Each December, we review the Outlook we presented a year earlier. In 2018 our predictions proved to be sound. Some came right pretty quickly – such as the expectation of US tax cuts. Others – such as our expectation for a weaker yen – materialised only late in the year. Bitcoin was, indeed, in a bubble a year ago. Overall we scored 8/10.
Moz Afzal Global Chief Investment Officer
Stefan Gerlach Chief Economist
Daniel Murray Deputy CIO and Global Head of Research
Growth continues with risk of slowing later in the year
We expected that global gross domestic product (GDP) growth would continue in 2018 at around
the same rate as in 2017. Although the final data are not yet available, the IMF’s latest estimate is
that growth will be 3.7% in 2018, the same as in 2017. Some softening was evident towards the end
of the year.
Monetary policy divergence
We expected global monetary policies to diverge, with the Bank of Japan and the European Central Bank (ECB) continuing to expand their balance sheets while not raising interest rates; but the US running down its asset holdings and raising the Fed Funds rate towards 2.8%. Policy followed that expected path although, to be fair, it had been pretty well-signalled.
Renewed yen weakness
At the end of 2017 the yen was trading at yen112.5/US$ and we expected it to weaken. Despite some early year volatility, it did, but only marginally, to yen113.2/US$ by 12 December 2018.
US tax reform, with a cut in corporation tax to 20%
US tax reform, especially with the large cut in corporation tax we expected, did indeed go through.
At the time we made our prediction, it was not obvious that it would do so. It also gave the expected boost to corporate earnings in 2018.
5 Partly correct
Prefer long-dated to short-dated US corporate bonds
We thought that the yield spread between long-dated and short-dated corporate bonds was too wide and would narrow. The spread did narrow but the greater sensitivity of long-dated bonds to rising yields meant that returns from such bonds were lower than from short-dated bonds.
6 Partly correct
China cleans up
China has made further strides in cleaning up the environment and improving corporate governance performance. However, this did not translate into equity market performance.
Prefer consumer discretionary sector
In the US the consumer discretionary sector of the S&P500 index produced total returns of 6.8% in
US$ terms in the year to 12 December 2018, well ahead of the 1.0% return from the overall S&P500
index. It was the third-best performing sector after healthcare and utilities.
Bitcoin bubble, blockchain boom
Indeed, Bitcoin was in a bubble and our chart of the Bitcoin price entitled “Blowing Bubbles” hit the mark. Blockchain technology has, however, continued to be more widely adopted.
Bullish on copper, cobalt, lithium and nickel
We were bullish on the prices of the key commodities used in the production of electric vehicles: copper, cobalt, lithium and nickel. Three of the four rose in price early in the year, but finished 2018 weaker than at the start of the year.
No cut in working hours and no move towards greater income equality
There was no cut in the average length of the working week and no move towards greater income equality. We showed the ratio of the typical US CEO’s pay to that of the typical US worker. On the latest data, it rose from 271 times (when we wrote a year ago) to 312 times (US$18,855,000 for the CEO compared to US$60,491 for the worker) on the latest data.
Trump: all out for growth
President Trump will, we think, go all out for growth in 2019. Even though US growth has been strong, and much better than in other advanced economies, the emphasis will be
on its maintenance. There are, of course, limits to what can
President Trump will aim to keep US growth strong in 2019, with an eye on paving the way for his re-election in 2020. There are four key areas in which President Trump may be able to influence developments.
First, we think – whether it is because of Trump’s tweets criticising the direction of Fed policy under Jerome Powell or not – the Fed will adopt a softer tone in 2019, with interest rates not rising as far and as quickly as the markets were discounting in late 2018.
Second – an area where President Trump’s tweets have arguably been even more influential – lower oil prices will help to boost growth. President Trump has tweeted that these are “Like a big Tax Cut for America and the World”, a point with which we agree.
Third, we think the US will back down on some of the measures that have been taken in its trade war with China. China, in turn, will be willing to make concessions on intellectual property rights, technology transfer and foreign ownership of Chinese companies.
Finally, measures to boost US infrastructure may eventually start
to come through. Very little progress on the US$1 trillion infrastructure plan launched before the 2016 presidential election has actually been made. Although such infrastructure projects are long-term in their nature, we think that 2019 may well see the announcement of significant developments on this front.
Certainly, there are headwinds to growth but we feel confident that the US expansion will continue and that by mid-year, President Trump will be able to tweet that he has delivered the longest expansion ever seen for the US economy. The expansion will overtake the 10-year long expansion of 1991-2001 even though the cumulative growth delivered will be little more than seen in a typical, shorter
Global growth continues
“I think it is a myth that expansions die of old age”, former Fed chair Janet Yellen claimed in 2015.1 In Australia expansion has continued for 27 years; in other advanced economies they have barely started. We think global growth will continue in 2019. Fears of a sharp downturn in global growth are misguided.
