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Your summary with links, if you’d like to pick and choose
💵 Understanding the U.S. Bond Market
A primer on the Treasury vs. the Federal Reserve:
The Treasury issues bonds to fund government spending.
The Fed doesn’t issue bonds but uses them to steer interest rates and liquidity via open market operations.
The Treasury’s role is fiscal (budget/debt), while the Fed’s is monetary (money supply/rates).
Bond prices move inversely to rates in the secondary market, shaping yields and liquidity.
🇿🇦 RSA Inflation & Grey List
Inflation ticked up from 3.3% to 3.4%, led by housing and food prices, slightly cooling expectations of an SARB rate cut. Good news, RSA is off the Grey List at last.
🇦🇷 Argentina
The U.S. extended a $40 billion bailout (conditional on Milei’s election win), but the peso has since fallen another 11%. A devaluation seems inevitable. The bailout mainly cushioned exiting investors and may deepen anti-U.S. sentiment.
🥩 Beyond Meat: Meme Stock
Beyond Meat surged 1,300% in days, then crashed 27% as traders squeezed shorts and volatility spiked. Despite Walmart expanding product distribution, analysts remain bearish. The company remains a case study in hype-driven investing and the pitfalls of overprocessed “clean food.”
🤖 AI in Africa
China’s DeepSeek AI, partnered with Huawei, is expanding across Africa, offering cheaper, power-efficient LLMs rivalling Western models. Local startups and universities are adopting it, deepening China’s “AI diplomacy” and influence across Africa’s digital ecosystem.
🇨🇳 China, Trade & the Yuan
Despite 55% U.S. tariffs, Chinese exports to the U.S. remain resilient, especially in electronics and e-bikes — aided by loopholes and trans-shipping. Meanwhile, China is pushing yuan-denominated loans, converting African and developing-world debt to embed its currency deeper into global trade and reduce dollar dependence.
👜 Hermès
Hermès beat most luxury peers with 9.6% sales growth, driven by strong U.S. demand and steady pricing. Its scarcity-driven model continues to outperform even as tariffs and global demand soften.
🧠 Asset Management & AI
Information once gated (Bloomberg/Reuters data) is now democratised.
Analysis is being automated — AI can replicate quantitative risk models.
Interpretation is next: AI “investment committee” bots are on the horizon. Cobie argues that human insight remains vital, but investment management must evolve as AI commoditises data-driven decision-making.
Global Roundup
South Africa:
The South African rand weakened against the US dollar due to risk aversion amid geopolitical tensions, speculation about US interest rate cuts, and the ongoing US government shutdown.
Despite gold prices hitting a record high, the rand’s gains were limited by a prevailing “risk-off” sentiment in global markets.
South Africa’s benchmark government bond yields remained stable, signalling steady investor confidence in local debt.
The country is intensifying efforts to expand its export footprint across Africa and beyond, leveraging productive partnerships.
Consumer inflation data came out on Thursday, and it is up ever so slightly.
United States:
The US government shutdown; on Monday, it will be 28 days, and has delayed critical economic data releases, including inflation reports and housing market updates.
Fed Chair Jerome Powell indicated that the Federal Reserve may ease the pace of its balance sheet reduction due to ample liquidity reserves, signalling cautious easing.
Despite delays, recent indicators show falling new home prices amidst high inventory, while mortgage applications have declined moderately.
The US stock market rebounded, fuelled by optimism around upcoming US-China trade talks and easing credit stress in regional banks.
President Trump remarked that the proposed 100% tariffs on Chinese imports are “not sustainable,” indicating flexibility ahead of talks with President Xi Jinping.
Global Economy:
Oil prices experienced a weekly incline driven by Russian oil sanctions.
The UK economy showed minimal growth in August, with manufacturing bouncing back slightly but services and construction remaining subdued.
European sovereign debt markets face vulnerabilities amid ongoing trade uncertainties and political developments.
Global markets are watching central banks’ varied monetary policies, balancing easing and tightening based on local economic conditions.
Bankers in the UK benefit from relaxed regulations, allowing faster bonus payments, signalling confidence in the financial sector recovery.
