Quarterly Investment Review – Q4 2023

by James Macpherson

Quarterly Investment Review – Q4 2023

“The Middle East region is quieter today than it has been for two decades.” James Sullivan, US National Secretary Adviser, 29.9.2023

“The Western World faces the greatest number and most complex array of threats since the end of the Cold War.” General Petraeus, 21.10.23

“The stock market is a device for transferring money from the impatient to the patient.” Warren Buffett

2023 was a year in which investors were continually wrong footed. Surging inflation and sharply rising interest rates meant that the banking crisis in March caught them unawares, as bond prices plunged. The reassertion of higher rates as economic growth continued to be strong, despite interest rates reaching a twenty year high, caught them off guard again. In equity markets performance was dominated by a handful of immensely powerful US technology companies benefiting from an explosion of interest in Artificial Intelligence. Apart from these companies, the stock market’s performance was muted. By year end the performance of US 10-year bonds was flat ex the coupon payment, registering a third consecutive disappointing year. The S&P 500 was up 24.2%, though much of this rise was accounted for by the mega tech companies’ stellar performance. The equal weighted S&P index was up 11%.

After a forty-year bull market bonds have been struggling. When interest rates reached all-time lows, the temptation for any type of borrower to take on debt led to an orgy of debt issuance. Yet despite higher borrowing costs debt has continued to accumulate. In 2023 the US Government issued its second largest amount ever. Incredibly this borrowing occurred during a year of reasonable growth, which begs the question of what borrowing would reach if the economy fell into recession and required government support. The annual rate of US Government borrowing is now running at approximately $2 trillion, piling on top of a total of about $33 trillion. The annual interest bill is now close to $1 trillion per year and rising. The $2 trillion of new debt, together with $7.6 trillion that matures in 2024 that will need to be rolled over, is now incurring an interest rate of over 4%, compared to the current average of 2.78%. The market seems to be floundering as it digests these giant flows. The further complication is that large-scale buyers such as the wealthy Middle East oil nations and China have become less willing to buy American debt, leaving the market rate being set by more price sensitive investors such as fund managers.

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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

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

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

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’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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