Three years after Janet Yellen claimed the US economic expansion would not, as some considered likely, die of old age her words look suitably prophetic. At that time, and repeatedly since, there have been periodic claims that the US and other developed economies are headed into recession. That has not happened and we do not see it happening in 2019.
Expansions typically come to an end for three main reasons: a financial crisis, as in 2008/9; a rise in inflation which triggers excessive monetary tightening; or an external shock (for example, a natural disaster).
While the latter is impossible to predict, we can be pretty sure the first two triggers will not be seen in 2019 throughout the developed world.
Banks and financial institutions are generally much more resilient than they were in 2008.
There are some concerns in certain areas of financial markets – such as in parts of the corporate bond market – about excessive borrowing and poor credit quality, but we see these as being concentrated in specific areas and not a generalised problem.
A sharp rise in interest rates to curb inflation does not seem to be on the cards anywhere. In 2019, inflation
rates in all developed economies will be restrained by the recent fall
in oil prices; and nowhere is wage inflation high enough to trigger
a wage-price spiral.
1 Source: Federal Open Market Committee, Transcript of Chair Yellen’s Press Conference, 16 December 2015
We do not see the US and other developed economies heading
into recession in
US industrial sector
We think the US industrial sector of the equity market is pricing in a recession in the US economy. As that seems
very unlikeIy to us, it is our favoured US equity market
sector for 2019.
The US industrial sector of the S&P 500 index performed poorly over the course of 2018. Such weak relative performance of the industrial sector has only previously been seen during recessionary conditions in the US. These are shown in Figure 3a as periods where the ISM manufacturing index is below 50. We think this displays far too much pessimism about the US industrial sector and that its performance could rebound in 2019.
One important reason is that the industrial sector should benefit as stronger infrastructure spending starts to come on stream. This has been much slower to materialise than we, and many expected, but we think it could well be a key element of what we describe as President Trump’s “all out for growth strategy” ahead of the 2020 elections.
Globally, there is a high need for infrastructure spending. Research by McKinsey estimates the total required spending on roads, rail, ports, airports, power, water and telecoms at US$69tr by 2035. The total would be US$20tr higher if additional spending to reach the United Nations’ sustainable development goals were included.
Although this need is often considered greatest in emerging economies, where the infrastructure is underdeveloped, recent research by Oxford Economics (see Figure 3b) shows that the gap between needed investment in infrastructure and that which is expected to take place is greatest in the Americas region (and much of that in the US itself).
Emerging markets recover
One thing that risks being overlooked when there are periodic crises in emerging markets (Argentina and Turkey in 2018, for example) is that their growth has consistently been ahead of that in the developed world. We think that 2019 will be a year to (selectively) take advantage of that trend.
When there are problems in emerging economies – of the type seen in Argentina and Turkey in 2018, for example – there is always a concern that they will lead to contagion to other emerging markets. Such predictions have a firm basis in history. The Asian financial crisis in 1997/98, for example, started in Thailand and quickly spread to Indonesia, Malaysia, the Philippines and South Korea. Few Latin American countries escaped its debt crisis of
Greece’s problems spread to other peripheral eurozone economies in 2009/12: and although Greece was not classified as an emerging market when the crisis started, it was by the time
it finished. There were some early signs of that contagion in 2018, but it never developed to a very serious extent. We think that there are two main reasons:
First, many emerging economies now have flexible rather than fixed exchange rates: the exchange rate can take the strain of any outflows of foreign money.
Second, many emerging economies are better run than in the past. The picture is not uniform, but in Asia we would cite the Philippines and Indonesia as two economies with consistently market-friendly policies. In Latin America, hopes are high that, under the new Brazilian president, reforms will build on those already implemented.
Just as it would be completely wrong to judge ‘developed’ or ‘advanced’ economies as a homogeneous group, it would be wrong to apply the same approach to emerging economies.
Real rates stabilise
One often-overlooked feature of the US bond market is the trend in
real yields. After a rise in 2018, we think that they should now stabilise.
US Treasury Inflation-Protected Securities (TIPS) are a sector of the US bond market which still attracts relatively little attention. Such securities provide a regular coupon and final principal repayment set in real terms. Both the coupon and principal increase in line with
The conventional US 10-year Treasury bond yield, which does not provide such inflation protection, is much more widely reported. Indeed, it is a staple of financial news bulletins and is often described as the single most important financial instrument in the world or the “global risk-free rate”.
The yield gap between conventional Treasuries and TIPS is the break-even inflation rate: the inflation rate at which the yield on the two would be the same (see Figure 5a).
Viewed in this context, the rise in the conventional 10-year Treasury yield from just under 2.5% to a peak of over 3% during 2018 was entirely due to the rise in real yields.
For 2019, we think real yields will
now stabilise or maybe even fall. One reason is that TIPS are likely to gain in popularity amongst US pension funds, as they have done with pension funds in other financial markets around
In particular, they allow such funds to invest in an inflation-protected asset which is often well matched to their inflation-linked liabilities. This potential increase in demand will tend to depress real yields. In the UK, for example, similar inflation-protected bonds provide a negative real yield.