The Federal Reserve (Fed) – headed by Powell and the U.S. Treasury – headed by Bessent play distinct but interconnected roles when it comes to bonds in the USA, and in light of the looming problem of US and other global debt, it is important to understand a little bit about how they work.
U.S. Treasury Role:
The Treasury is responsible for issuing government debt securities such as Treasury bills, notes, and bonds to finance federal government spending.
It manages the federal government’s budget, collects tax revenues, and pays government debts.
The Treasury issues bonds through regular auctions to raise cash for governmental operations. These are known as Treasury securities. The ‘price’ of the bond is determined by the auction, as close to a ‘free market rate’ that you’re going to get and influenced by demand, perceived risk, maturity, inflation expectations and other ‘soft’ variables that are often difficult to quantify.
Physically printing money is handled by the Treasury’s Bureau of Engraving and Printing, but issuing bonds is a key tool for borrowing funds.
Federal Reserve Role:
The Fed acts as the nation’s central bank, regulating money supply, inflation, and credit conditions.
While it doesn’t issue bonds, the Fed conducts monetary policy by managing interest rates and buying or selling Treasury securities in the open market.
The Fed holds Treasury bonds as part of its portfolio and uses these purchases or sales to influence liquidity and interest rates in the economy. This is often referred to as quantitative easing or tightening.
The Fed also conducts Treasury security auctions on behalf of the Treasury and sets the target rates affecting yields on these securities.
It creates digital money (reserves) to buy bonds, but actual physical money printing is done by the Treasury.
In summary, the U.S. Treasury issues and manages bonds as a way for the government to borrow money, while the Federal Reserve uses those bonds as tools to implement monetary policy, influencing interest rates and money supply to stabilise the economy. The Treasury’s function is fiscal (budget and debt management), and the Fed’s function is monetary (money supply and credit conditions).
After a bond is first sold to investors in the primary market, it can be traded among investors in the secondary market. Bond prices fluctuate here based on interest rates, inflation expectations, and credit risk. If prevailing rates rise above a bond’s coupon rate, that bond’s market price falls, and vice versa. Active trading in this market provides liquidity, allowing investors to enter or exit positions without holding bonds to maturity. A tighter “bid-ask” spread indicates higher liquidity. Institutional investors such as banks, insurance companies, and mutual funds dominate the secondary market, although retail investors can also participate via brokers or bond funds.
As I mentioned above, the Federal Reserve (Fed) doesn’t issue bonds—it buys and sells existing Treasury or corporate bonds to influence the money supply and interest rates. This is done through Open Market Operations (OMO), where the Fed buys bonds from banks or institutional investors to inject liquidity (increase money supply) or sells them to withdraw liquidity.
These actions directly influence short-term interest rates and indirectly affect longer-term yields, shaping the overall yield curve. In times of market stress, the Fed intervenes to stabilise liquidity, such as through the Secondary Market Corporate Credit Facility (SMCCF) established in 2020 to support credit markets. By buying Treasuries and mortgage-backed securities, the Fed ensures functioning secondary market activity and anchors borrowing costs across the economy.
The short-term interest rate is set by the Fed, as it is by our SARB, and while the interest rates and bond coupon rates often correlate, they can also be quite different – because they are not set by policy, but in those secondary market auctions.
RSA Inflation and the Grey list updates
The latest inflation rate for South Africa (RSA) was 3.4% in September 2025, an increase from 3.3% in August. The monthly consumer price index (CPI) rose by 0.2%. The main drivers of this slight increase were housing and utilities, food, and non-alcoholic beverages. The monthly CPI increased by 0.2% in September, following a 0.1% decrease in August. The key contributors were Housing and utilities, where prices rose by 4.5%, and Food and non-alcoholic beverages prices, which rose by 4.5%. The core inflation rate, which excludes food, non-alcoholic beverages, fuel, and energy, increased to 3.2%.
The slight increase may affect interest rate cut expectations from the South African Reserve Bank.
