9:00 – CIO keynote interview: Assessing the top currency trends in 2018/19 - How can you best respond and adapt your portfolio in a volatile geo-political environment?
Geoffrey Yu, CIO and Head of UK Investment Office, UBS Wealth Management
The view of UBS Wealth Management right now is that it’s not time to add risk, but manage risk. US markets are relatively robust and ahead the firm wants to manage and progressively reduce risk. Diversification is key: Clients should be long volatility.
Within UK wealth management, key events in 2016, such as Brexit and the US election, were an education experience for UBS clients. It taught them how that short-term noise can be just noise, but it doesn’t necessarily cause any deviation from long-term strategies or the underlying structure in the economy.
9:20 – Panel Discussion: With recent underperformance by alpha strategies, is now the time to move to smart beta for better returns in FX?
Today’s alpha will become beta in five years time due to today’s information leakage in approaches. If you have signals from other sources other than price - for example, a sentiment on Twitter - and you’re trading it successfully in predicting the next currency movement, it can be a game-changer. Simply put, alpha is at timing and risk management.
Macro discretionary performance has been unimpressive since 2010. Running up to the crisis trading a systematic model of fundamentals performed well, but that changed post-crisis. Interest rates converged and came down to zero and it became a different world. Now, a new era is emerging where people are talking about divergence and interest rates rising. The future is looking bright for macros fundamentals.
9:50 – All Star Panel: The evolving FX market structure – What are the major developments transforming European FX markets and how will this change the way you interact with your sell-side, platform and technology counterparts?
Regulation has been a major part of structural change seen in FX markets in recent years, and that is unlikely to change any time soon. Complexity in FX markets has also increased with more venues, platforms and technology, but the market is based on infrastructure which is very old, with an increasing need to find different ways of underpinning the market.
FX markets continue to move more towards algorithms, but uptake has been slow. The buy-side are looking at algos and asking providers more questions about performance. The availability of analytics on performance from transaction cost analysis (TCA) is also providing the buy-side with more confidence on using algos.
Banks continue to lag behind other non-finance industries in terms of collection and use of data. There is a risk in the future that the FX industry will be inundated with too much data, and a limited timeframe to work through it.
10:30 – Sell-side Keynote: Expect the unexpected – Establishing the macro opportunities in FX in 2018/2019 and how you can capitalize on them
There are huge political ongoing changes impacting on trade and currency markets, however these events are often being distorted by fake news and warped statistics. “Tax shopping” is the one of the biggest distorting factors for the US trade deficit, which would be much lower with this taken into account.
Deutsche Bank believes the US Dollar has peaked and will not display historical strength during periods of a global economic slowdown as other Central Banks haven’t yet been able to hike interest rates from the previous economic recession. In Europe, the ECB is being too negative on the Eurozone and rates should increase next year.