Furthermore, a lower oil price has typically brought not just a lower break-even inflation rate (see Figure 5b) but also lower real yields. The latter relationship may seem curious, but it can be explained by the fact that much of the benefit of lower oil prices for consumers is actually saved: higher savings then depress real yields
(see Figure 5b).
Value in US corporate bonds
We think that US investment grade corporate debt offers
good value and will produce positive returns in 2019.
2018 was a year of concerns about some areas of the US corporate bond market. Overall returns from both the investment grade and high yield sectors of the market were negative: falling prices more than offset
The general concerns in 2018 surrounded high levels of corporate debt in some sectors; the relatively high proportion of companies which are in the investment grade universe but have a relatively low credit rating within that sector; and, hence, the vulnerability of some companies to being downgraded to the high
Overlaying those issues during 2018 was a concern that interest rates may rise quite quickly and that economic growth would slow, with the potential for the US to enter a recession.
That combination, it was considered, would have the potential to push some companies into difficulties in servicing their debt.
We see a much more benign macroeconomic outlook. We do not expect a US recession and we think the extent of interest rate increases will be quite modest: we see one or two 25 basis point increases in the Federal Funds rate in 2019. Indeed, market expectations changed quite quickly towards the end of 2018 to be in line with that view.
Furthermore, for investment grade companies, the degree of leverage is not particularly high by historic standards and the coverage of debt interest payments by earnings is comfortably high.2
Nevertheless, this is a market in which an emphasis needs to be on active management and individual
security selection. In that context, the yield on US investment grade corporate debt
(see Figure 6a), which increased to 4.4% in late 2018 looks attractive to us. We think that yield is a fair compensation for the risks involved and that yields will not rise significantly further in 2019.
Therefore, further price falls seem unlikely. Over the last 44 years, there have not been two consecutive years of negative total returns for the US investment grade market (see Figure 6b). We think that positive returns
will be seen in 2019.
2 Total leverage was 2.5 times EBITDA (Earnings Before Interest, tax, Depreciation and Amortisation) and on a net basis (after taking into account cash holdings) was 1.5 times in 2018 Q2. Interest coverage (the ratio of EBITDA to interest payments was 11 times in 2018 Q2. Source: Deutsche Bank Research.
Sterling’s value has been depressed for much of the time since the 2016 Brexit referendum. We think that as the way forward for the UK becomes clearer, sterling’s value will recover.
Sterling’s value against the US dollar and the euro has been depressed for much of the time since the vote to leave the EU in June 2016. We use two measures of sterling’s fair value to establish a range in which it should reasonably trade.
First, a simple measure of relative Purchasing Power Parity (PPP) between the UK and the US. This currently estimates the appropriate rate at US$1.73/£, a rate much stronger than sterling’s US$1.28/£ rate on 10 December 2018.
Second, a measure of the equilibrium exchange rate produced by the Peterson Institute for International Economics. This measure takes into account, as well as PPP considerations, the size of the UK’s current account deficit, its financing and the requirement to maintain domestic economic activity at close to its full employment and potential output levels. That rate is currently estimated at US$1.35/£.
So, with sterling below its ‘fair value’ range set by those two rates, we think, on fundamental grounds sterling should appreciate. Furthermore, global investors have been underweight the UK since the Brexit vote and may well be inclined to reassess their exposure once there is more clarity on the
The prediction is based on a successful agreement between the UK and the EU on the terms of Brexit. We think that, in the end, and perhaps very close to the UK’s scheduled withdrawal date of 29 March 2019, that will be agreed.
The healthcare sector is ripe for disruption. We expect that trend to start, firstly, in the US, where healthcare costs are disproportionately high.
The healthcare sector has become progressively more important in all economies around the world in recent years. In the US, the sector has become the largest employer, with more people employed in it than in manufacturing or retail trade.
US healthcare spending amounts to 17% of GDP (see Figure 8), almost twice the OECD average. In 1960, such spending was just 5% of GDP. Growing healthcare spending, partly as a result of ageing populations with longer life expectancy, and partly because of the improved technology now available, is an issue in advanced and emerging economies alike.
Over the last twenty years, price inflation for medical care and hospital services in the US has run well ahead of general price increases. Furthermore, there is a mounting concern that many of the services provided are not strictly necessary.
The US National Academy of Medicine estimates that the US healthcare system wastes US$765 bn per year (one quarter of all the money spent) on unnecessary or needlessly expensive care. In 2015, an investigation by an independent research firm found that since 1980, the number of CT scans had grown from fewer than 3 million to more than 80 million per year, with a third of them judged unnecessary. Warren Buffett regards such a high level of healthcare spending as a serious impediment to US companies’ competitiveness in world markets.
