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Sir Michael Hintze at Milken: Global Capital Markets

Milken Institute Global Conference panel discusses global capital markets.

Global Capital Markets
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Global Capital Markets

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Transcript

Let's start with the geo political environment and its influences on the market. One of the pressing issues of our day is the rise of nationalism and populism so Sir Michael as head of a multi strat asset management firm based in London. I'd like to start with you. What are the underlying drivers of these related trends and what are near term and long term economic implications for them okay.

Well again thank you very much. And such a pleasure to be here this morning. My view very clearly that this is come from the global financial crisis remember. What have we done simplistically but what have we done. We've borrowed money from our children and brought it to us today that's basically given this the situation where it's increased the Gini coefficient increase the the amount of dispute disparity in our society and the reality is.

Remember if you have no capital why be a capitalist. That's the real problem we've got here. Lubis simplistically if you have no capital why be a Catholic capitalist. And the logical response that the logical response that is to be a socialist a national socialist or a trusted socialist or whatever. Or at the very least to be a government also. So we've got a situation where this has led to populism. Yes there is a view that the liberal elite has let us down as let the world down. That is the disparity that they will not the people not be better off in the next generation than they are today. And we have some really interesting interesting phenomenon and the reality is the populist voting share is increasing all over the world. If you pull up slide 13 1 3 you'll see what that what is going what is going on there. Slide 13. If we were waiting for that but again let me just talk talk through that. It is increasing all over the world it is increasing at all across the world. And whether it's and what is what is that giving us the opportunity to do it it is prevent providing a very interesting trading investment opportunity. You need to understand what's happening here. And again if we go to the end we can use goes across the world. It's a global phenomenon. Latin America Europe the US for that matter. And if you go to Slide 14 the next slide on 14 you'll see that it is different country by country. It is a global phenomenon. Yet country by country. It is different. And that is the interesting thing about that. So if you focus on Europe which is the next slide Slide 15. There we see a significant divergence of populism whether it's in Italy where again some really interesting things to trade around. And you know it's it's it's it's quite a candidate. Quite an interesting play there. Obviously we have Brexit we have all sorts of other things going on. And the intriguing thing about this rise of populism is it leads to a it leads to a policy dilemma a policy vacuum and frankly it is one of the reasons what allows China to be as effective in the world. And I look a little more about China but that is a mess. Another method theme and another massive view that comes out of the populist agenda.

So thanks for that following on Mark Matson as head of CPB which is one of the largest pension funds in the world. You set very ambitious targets for investments in emerging markets. With all of the geopolitical and trade tensions going on today could you please share your views on China and how those tensions have changed your near term investing outlook in the country if at all.

Thank you. So I think the.

Key on China is huge which we all we all know it's massive. As a population as a component of Asia Pacific now it's Asia-Pacific is now two thirds of the global growth. It's you know 60 percent of global workforce is 50 percent the population that's 50 percent of fixed income a fixed investment in the world and side and then with intra regional trade is just increasing to 70 percent of container traffic in the world is in Asia. China's a key component that China days are pushing towards mid teens percentage GDP it will be 20 20 percent of GDP in the world by 2025. And you know things grow on a straight line and push towards 25 percent of GDP by the mid twenty third is so just from pure economic size massive. So we have to pay attention to it. Second second thing is markets market today.