BOV and Saxo Bank meeting discusses risks of a possible European recession

(source: Pixabay/Gerd Altmann)

Last Updated on Monday, 17 June, 2019 at 1:54 pm by Christian Keszthelyi

Banking and finance professionals discussed the possible risks of a recession in Europe as the main topic of a business breakfast organised by Bank of Valletta (BOV) in collaboration with Saxo Bank, according to a BOV press statement. The event was titled: The Clock is Ticking for Europe – a slowdown or the risk of a recession.

“Traditionally, a recession results from a hit on exports, that is already being witnessed while we luckily are not yet experiencing tightened domestic financial conditions,” said Christopher Dembik, Head of Macroeconomic Analysis at Saxo Bank. “A possible trade war with the United States, and current political uncertainties, particularly the looming Brexit, are all contributors to a potential bleak economic environment,” Mr Dembik said according to the press statement.

After the introductive speech Steve Ellul, Head BOV Asset Management and Giovanni Cachia, Head Portfolio Management Services within BOV’s Wealth Management Arm, held presentations, respectively, according to the BOV press release.

“The size of our economy allows us to be nimble and flexible in the face of external economic shocks and this has been proven in the past,” Mr Ellul said. He noted that Malta has a resilient economy, which has always fared well in times of crisis. “We have to promote and highlight the value proposition offered by Malta as a jurisdiction which is at the forefront in the financial sector, e-gaming and other innovation-oriented sectors,” he added.

“High-quality bonds have traditionally performed well in a low-interest environment and we should seek investments that historically have been more resilient during an economic slowdown or a recession,” said Mr Cachia.

“Sector rotation is critical during these times; discretionary spending, such as leisure, cars and luxury products are the first to experience decreased spending in troubled times so investment should be channelled more towards essential items such as food and beverages, and hygiene products that traditionally have performed relatively better, with gold being a good consideration as a safe haven asset,” Mr Cachia added.

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