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Last year, we experienced the same headwinds that led many to label 2022 as the year of “permanent crisis.”
Inflation, rising interest rates and geopolitical tensions continued to hurt economies around the world and affected financial services in Europe. The investment bank carried out its deepest job cuts since 2008, cutting thousands of positions as trading fees flattened and a hoped-for recovery in trading failed to materialize.
Fund managers and law firms followed suit, but the Big Four accounting firms pulled the trigger after turnover plummeted and profits stagnated. Fighting between Israel and Hamas began in October amid concerns about Russia’s invasion of Ukraine, bringing the world into yet another brutal conflict. Will we see more of the same in 2024? Or will new threats emerge this year?
David Hunt, PGIM CEO
“Most of the major risks we have seen over the past five to six years, such as pandemics, two wars, oil price shocks, and inflation, are much more idiosyncratic in nature and come from a variety of sources. and is actually more important than the traditional business cycle risks that we have seen so far. Therefore, the greater risk is that portfolios are not in a new world with more idiosyncratic geopolitical and national security instability. , it is constructed only for the old world of business cycles.”
Bob Diamond, former president of Barclays and CEO of Atlas Merchant Capital
“The most obvious risks will be to interest rates and the economy. The Fed appears to have engineered a soft landing, but an upside surprise in inflation could change the outlook on interest rates and portend a negative impact on economic performance. Beyond that, the other key area of concern will be around political risk with upcoming elections in the US, UK and elsewhere.”
Claire Woodman, head of emea at Morgan Stanley
“Despite recent strong inflation indicators and analysts’ predictions of a rate cut in 2024, signs of a resurgence in inflation could prompt the central bank to raise benchmark interest rates or maintain interest rates for an extended period of time. “Rising interest rates will continue to weigh on borrowing, with knock-on effects on advisory transaction flows, underwriting, and the broader industry and economy.”
Farmida Bi, Emea Chair, Norton Rose Fulbright
“The world has been hit by geopolitical events in recent years, and this will continue in 2024, when half the world’s population goes to the polls.
read “As long as Putin is in the Kremlin, global finance will not be able to cooperate with Russia.”
“The results could impact markets around the world, and all businesses need to prepare for it.”
Bee Martin, President of EMEA, UBS
“We expect 2024 to continue to be characterized by economic uncertainty and geopolitical instability. These geopolitical risks will only impact our customers and employees, including across our EMEA footprint. It also presents real issues that the industry as a whole will continue to grapple with, including a continuing sanctions regime, growing cyber risk concerns, and rising inflation and interest rates. market fluctuations, etc.
Sandro Pieri, CEO of BNP Paribas AM
“The funds that propelled economic activity in 2023 will begin to dry up in 2024. Excess savings in the United States will soon be spent and business investment will decline. Europe will be more vulnerable to recession risk and stagnant. China is struggling to resolve an asset crisis while facing rationing. Tight financial conditions will weigh on economic growth and corporate profits. Fiscal support reverses as government focuses on debt reduction Possible. The main risk is that growth slows more than the market expects.”
Biddy Boma, Liberum CEO
“For the UK, negative factors pushing up inflation and expectations that interest rates will not fall remain the key risks. For the UK capital market, the lack of IPOs and low levels of funding cannot be allowed to continue. This is a huge risk, not only for our industry but for the economy as a whole. There are currently only 1,908 companies trading on the LSE, down from around 2,500 in 2015.”
Martin Gilbert, AssetCo Chairman of the Board
“Geopolitics poses the biggest risk to investment markets and returns to date. The invasion of Ukraine caused a spike in oil prices and triggered a resurgence of inflation in 2022, while events in Gaza pose further risks. It has brought stability. With 2024 set to be the biggest election year in history, when countries with half the world’s population go to the polls, the potential for further geopolitical upheaval is considerable.”
verena ross, chair, esma
“Markets are adapting to a prolonged high interest rate environment amid continued uncertainty regarding the macroeconomic and geopolitical situation.”
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“Two examples of areas where risks may materialize in this difficult environment are high interest rate real estate markets, which impact property valuations and refinance costs, and the risk of weakening fundamentals. It’s a corporate bond market where you’re seeing a lot of things, and the market valuations don’t match up.”
Ian Simm, CEO, Impax Asset Management
“Spurred by the arrival of El Niño, 2023 is almost certain to be the hottest year on record, with many regions experiencing catastrophic weather-related damage. Society’s response to major environmental issues is It will continue to attract attention in 2024, building on recent policies such as the US Inflation Control Act and the EU Green Deal, which are directing significant capital flows to clean energy and infrastructure. Diversity loss will also be of increasing interest to investors ahead of the COP16 Global Biodiversity Summit in October 2024.
Richard Houston, Senior Partner and CEO, Deloitte UK
“The biggest source of risk for businesses is uncertainty, and the challenges it poses to investment confidence and decision-making. The broader geopolitical environment is a key driver of this uncertainty, and businesses are We are asking the government to commit to thoughtful thinking and decision-making.”
Stefan Hoopes, DWS CEO
“There will be a number of elections over the next 12 months. In the short term, this will result in higher bond risk premiums, lower stock prices, increased volatility and a flight to supposedly safer investments. That could lead to a significant market reaction. History tells us that such reactions don’t last long, but when viewed through this lens, 2024 will be a roller coaster. .”
Dame Jayne-Anne Gadia, founder of Snoop
“Ongoing geopolitical tensions and elections around the world pose significant downside risks regarding uncertainty and instability in 2024.”
Anna Anthony, EY, UK Financial Services Managing Partner
“If 2023 is the year of generative AI adoption, 2024 will be the year of upskilling the workforce and addressing its risk, regulation and ethical use. It is rapidly rising to the top of the committee’s agenda and care must be taken to ensure its safe use. Industry will work closely with government and regulators as AI regulation progresses in the UK. It is important to do so.”
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