Investment

Quarterly Investment Review – Q1 2022

by James Macpherson

Quarterly Investment Review – Q1 2022

“We need to increase oil and gas output immediately.”
Elon Musk, 5 March 2022

Just as the world economy was emerging from the Covid crisis it was overtaken by another crisis when Russia invaded Ukraine. Apart from the human trauma there are multiple economic impacts from this act. The main one is that it has made an energy crisis even more acute, but a string of other commodities’ supply have been affected. Russia is a commodity superpower producing 11% of the world’s oil, 17% of its natural gas, 40% of palladium, 15% of platinum and rhodium, 15% of aluminium, significant volumes of battery grade nickel, and 65% of neon (a rare gas used for semiconductor production). Russia and Ukraine account for 28% of global wheat trade. Belarus has 40% of the world’s potash, and Russia supplies 66% of ammonium nitrate (used for fertilizer). Many of these markets were already tight, and the loss of such a large provider will create huge upheaval as the world tries to reorganise its supplies. The inflationary pressures are clear, and they add to a situation which was already experiencing the highest inflation for forty years. On top of these pressures will be increased defence spending, which will further constrain government budgets and add to inflation. Wars are always inflationary. Before the invasion several areas of financial markets were struggling as Central Banks indicated that interest rates would rise through the rest of the year. Bonds had fallen as inflation rose, and profitless technology companies in the US fell precipitously. Most dramatic was the profit warning on 3rd February by Meta (formerly Facebook) which resulted in it losing $250bn of value that day. It is a measure of how concentrated the market is that its loss represented the combined total value of all but the top twenty companies in the S&P500. Yet this feature of the market also offers opportunity. The obsession with technology in the last decade means that large swathes of the market have been ignored, leaving plenty of decent companies on sensible valuations. Nonetheless the strong inflationary environment, with a super imposed geopolitical and commodity shock, has left all markets in an uncertain state. Longer term the most damaging consequence may be to the US dollar’s reserve currency status. The unilateral freezing of Russian reserves will make countries with large surpluses think twice about parking their reserves in the US bond market. The US has benefited from trillions of deposits from countries such as China, India, Saudi Arabia, UAE, and Kuwait. These reserves have allowed the US to run huge deficits at low cost, but if the inviolability of these reserves is questioned they may leave. That will put upward pressure on US interest rates, and downward pressure on the dollar.

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

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Antonio Mira
CHIEF FINANCIAL OFFICER, MEMBER OF THE EXECUTIVE COMMITTEE

Antonio Mira joined NS Partners in 2006 as Group Chief Financial Officer. He heads the corporate functions and is involved in coordinating and implementing the decisions of the Executive Committee.
An experienced bank auditor, Antonio started his career in 1995 with Arthur Andersen, where he worked for some 7 years before joining Ernst & Young in 2002 as a Senior Manager.
Antonio is a Swiss chartered accountant and a Business graduate of Lausanne University (HEC).

Sébastien Poiret
DEPUTY HEAD OF WEALTH MANAGEMENT

Sébastien Poiret joined NS Partners in 2008 and manages funds of hedge funds and private client mandates. He also oversees the development of the Group’s offices in Mauritius.

Prior to joining NS Partners, he served as a Trader, Head of Manager research and Portfolio Manager in the USA and Switzerland for a single hedge fund (1998-2004) and for Optimal (2004-2008), Grupo Santander’s fund-of-hedge funds operations.

Sébastien holds a Bachelor’s degree in Corporate Finance from the ESPEME Business School (EDHEC Group) and an MBA in Finance and Economics from the Institute of Business Administration, both in Nice.

Abir Oreibi
BOARD DIRECTOR

Abir Oreibi joined the Board of the NS Partners Group in 2018, where she brings her truly international perspective and rich experience.
Among many other ventures, Abir set up Alibaba.com’s first European office. After living and working in Shanghai, Hong Kong, Bangkok and London, she now lives in Geneva, where she is CEO of Lift Events, an organization that identifies technology trends, their business and social impact through the organization of events and open innovation programs. Issues related to the challenges and opportunities created by new technologies as well as the strategic responses from organizations are at the heart of Lift’s activities.
Abir holds a BA in Political Sciences from the University of Geneva. She is an investor, and member of advisory and innovation boards.

Romain Pidoux, CAIA

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Romain Pidoux joined NS Partners in 2011 and heads the Group’s Risk Management.
He started his financial career in 2005 as Head of Quantitative Analysis for a Swiss Family Office, selecting funds and managing portfolio allocation. In 2008, he switched to the alternative world and joined Peak Partners as hedge funds analyst.
He is a Chartered Alternative Investment Analyst (CAIA) and holds a Master’s degree in international relations from the Graduate Institute of International Studies at Geneva University.

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