during the quarter, becoming the first major developed economy to do so.
In commodity markets, gold experienced gains, finishing the quarter up 4.3% at $2,326. Gold remains a safe-haven asset, offering diversification against inflation, geopolitical uncertainty, and potential market overvaluation. Meanwhile, oil retreated by -1.2%, ending the quarter at $86.4.
The second quarter presented fertile ground for growth, as markets largely benefited from a resilient macroeconomic backdrop despite increasing bouts of geopolitical volatility. AI continues to evolve into a major megatrend that could facilitate further sustainable long-term economic growth. The central bank environment remains supportive, and we expect the UK to follow the EU and begin the rate cut cycle in the coming quarter. This quarter highlighted the importance of maintaining a diversified asset approach in line with our long-term performance targets. We also remain mindful of short-term risks and opportunities, especially with the election risk looming in the second half of the year.
Disclaimer: The views, thoughts and opinions expressed within the article / video are those of the author / speaker(s) 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. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. CIG, its clients and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute views as at the date of publication and are subject to change.
Regulated investment activities are carried out on behalf of Capital International Group by its licensed member companies. Capital International Limited and Capital Financial Markets Limited are licensed by the Isle of Man Financial Services Authority. Capital International Limited is a member of the London Stock Exchange. CILSA Investments (Pty) Ltd (FSP No. 44894), trading as Capital International SA, is licenced by the Financial Sector Conduct Authority in South Africa. All subsidiary companies across both jurisdictions are represented under the Capital International Group brand.
Welcome to the Quarterly Investment Review for Q1 2024.
Our Investment team have put together a range of resources to update you on what has happened in themarkets across the first quarter of 2024. Here you will find:
The graph below shows global equity performance across the quarter and plots world events along the performance line to indicate their impact on markets.
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Portfolio Manager, Sean Mills, answers four key questions on the current AI mega-trend.
Head of Equity, James Penn chats to Portfolio Manager, Matthew Seaward about China's current investment landscape.
A new episode of Capital Alchemy has recently been released. Join host Tatenda Chikombero as he chats to Ulrik about the current tax landscape in South Africa including:
Watch the full podcast here on YouTube.
Listen to the podcast on your preferred listening platform.
Developed markets started the year mutedly, but by the end of January US, European, and Japanese equity markets had raced ahead delivering record highs across multiple trading sessions. Chinese markets were closely watched given negative performance in both mainland China and Hong Kong. Indices reinforced the view that the second largest economy in the world was struggling to return to levels of pre-pandemic growth.
In the end, the first quarter of 2024 produced the best first quarter in total equity market returns seen in almost 5 years. NIKKEI was the best index achieving 20.6%, followed by EUROSTOXX 12.4%, S&P 10.2%, and NASDAQ 9.1%, all in local currency terms, while the main UK index returned a modest 2.8%. The Japanese market index hit an all-time high after decades of stagnation, largely due to corporate reforms that took place during 2023 and a cheap yen attracting foreign buyers on a large scale. US stocks continued to benefit from AI euphoria as an endless stream of positive news on generative AI progress helped push US stock markets to all-time highs. The US Q4 earnings season also delivered strong results, with 75% of companies beating analyst expectations. However, there were some surprising individual underperformers, especially mega cap names like Apple and Tesla, which experienced difficulties amidst competition concerns or in dealing with regulatory lawsuits imposed by US and EU regulators. European stocks were surprisingly ahead of US peers for the quarter.
Fixed income markets came under pressure after the commencement of interest rate cuts were rolled further back in 2024, while the number of cuts expected for the full year have also been reduced. Global government bonds yields had a bumpy ride, mainly caused by bond markets overreacting to any uncertainty around inflation data that challenged the disinflation narrative while also navigating global central bank rhetoric which swung between dovish and hawkish projections. The Bank of Japan finally exited its yield control mechanisms and a negative interest rate territory while the Swiss National bank was the first major bank to cut their base rate by 25 basis points.