What can be done to curtail costs and provide a more efficient service? The solution, we think is on two fronts:
First, greater competition. In the US, for example, the provision of healthcare can be very fragmented, with few providers in some states, limiting the scope for competition. A new joint venture between Amazon,
J P Morgan and Berkshire Hathaway is a key development in this respect.
Second, digitisation, which would further help competition. Digitisation can take three main forms. Making healthcare records available in digital form; using digital technologies in the management of that information (for example, in identifying diseases and medical conditions); and digital transformation – developing new forms of digital technology. In the latter category, enhanced facilities in smart phones and watches are a rapidly-developing area.
We think we are just at the start of exciting new developments in this sector and we are actively seeking ways of gaining exposure. This will be
a key theme for 2019 and beyond.
China-US cold war
Tensions between the US and China may ease to some extent in 2019. However, there is very unlikely to be a big reduction
in China’s trade surplus with the US. Longer-term, China will pivot towards the rest of Asia as the US turns towards
Late 2018 saw some reduction in tensions between the US and China on trade. Further tariff increases and a broadening of the range of Chinese imported goods on which tariffs are imposed looks to have been avoided.
Nevertheless, we doubt very much that there will be any significant narrowing of the trade surplus which China runs with the US. When final data become available for 2018 it seems likely that China’s surplus will be larger than that it was in 2017.
Indeed, the US trade deficit is a function of the US domestic investment savings gap. If the US economy remains strong and Trump is successful in imparting further stimulus, the investment savings gap will widen and the US current account deficit must, in that case, also grow.
The key issue is that many of the goods which China produces
cannot easily be substituted by
US-produced goods. Over the course of the coming years, China has other markets it can turn to for sales of
its goods. Most notably, it is developing markets along the ‘new Silk Road’, a strategy which is now termed China’s Belt and Road Initiative.
The US, in turn, may look to alternative suppliers in, for example, Latin America. On this view of the world, three key trading blocs could emerge: one centered on the US in the Americas; one centered on China in Asia; and one covering a broad European region.
Europe: another crisis averted
Europe seems to stumble from one crisis to another. We think the latest – relating to Italy – will ease in 2019, but more fundamental problems remain.
The latest crisis in the eurozone relates to Italy and the difficulties in coming to an agreement with the European Commission on the new government’s fiscal plans. As is so often the case in such eurozone matters, a compromise will, we think, be achieved. Consequently, concerns about Italy’s credit standing should improve and the yield spread between Italian and German government bonds should narrow further.
Nevertheless, the inescapable fact
is that Italy’s fiscal stance remains
far from the guidelines of the European Stability and Growth pact, at least according to the strict interpretation adopted by, most notably, Germany and other northern European economies.
There is a wider concern as well. Although the euro crisis may ease, the growth of populism and the decline of mainstream political parties remains an important theme. We expect it to be evident in the elections to the European parliament in May 2019.
Social problems also persist, notably with high (especially youth) unemployment, the effects of
immigration, high income and wealth inequality and the uneven distribution of the tax burden. These elements of discontent came together in the protests of Les Gilets Jaunes in France in late 2018. On the surface, these were against fuel price increases but they represented deeper social concerns. We doubt very much that significant progress will be made on tackling these issues in 2019.
Concerns about Italy’s credit standing should improve and the yield spread between Italian and German govenment bonds should narrow further.
Term in full
European Central Bank
The ECB is the central bank for Europe's single currency, the euro. The euro area comprises the 19 European Union countries that have introduced the euro since 1999.
Exchange Traded Fund
An ETF is an investment fund traded on a stock exchange. ETFs are typically passively managed to track a particular stock or bond market index or sector.
Gross Domestic Product
GDP is the monetary value of all the nal goods and services produced within a country’s borders in a speci c time period. GDP is usually calculated on a quarterly basis.
Organisation for Economic Co-operation and Development
A group of 35 member countries, including many of the world’s advanced countries but also emerging countries such as Mexico, Chile and Turkey. The members of the group work together to discuss and develop economic, social and environmental policies.
QE is an unconventional form of monetary policy where a central bank creates new money to buy nancial assets, like government bonds. This process aims to directly increase private sector spending in the economy and return in ation to target.
State Owned Enterprises
Enterprises where the state has signi cant control through full, majority or signi cant minority ownership.
By clicking accept you acknowledge that you have fully understood and accepted the terms and conditions outlined below. Please note this document is only intended for the jurisdictions noted below.
This document does not constitute and shall not be construed as a prospectus, advertisement, public offering or placement of, nor a recommendation to buy, sell, hold or solicit, any investment, security, other financial instrument or other product or service. It is not intended to be a final representation of the terms and conditions of any investment, security, other financial instrument or other product or service. This document is for general information only and is not intended as investment advice or any other specific recommendation as to any particular course of action or inaction. The information in this document does not take into account the specific investment objectives, financial situation or particular needs of the recipient. You should seek your own professional advice suitable to your particular circumstances prior to making any investment or if you are in doubt as to the information in this document.
