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NEWSLETTER

USA v China

Institutional Asset Manager 12/02/21

All eyes are on the US, as the impeachment trial in the Senate decides whether former President Donald Trump was responsible for inciting rioters to storm the Capitol in January. The verdict could bar Trump from running for President again.

Since his election, Democratic President Joe Biden has lost little time in reversing Trump policies such as the Muslim travel ban and re-joining the Paris Agreement on climate change – but his stance on relations with China has remained unclear.

A pre-Chinese New Year phone call between Presidents Xi Jinping and Biden this week reportedly saw Biden vent his “fundamental concerns about Beijing’s coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan”.

“I told him I will work with China when it benefits the American people,” tweeted Biden after the call. Trade tensions between the two countries have played havoc with stock markets in the past, and with institutional investors gradually upping their allocations toward China, relations with the US are likely to influence investment in the region in 2021.

Another allocation is also on the rise among institutions: cryptocurrencies. News that Tesla CEO Elon Musk had placed a USD1.5 billion bet on bitcoin helped spur interest in digital assets this week. Demand for Ethereum’s ether, the second-largest cryptocurrency, has outstripped bitcoin, with digital asset manager Grayscale reporting inflows of more than USD150 million in the last week alone.

Grayscale explained the ongoing trend toward inflation-hedging and the developing world of decentralised finance in an interview with Institutional Asset Manager.

Nevertheless, Musk’s move into crypto has also attracted criticism from environmental activists, due to the huge amounts of electricity required to mine bitcoin, most of which is generated by fossil fuels.

A new survey from bfinance shows that most institutional investors say environmental, social and governance factors play a major role in selecting (and terminating) asset managers. Many asset owners now expect their managers to employ dedicated sustainable investing staff, promote workforce gender diversity, and be members of the UN Principles for Responsible Investment.

Madeleine Taylor
Editor, Institutional Asset Manager

 

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