How the market digests inflation data and the resulting central bank responses continued to be at the forefront of macroeconomic focus. At the end of the quarter major developed market inflation rates for the US, EU, and UK were 3.2%, 2.4%, and 3.4% respectively. Reduced expectations of lower interest rates have mainly been affected by the surprising resilience of the US economy, with inflationary pressures not dissipating at a sufficient level to warrant cutting. Some signs of weakness have been seen, with European, UK, and Chinese economic growth flat, and even a technical recession for Germany. This could warrant the possibility of the EU or UK cutting rates before the US.
In commodity markets, gold recorded significant gains as it finished the quarter up 8.1% at $2229. The gold rally was supported by a softening dollar, the outbreak of two major conflicts, and pushed back projections of rate cuts making gold more attractive. Oil also rallied 13.5% finishing the quarter at $87. Oil prices were impacted by the Israel-Palestinian war, disruptions to Red Sea passage shipping, and reduced output from Russia caused by significant disruptions to refineries which were targeted by drone strikes.
This quarter presented a series of opportunities across a range of sectors. Markets largely benefited from a strong macroeconomic backdrop and the positive sentiment that surrounds the generative AI megatrend. We believe there remains a supportive central bank environment and we anticipate the first rate cuts will now begin in June, possibly with the European Union or the United Kingdom leading the way over the United States. We continue to maintain a diversified asset approach in line with our aim of achieving long-term performance targets while also being mindful of any short-term opportunities as they present themselves.
Disclaimer: The views, thoughts and opinions expressed within the article / video are those of the author / speaker(s) 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. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. CIG, its clients and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute views as at the date of publication and are subject to change.
Regulated investment activities are carried out on behalf of Capital International Group by its licensed member companies. Capital International Limited and Capital Financial Markets Limited are licensed by the Isle of Man Financial Services Authority. Capital International Limited is a member of the London Stock Exchange. CILSA Investments (Pty) Ltd (FSP No. 44894), trading as Capital International SA, is licensed by the Financial Sector Conduct Authority in South Africa. All subsidiary companies across both jurisdictions are represented under the Capital International Group brand.
The population within the Gulf Cooperation Council (GCC) region has seen significant growth, reaching 56.4 million people in 2021, up from 26.2 million in 1995 (Source: ISI World Statistics). This surge is attributed to the influx of expatriate workers, drawn by favourable local taxation rules and expanding business opportunities.
Notably, the population balance has tilted in favour of non-citizens, constituting 50.9%, with an annual growth rate of 3.1%, compared to 1.4% for citizens. This shift, from 46.6% in 2010, suggests that the non-citizen population could double in about 23 years, reaching 57.6 million people by 2044 (Source: ISI World Statistics).
This population boom, particularly within the expat market, is driving a heightened demand in the financial services industry for top-tier advice, wealth management, and associated services and products. Among the available options for advisers to support their clients' financial goals, investment platforms are gaining significant traction.
Following my recent trip to Dubai, along with our Commercial Director David Noon, I wanted to share some insights on the trends and limitations our clients are facing. We work closely with our clients, and it is our commitment to understand their needs and the challenges they encounter.
Situs is defined as “the place to which, for purposes of legal jurisdiction or taxation, a property belongs” (Source: Golding & Golding). Despite the increasing awareness of situs tax, not everyone is cognisant of its potential impact on a client's assets upon death.
Did you know, for example, that a person holding over $60,000 in US stocks could face US situs tax of up to 40% of the value of their holdings? Likewise in the UK, if your combined UK domiciled assets total more than £325,000 then similar taxation can apply?
Situs isn’t just applicable to physical property but to a range of asset types. With clients wanting exposure to popular global stocks, or obtaining share options from their employer, it’s important to keep situs in mind and understand the associated risks involved.
To mitigate situs, options like an insurance wrapper or an international pension exist, though each comes with potential drawbacks. Our 'Kinesis Service’ aims to assist advisers and their clients in mitigating potential situs liability while harnessing the benefits of an investment platform.