Although information in this document has been obtained from sources believed to be reliable, no member of the EFG group represents or warrants its accuracy, and such information may be incomplete or condensed. Any opinions in this document are subject to change without notice. This document may contain personal opinions which do not necessarily reflect the position of any member of the EFG group. To the fullest extent permissible by law, no member of the EFG group shall be responsible for the consequences of any errors or omissions herein, or reliance upon any opinion or statement contained herein, and each member of the EFG group expressly disclaims any liability, including (without limitation) liability for incidental or consequential damages, arising from the same or resulting from any action or inaction on the part of the recipient in reliance on this document.
The value of investments and the income derived from them can fall as well as rise, and past performance is no indicator of future performance. Investment products may be subject to investment risks involving, but not limited to, possible loss of all or part of the principal invested.
The availability of this document in any jurisdiction or country may be contrary to local law or regulation and persons who come into possession of this document should inform themselves of and observe any restrictions. This document may not be reproduced, disclosed or distributed (in whole or in part) to any other person without prior written permission from an authorised member of the EFG group.
This document has been produced by EFG Asset Management (UK) Limited for use by the EFG group and the worldwide subsidiaries and affiliates within the EFG group. EFG Asset Management (UK) Limited is authorised and regulated by the UK Financial Conduct Authority, registered no. 7389746. Registered address: EFG Asset Management (UK) Limited, Leconfield House, Curzon Street, London W1J 5JB, United Kingdom, telephone +44 (0)20 7491 9111.
If you have received this document from any affiliate or branch referred to below, please note the following:
Bahamas: EFG Bank & Trust (Bahamas) Ltd. is licensed by the Securities Commission of The Bahamas pursuant to the Securities Industry Act, 2011 and Securities Industry Regulations, 2012 and is authorized to conduct securities business in and from The Bahamas including dealing in securities, arranging deals in securities, managing securities and advising on securities. EFG Bank & Trust (Bahamas) Ltd. is also licensed by the Central Bank of The Bahamas pursuant to the Banks and Trust Companies Regulation Act, 2000 as a Bank and Trust company.
Bermuda: EFG Wealth Management (Bermuda) Ltd. is an exempted company incorporated in Bermuda with limited liability. Registered address: Thistle House, 2nd Floor, 4 Burnaby Street, Hamilton HM 11, Bermuda.
Cayman Islands: EFG Bank is licensed by the Cayman Islands Monetary Authority for the conduct of banking business pursuant to the Banks and Trust Companies Law of the Cayman Islands. EFG Wealth Management (Cayman) Ltd. is licensed by the Cayman Islands Monetary Authority for the conduct of trust business pursuant to the Banks and Trust Companies Law of the Cayman Islands, and for the conduct of securities investment business pursuant to the Securities Investment Business Law of the Cayman Islands.
Chile: EFG Corredores de Bolsa SpA is licensed by the Superintendencia de Valores y Seguros (“SVS”, Chilean securities regulator) as a stock broker authorized to conduct securities brokerage transactions in Chile and ancillary regulated activities including discretionary securities portfolio management, arranging deals in securities and investment advice. Registration No: 215. Registered address: Avenida Isidora Goyenechea 2800 Of. 2901, Las Condes, Santiago.
Guernsey: EFG Private Bank (Channel Islands) Limited is licensed by the Guernsey Financial Services Commission.
Hong Kong: EFG Bank AG is authorized as a licensed bank by the Hong Kong Monetary Authority pursuant to the Banking Ordinance (Cap. 155, Laws of Hong Kong) and is authorized to carry out Type 1 (dealing in securities) and Type 9 (asset management) regulated activity in Hong Kong.
Jersey: EFG Wealth Solutions (Jersey) Limited is regulated by the Jersey Financial Services Commission in the conduct of investment business under the Financial Services (Jersey) Law 1998.
Liechtenstein: EFG Bank von Ernst AG is regulated by the Financial Market Authority Liechtenstein, Landstrasse 109, P.O. Box 279, 9490 Vaduz, Liechtenstein.
Luxembourg: EFG Bank (Luxembourg) S.A. is listed on the official list of banks established in Luxembourg in accordance with the Luxembourg law of 5 April 1993 on the financial sector (as amended) (the “Law of 1993”), held by the Luxembourg supervisory authority (Commission de Surveillance du Secteur Financier), as a public limited company under Luxembourg law (société anonyme) authorised to carry on its activities pursuant to Article 2 of the Law of 1993. Luxembourg residents should exclusively contact EFG Bank (Luxembourg) S.A., 56 Grand Rue, Luxembourg 2013 Luxembourg, telephone +352 264541, for any information regarding the services of EFG Bank (Luxembourg) S.A.
