Investment

Economic and financial consequences: How to reposition the portfolios.

by Angel Sanz

The new environment after the Russian invasion of Ukraine.

How to reposition the portfolios.

The Russian invasion of Ukraine is having and will have an important impact in world politics for a generation or more: Europe is more united than ever; Russia has become a pariah among developed democratic countries; energy security is becoming a first priority for European countries, etc. What are the practical economic and financial consequences and how can investors profit from this environment?

Si vis pacem, para bellum

The first long-term negative consequence is that the “peace dividend” is over. As Julius Cesar said 2000 years ago, “if you want peace, prepare for war”. And so be it, Germany and Italy have already announced a significant increase in defense investments and other countries will follow. These investments for peace will decrease the amount available for other purposes. Investment opportunity: traditional defense stocks and cybersecurity companies.

Avoiding high valuations

The second negative consequence (in this case, short-term) is that the prices of many commodities are increasing very rapidly, which has a short-term impact on lower GDP growth and higher inflation. If we look at the futures markets, in one or two years, this impact may have disappeared as commodity prices will have come back to previous levels. In any case, the higher inflation rate expected will make central banks more hawkish in their monetary policies and hypergrowth stocks with demanding valuations should be avoided in the portfolios.

The ESG investment approach is as valid as before the war

Focusing on energy security

The most important short, medium and long term consequence is that countries are accelerating their pursuit of Energy Security (The new ES of the ESG investment?) to avoid their dependence on Russian oil and gas. In the oil crisis of the 70s after the Arab oil embargo, many countries started to invest in their nuclear power reactors to gain more energy independence. In this case, we foresee an acceleration of investment in wind and solar energy, battery storage, hydrogen and ammonia technologies, carbon sequestration, small size nuclear reactors, energy- saving devices, isolation materials, and other technologies linked to cleaner energy. This is a once-in-ageneration opportunity to invest in both public and private markets.

To look good

To accelerate this “cleaner energy” goal, there is need for what we can call “decarbonisation metals”, that include copper, lithium, rare earths, zinc, aluminum, cobalt, etc. Mining companies in this space are to be favored.

Health is always important

Health care companies will again be a favorite group as they (1) are defensive in a lower GDP growth environment; (2) are not much impacted by the increase in commodity prices; (3) have a secular growth as the population ages and (4) valuations are very good in pharmaceutical companies and reasonable in medical equipment companies.

As a final thought, the ESG investment approach is as valid as before the war, as we look for companies that will profit economically, while caring for the Environmental, Social and Governance aspects, and we have not excluded any company so far because of the nature of its business.

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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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