The removal of the UAE from the Financial Action Task Force's 'grey list' (Source: Reuters) marks a significant achievement for the jurisdiction, signalling positive strides taken by the country. This development opens wider opportunities and fosters closer collaboration with other international jurisdictions.
Despite this success, the EU still designates the UAE as a high-risk country (Source: Reuters), emphasising the ongoing work required. The UAE's commitment to diversifying beyond the oil sector bodes well for industries like financial services, boosting investor confidence locally and internationally
Navigating international waters exposes companies to higher risk factors, with constraints ranging from clients returning to their birth country to stringent limitations on investment choices. As companies grapple with these challenges, it is crucial for advisers to scrutinise providers' outlook on risk and their policies.
I firmly believe in advisers and clients being given access to an open-architecture solution, allowing them to tailor investment solutions to their financial goals and risk appetite, both now and in the future.
Succession planning is a recurrent theme in nearly all my meetings, underscoring its significance in comprehensive financial planning. The importance of succession varies among clients, contingent on their unique circumstances. Fortunately, most providers present viable solutions, whether through life insurance policies with designated beneficiaries from the outset or platforms offering 'death bed' trusts. However, it's paramount to understand the tax implications for beneficiaries.
A word of caution is in order – always seek legal or tax opinions on prospective solutions to validate their legitimacy and safeguard against potential liabilities in the future. I've encountered instances where proposed beneficiary nominations, upon scrutiny, could falter as trusts, triggering unforeseen inheritance and probate obligations. In the intricate realm of wealth management, meticulous planning today ensures a lasting legacy tomorrow.
In conclusion, the offshore investment platform market is experiencing an exciting phase of growth. The prevalence and utilisation of platforms are steadily increasing, and at Capital International Group, we are dedicated to supporting this upward trend. With substantial plans for 2024 and beyond, stay tuned for future blog posts as we unveil more details about our exciting developments.
Disclaimer: The views, thoughts and opinions expressed within the 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 productor security or to make a bank deposit. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. CIG, its clients and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute our views as of this date and are subject to change.
Regulated investment activities are carried out on behalf of Capital International Group by its licensed member companies. Capital International Limited and Capital Financial Markets Limited are licensed by the Isle of Man Financial Services Authority. Capital International Limited is a member of the London Stock Exchange. CILSA Investments (Pty) Ltd (FSP No. 44894) trading as Capital International SA, is licenced by the Financial Sector Conduct Authority in South Africa. All subsidiary companies across both jurisdictions are represented under the Capital International Group brand.
Why it’s Important to Stay Invested!
It comes as little surprise that, over the long term, equities outperform bonds, and that bonds outperform cash. So, why is it so challenging to make the decision to invest? Uncertainty, volatility, and psychological biases all prevent investors, even those more willing to take risks, from making the leap and entering the market.
Whilst many clients were comparing the positive cash returns last year to investment returns, over the last 13 months our PRISM H5 balanced strategy returned 6.7%whilst UK base rates returned 5.2% and to achieve a return close to UK base rates at the Bank clients would need to lock it away – typically for 12 months or more.
In the picture below we review how markets performed over the last 13 months and summarise the key events.
Disclaimer: The views, thoughts and opinions expressed within the article / video are those of the author / speaker(s) 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 productor security or to make a bank deposit. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. CIG, its clients and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute our views as of this date and are subject to change.
Regulated investment activities are carried out on behalf of Capital International Group by its licensed member companies. Capital International Limited and Capital Financial Markets Limited are licensed by the Isle of Man Financial Services Authority. Capital International Limited is a member of the London Stock Exchange. CILSA Investments (Pty) Ltd (FSP No. 44894) trading as Capital International SA, is licenced by the Financial Sector Conduct Authority in South Africa. All subsidiary companies across both jurisdictions are represented under the Capital International Group brand.