Monaco: EFG Bank (Monaco) SAM is a Monegasque Public Limited Company with a company registration no. 90 S 02647 (Registre du Commerce et de l’Industrie de la Principauté de Monaco). EFG Bank (Monaco) SAM is a bank with financial activities authorized and regulated by the French Prudential Supervision and Resolution Authority and by the Monegasque Commission for the Control of Financial Activities. Registered address: EFG Bank (Monaco) SAM, Villa les Aigles, 15, avenue d’Ostende – BP 37 – 98001 Monaco (Principauté de Monaco), telephone: +377 93 15 11 11. The recipient of this document is perfectly fluent in English and waives the possibility to obtain a French version of this publication.
People’s Republic of China (“PRC”): EFG Bank AG Shanghai Representative Office is approved by China Banking Regulatory Commission and registered with the Shanghai Administration for Industry and Commerce in accordance with the Regulations of the People’s Republic of China for the Administration of Foreign-invested Banks and the related implementing rules. Registration No: 310000500424509. Registered address: Room 65T10, 65 F, Shanghai World Financial Center, No. 100, Century Avenue, Pudong New Area, Shanghai. The business scope of EFG Bank AG Shanghai Representative Office is limited to non-profit making activities only including liaison, market research and consultancy.
Singapore: The Singapore branch of EFG Bank AG (UEN No. T03FC6371J) is licensed by the Monetary Authority of Singapore as a wholesale bank to conduct banking business and additionally carries on the regulated activities of dealing in securities, fund management and securities financing.
Switzerland: EFG Bank AG, Zurich, including its Geneva and Lugano branches, is authorized and regulated by the Swiss Financial Market Supervisory Authority (“FINMA”). Registered Office: EFG Bank AG, Bleicherweg 8, 8022 Zurich, Switzerland. Registered Branches: EFG Bank SA, 24 quai du Seujet, 1211 Geneva 2, Switzerland and EFG Bank SA, Via Magatti 2, 6900 Lugano, Switzerland.
Taiwan: EFG Securities Investment Consulting Co. Ltd, Suite A-1, 14th Floor, Hung Tai Center, No. 168 Tun Hwa North Road Taipei, +886 2 8175 0066, SICE License No. BO286.
United Kingdom: EFG Private Bank Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, registered no. 144036. EFG Private Bank Limited is a member of the London Stock Exchange. Registered company no. 2321802. Registered address: EFG Private Bank Limited, Leconfield House, Curzon Street, London W1J 5JB, United Kingdom, telephone +44 (0)20 7491 9111. In relation to EFG Asset Management (UK) Limited please note the status disclosure appearing above.
United States: EFG Asset Management (UK) Limited is an affiliate of EFG Capital, a U.S. Securities and Exchange Commission (“SEC”) registered broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). None of the SEC, FINRA or SIPC, have endorsed this document or the services and products provided by EFG Capital or its U.S. based affiliates, EFGAM Americas and EFG Capital Advisors (EFGCA). Both EFGAM Americas and EFGCA are registered with the SEC as investment advisers. Securities products and brokerage services are provided by EFG Capital, and asset management services are provided by EFGAM Americas and EFGCA. EFG Capital, EFGAM Americas and EFGCA are affiliated by common ownership and may maintain mutually associated personnel. This document is not intended for distribution in the United States or for the account of U.S. persons (as defined in Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”)) except to persons who are “qualified purchasers” (as defined in the United States Investment Company Act of 1940, as amended (the “Investment Company Act”)) and “accredited investors” (as defined in Rule 501(a) under the Securities Act). Any securities referred to in this document will not be registered under the Securities Act or qualified under any applicable state securities statutes. Any funds referred to in this document will not be registered as investment companies under the Investment Company Act.
Our Commitment to Protecting Your Personal Data
"Personal Data" and “Sensitive Personal Data” (which may be used interchangeably with the term ‘special categories of personal data’) have the meaning given to it in the Data Protection Laws;
"Process/Processing", "Data Controller", "Data Processor", "Data Subject", and "Personal Data Breach" shall have the same meanings as in the Data Protection Laws;
"Standard Contractual Clauses" means the standard contractual clauses as approved pursuant to Commission Decision of 5 February 2010 (on standard contractual clauses for the transfer of personal data to processors established in third countries under Directive 95/46/EC of the European Parliament and the Council), the standard contractual clauses as approved pursuant to Commission Decision of 27 December 2004 (on standard contractual clauses for the transfer of Personal Data to controllers established in third countries under Directive 95/46/EC of the European Parliament and the Council) or any set of standard contractual clauses which substantially amends, replaces or supersedes the foregoing; and
"Subprocessor" means any Data Processor appointed by the EFG Group, which may include an affiliate.
