Global Markets enters uncharted territory at its sixth annual conference

The sixth annual BNP Paribas Global Markets Conference returned to London on 17 November providing insights on some of the transformations shaping markets today.

The sixth annual BNP Paribas Global Markets Conference returned to London on 17 November, convening industry leaders and experts from across politics, sustainability, financial services and technology. Speakers shared their unique insights into some of the transformations shaping markets today.

Security

Global security – or a lack thereof – was a recurrent theme. First and foremost, the invasion of Ukraine dominated proceedings with speakers highlighting the conflict’s devastating human and economic toll as well as the resulting issues for energy scarcity and security.

One expert noted Russian gas supplied 20% of Germany’s energy needs, highlighting the scale of the energy security problem facing some European markets, as well as the need for European countries to seek out new energy supplies. “Europe is closing the period in which it was dependent on Russian gas,” said one expert.

Sustainability

The war in Ukraine has also highlighted the importance of embracing renewables and clean energies.

Speakers highlighted that the transition to renewables will not be an overnight phenomenon and requires a degree of pragmatism. A corporate executive, for example, noted that the current economic uncertainty meant it was difficult to bring some renewable projects forward.

Nonetheless, a number of corporates are making excellent progress on greening their businesses. An executive at a shipping company said their firm is aiming to become net zero carbon by 2050, but conceded it would be a tough job.

Institutional investors – including asset managers – are incorporating ESG (environmental, social, governance) criteria into their investment processes as well. A manager said they are integrating ESG into their strategies from a bottom up securities level and a long term asset perspective.

Inflation

Speakers underlined how, thanks to the ongoing conflict in Ukraine, spiralling energy and fuel costs are accelerating global inflation. “This time last year, many of us assumed inflation would be transitory, but now we are seeing the highest inflation in many countries in 40 years,” commented a speaker looking at the investment outlook. In many European markets, inflation is running in excess of 10%, however, an asset manager said that markets are not suffering from structurally high inflation like they were four decades ago: “Inflation is high, but not structurally high like in the 1970s.”

Most major markets now target an inflation rate of 2%, but some asset managers have urged Central Banks to be more flexible in their approach.  “There is nothing magical about 2% other than the fact that it has become well entrenched with market expectations,” explained one speaker from an asset management firm.

Despite the difficult macro headwinds, there are return opportunities available. One private equity manager commented on how debt markets are very attractive, as are sectors focused on the energy transition. He noted that infrastructure was a sensible investment too as it can provide an effective hedge against rising inflation.

Another manager highlighted that fixed income was making a comeback: “Bonds are back. We have got proper yields now for the first time in more than a decade.”

Blockchain and digital assets

With the conference taking place just days after FTX – a crypto-exchange once valued at US$32 billion and backed by a number of major institutional investors- filed for bankruptcy, experts attempted to dissect what went wrong, and what lessons could be learned.

Although the FTX incident has undoubtedly eroded the trust many investors once had in the crypto market, both panellists agreed that it was not an indictment of the blockchain technology and crypto assets but rather that the scandal supported the need for regulation, transparency, a separation of certain functions, due diligence and ultimately global cooperation. To illustrate this point, one speaker highlighted the fact that other decentralised non-custodial crypto exchanges and regulated centralised crypto exchanges kept performing well during the FTX incident.

Just as people’s long-term bullishness about electric vehicles is influencing Tesla’s share price, a former regulator said the value of crypto-currencies – such as Bitcoin and Ethereum – is derived from the fact that many investors are convinced the future of money will be network-based, digital and tokenised in nature.

Related solutions

Cash Equities

BNP Paribas’ best-in-class Cash Equities platform offers award-winning equity research and a premier, customisable execution experience. BNP Paribas Exane research is renowned for its depth and quality, reinforced by experienced, top-ranked sales and specialist teams as well as a dedicated corporate access service. This, combined with our market-leading global execution services including Cortex Equities, a state-of-the-art electronic trading platform, high-touch trading, portfolio trading, quant research and execution consulting deliver an unparalleled Cash Equities offering.

Commodity Derivatives

With a global footprint and over 30 years of expertise in the commodities market, we are one of the few banks in the world with a long term commitment to the growth of our commodity derivatives franchise bringing innovative and ground breaking solutions to clients worldwide.

Equity Derivatives

BNP Paribas has over 30 years of track record in developing innovative equity derivatives strategies and an established global leader in structured products. Our comprehensive range of solutions across flow and structured products is designed to meet all our clients’ needs.

Foreign Exchange

Our Forex business is designed to respond to the complex and constantly evolving market. Discover our truly global network boasting broad market access across both developed and emerging markets.

Foreign Exchange Prime Brokerage

As a leading Foreign Exchange Prime Broker (FXPB), BNP Paribas serves a diversified institutional client base, including multi-strategy and macro hedge funds, asset managers, banks, large non-bank liquidity providers and agency brokers across regions.

Global Credit

Our global Credit business enables us to realise synergies while maintaining strict boundaries between the public and private sides. We provide solutions to clients throughout the entire credit continuum from origination through execution to secondary market trading and post trade services.

Global Equities

Building on our long-established world-class Equity Derivatives business, BNP Paribas continues to diversify and scale our Equities offering. Clients can now access the combined strengths of our market-leading Prime Services and Cash Equities platforms.

Global Macro

Global Macro offers the full spectrum of products across FX, Rates and Commodities in both developed and emerging markets, from millisecond electronic trading supported by the most advanced AI platforms, through to long dated, high touch solutions.

Global Rates

We aim to be a top 3 house across both developed and emerging market rates. Our business has grown substantially and we operate a culture of “shared purpose”. Our focus is aligned around the social and economic outcomes of supporting our broad client base across Corporates and Institutional Investors.

Markets 360

A radical new approach to strategy and economics to provide you with top quality views, focusing on evidence-based research and thought leadership. We bring economics and strategy together in thematic notes across asset classes, delivering what you need when you need it and continuously adapting to your needs.

Prime Services

As a leading European bank with a prominent global presence, BNP Paribas is one of the few banks globally with a comprehensive suite of investor services. Our multi-asset Prime Services offering provides clients with access to one of the broadest product capabilities across prime brokerage, clearing, and FX prime brokerage.