Generally, we collect, handle, process, store, use and transport your Personal Data and Sensitive Personal Data for the purposes of (1) providing the products and services that you have requested (including where you have requested products and services from multiple EFG Group companies), (2) administering your account(s) and mandates, (3) administering and maintaining your electronic communications with us (e-mail, fax and telephone), (4) identifying and offering suitable products and services (as you may request from time to time), (5) managing risk on a local and consolidated basis, (6) meeting requests or demands for information from authorities or third-parties, (7) meeting applicable legal and regulatory requirements, (8) and endeavoring to adhere to industry best practices (the “General Processing Purposes”). Your request for products or services that necessitates us processing your Personal Data in order to perform our contract with you (or that necessitates us processing your Personal Data before entering into such contract) is our primary legal ground for the General Processing Purposes. However, there may be circumstances where we also rely on other valid legal grounds for the General Processing Purposes. These include your express consent in the case of administering and maintaining electronic communications and any accounts you hold with us, our legitimate interests as a business (except where such interests are overridden by your interests or rights) in the case of our adherence to industry best practice, or our compliance with a legal obligation in the case of meeting requests from information from authorities.
We destroy documents and information that may contain your Personal Data and Sensitive Personal Data in accordance with our record retention policies that apply to specific types of records. These are subject to periodic review. However, as a general principle, we will retain your Personal Data until your last use or purchase of our products and services and for a minimum period of 5 years thereafter, unless longer retention is required by applicable local law or where we have a legitimate and lawful purpose to do so. Notwithstanding the foregoing, unless you indicate in writing to the contrary, we reserve the right to destroy documents containing your Personal Data immediately upon your last use or purchase of our products and services.
EFG Group companies may also use your Personal Data or Sensitive Personal Data to (1) confirm your identity, reputation, educational background, and source of funds; (2) to improve service levels being provided to you; (3) to administer our business; (4) to maintain our records; (5) to communicate with you (including sending alerts, notifications, updates, content or information); (6) to conduct analysis and better understand client behaviors on a statistical basis as well as specific interactions; (7) to enhance and support our operations; (8) to conduct audits; (9) to manage our risks; to carry out servicing, maintenance and security of your accounts (including e-Banking); (10) to market our products and services; (11) to tailor our offerings to you; (12) and to the extent necessary to comply with court orders, law, rules, regulations, codes of practice, guidelines or requests applicable to us (including reporting to regulators, trade depositories, or responding to requests from law enforcement authorities or governmental agencies)(“Specific Processing Purposes” and, together with the General Processing Purposes, the “EFG Group Processing Purposes”). Our compliance with legal obligations is our primary legal ground for the Specific Processing Purposes. However, there may be circumstances where we also rely on other valid legal grounds for the Specific Processing Purposes. These include your express consent in the case of sending you alerts (etc.), our legitimate interests as a business (except where such interests are overridden by your interests or rights) in the case of enhancing and supporting our operations and processing necessary in order to perform our contract with you (such as, for example, in the case of confirming your identity, source of wealth, credit worthiness, etc.].
EFG Group products and services include financial, banking, fiduciary, securities, advisory, asset management, investment products and services, including but not limited to derivatives, securities trading, commodity, equity and fixed income sales, prime services (including execution, brokerage, settlement, give-up, clearing, custody, reporting and financing services), mortgages and a variety of other lending products.
From time to time, we may use your Personal Data and Sensitive Personal Data (including, but not limited to, your name and contact details, behavioral information, and account, transaction and financial information) to send you news and product offers; but we cannot do so without obtaining your express consent in accordance with applicable Data Protection Laws. In that regard, please be advised that unless you have previously indicated that you do not wish to receive marketing materials from us, your consent for us to use and disclose your Personal Data or Sensitive for the above direct marketing purposes has been obtained in accordance with Data Protection Laws under existing privacy notices, agreements, and terms and conditions, as part of your ongoing relationship with us. Even if you have previously given us your express consent to use and disclose your Personal Data for the above direct marketing purposes, you may withdraw your consent at any time free of charge by contacting us. The withdrawal of your consent will be processed and will take effect as soon as possible.
Cookies are small files which are stored on your computer or device to keep track of your visit to the website and your preferences; as you move between pages, and sometimes to save settings between visits. Cookies help us gather statistics about how often people visit certain areas of the site, and help in tailoring websites to be more useful and user-friendly. For more information on cookies, and for information on how to control and delete cookies from your browser, please visit https://www.efginternational.com/Cookie-policy.html.
track the number, and type of visits to the site and its pages, in order for us to determine which parts of the site are working well, and which need improvement;
store your preferences such as your preferred language;
gather statistics on the number of users and their usage patterns; and
improve the speed and performance of the site.
Links to Third-Party Sites
We may collect Personal Data and Sensitive Personal Data about you as a result of us recording telephone calls which our employees may have with you, and store those recordings, in order to satisfy our legal and regulatory obligations, manage risks, improve client experiences and service levels or otherwise for EFG Group business purposes.
We are pleased to offer the convenience of having account-related information as well as account documents, including, but not limited to, statements and advices, regulatory notices and disclosures, electronically communicated to you (the “Account Documents”). Any Account Document delivered electronically will contain the same information as a paper version of the same document, and at any time you may request a paper copy of any electronic version of a document. For enhanced security, we strongly encourage you to consider activating eBanking – please check with your Client Relationship Officer to determine if it is available in your location.
Sending private and confidential information via e-mail or fax involves the use of insecure channels and carries enhanced risk of unauthorized third-party access as well as potential misuse of such information. While no system, including eBanking or secure messaging facilities, can offer absolute security, the controls and security measures offered by eBanking, including messaging features, provide users with the convenience of electronic communication capabilities as well as access to their information and Account Documents with the reduced risk of being compromised. The eBanking platform, as well as any data and private information about you and your accounts(s) contained within eBanking, is administered, managed and maintained by EFG Bank AG in Switzerland.
Please be advised that all private and confidential account information, including Account Documents, sent via electronic communication will be deemed to be good and effective delivery to you when sent by the EFG Group, regardless of whether or not you actually or timely receive such communications or are able to access the Account Documents. The EFG Group will communicate with you via the numbers, accounts or address(es) (physical and electronic) you have provided to us, and you must promptly notify the EFG Group of any changes thereto. If we receive notification that an electronic communication is undeliverable, or if we reasonably believe that your designated accounts, numbers or addresses have been compromised, or if we reasonably believe that you are not receiving or accessing electronically delivered communications or Account Documents, we may discontinue electronic communications without notice to you and provide delivery of communications and Account Documents exclusively to your designated mailing address listed, even if you had previously elected to be a ‘Paperless’ client. It is your responsibility to promptly notify the EFG Group if any of your designated numbers, e-mail accounts or addresses have been compromised.
We do not charge for any electronic delivery service. However, you may incur costs associated with electronic access to documents, such as usage or data charges from an Internet access provider and/or telephone company. An e-mail account and access to an Internet browser will be required in order to communicate electronically with the EFG Group, and in order to review Account Documents that require PDF readers, options such as Adobe Acrobat Reader®, Acrobat® software are available for download free of charge. If you wish to print documents, you must have access to a printer, the costs of which are your sole responsibility. In order to access password protected or encrypted Account Documents on mobile devices or otherwise, you may be required to download and install WinZip for iOS, RAR/AndroZip for Android or other software as instructed by the EFG Group entity where you have your accounts.
Internet-based communication is not secure from access by third parties and by engaging in electronic communications with the EFG Group you are accepting the risk that such communications or web-based account access may be intercepted, misused and may fail to be received by you or the EFG Group. In accordance with industry standards and practices, and to comply with our legal and regulatory retention requirements, the EFG Group retains e-mail messages for a period of time in accordance with our established policies, guidelines and procedures. Those messages are kept confidential and are accessed and used in accordance with our policies, guidelines and procedures.
The privacy and security of electronic communications cannot be guaranteed and presents inherent and prevalent security risks including the risk of interception and misuse. Further, actual delivery of electronic communications is not guaranteed, and communication by mobile text, Bloomberg messaging, e-mail or fax maybe subject to delay or even mis-delivery. The EFG Group may rely on and act in good faith upon receipt of electronic communications from the designated numbers, addresses and accounts detailed above, and shall not be required to make any enquiries as to the authenticity of such instructions or to the authority or identity of the person making or purporting to make the instructions. It is your responsibility to confirm that the EFG Group has executed any instructions you send electronically, including any securities orders or payment instructions, to the extent receipt of your instructions is not otherwise acknowledged as accepted by the EFG Group, in order to prevent losses, including any opportunity cost, to you. The EFG Group will not be liable to you for any actual or alleged loss due to the EFG Group executing instructions received from the designated numbers, accounts and addresses set forth above, inability to timely execute instructions sent by you electronically where delivery of your communication is delayed, fails to be received or is inadvertently misdirected due to our security filters or other factors.
Upon your specific written request, we may provide your Account Documents without password protection or encryption. Receiving unprotected Account Documents presents inherent and prevalent security risks including, but not limited to, enhanced risks associated with unauthorized third-parties accessing and misappropriating your personal and private information. By instructing the EFG Group to remit your Account Documents in an unprotected format you acknowledge and accept such risks, and will hold the EFG Group harmless with respect to any actual or alleged losses or damages that directly or indirectly relate to us complying with your instructions.
Under applicable Data Protection Laws you have certain rights that may include the right to limit how your Personal Data or Sensitive Personal Data is processed. You have the right to decline providing information we may request but we may not be able to make certain products and services available as a result.
In addition, you may, where permitted under the Data Protection Laws:
check whether we hold your Personal Data or Sensitive ;
ask us to provide you with a copy of your Personal Data or Sensitive Personal Data;
ask us how we process, maintain and share your Personal Data or Sensitive Personal Data;
require us to correct any of your Personal Data or Sensitive Personal Data that is inaccurate, under certain circumstances;
request the deletion of your Personal Data or Sensitive Personal Data so long as the EFG Group is not required to retain such information in order to meet its legal or regulatory obligations, manage risks or business purposes;