News out on Friday confirmed that RSA is now off the Grey List, thanks to firm government action in the areas that were problematic, like opaque beneficial ownership. Although this has probably been priced into markets, it will make the flow of capital cheaper.
I don’t think the American people quite realise how big a ‘gift’ the $40bn from King Trump to Argentina was, but it comes with caveats. (Maybe it’s just as well that this is poorly understood, especially with food stamps about to expire this week if the government shutdown doesn’t end soon).
In the month before America’s Bessent pledged to stem the fall of the Argentine peso, the currency had dropped nearly 7%. Ironically, since Washington not only announced but followed through on support, it’s done much worse — shedding an additional 11% and showing little sign of stabilising ahead of yesterday’s elections. Of course, the promised bailout is contingent on Milei winning the election. The bailout, or “bridge to a better economic future,” as he calls it, hasn’t stopped the bleeding — and it’s inflicted losses on the US Treasury that he leads.
As the peso is widely viewed as overvalued, the $20 -$40 billion swap line may have only delayed the inevitable, offering aid not to Argentina’s economy, but to investors who were already heading for the exits. Its turmoil is rooted in decades of unconventional pegs to the dollar. As disastrous as the peso’s recent trajectory has been, the most painful, and paradoxically the most necessary, chapter in Argentina’s reset may still lie ahead.
Apart from Bessent, few are willing to defend Argentina’s current exchange-rate framework. After scrapping its one-to-one dollar peg at the turn of this century in crisis conditions, the Banco Central de la República Argentina has followed a “managed band” regime. It now faces pressure to let the peso float — even though President Javier Milei was elected on a platform of dollarisation, or scrapping the peso altogether.
The prevailing regime in Argentina requires the central bank to make expensive dollar sales and provides little room for manoeuvre. History suggests there’s little chance of rescuing the peso from further decline.
Not only does this suggest the peso is overvalued, but it also raises the question of whether, following the Turkish lira in May 2023, there could be a devaluation after the polls.
If the election goes well, it’ll still be optimal to devalue, as Milei can blame the opposition and escape the current overvaluation trap. Milei’s quest to snap Argentina out of its perennial troubles has strengthened the peso to a point where it is uncompetitive for exporters:
The US is demanding a float now, particularly because Bessent would face domestic criticism if recent peso purchases are quickly marked down by the devaluation that would accompany a free float – likely at least 15%–20% from the band’s ceiling.
Milei’s coalition needs to retain enough seats to preserve his presidential veto, and with it, his fiscal agenda. Washington’s backing is unlikely to carry them across the finish line, as the bailout is, if anything, fuelling anti-American sentiment.
After nearly two years of painful fiscal tightening and stubbornly high inflation, public fatigue has deepened, and confidence in Milei’s ability to deliver further adjustment is waning. Uncle Sam might have to take quite a loss on its bridge to the economic future.
Beyond Meat – the new ‘meme’ stock
Beyond Meat, Inc. is a “pioneering” American company that produces plant-based meat substitutes designed to mimic the taste, texture, and appearance of animal meat. It was founded in 2009 by Ethan Brown in Los Angeles, California, as part of a broader mission to reduce climate change, improve animal welfare, and promote human health through sustainable food innovation. Ethan Brown, who previously worked in the clean energy sector, founded Beyond Meat after licensing meatless protein technology from University of Missouri researchers Fu-hung Hsieh and Harold Huff. Their extrusion-based technique allowed plant proteins to replicate muscle-like textures. Beyond Meat launched its first product, Beyond Chicken Strips, at Whole Foods Market in 2012, followed by a national rollout in 2013.
In 2014, the company introduced Beyond Beef Crumbles and began developing its signature Beyond Burger, which became a major breakthrough when launched in 2016. The burger cooked, looked, and even “bled” like beef, drawing both vegan and flexitarian consumers. By 2017, the company’s distribution had expanded to more than 27,000 grocery stores and restaurants, including partnerships with major chains like TGI Fridays, Carl’s Jr., Dunkin’ Donuts, and McDonald’s. Between 2013 and 2016, Beyond Meat attracted significant venture capital from investors such as Bill Gates, Kleiner Perkins, the Humane Society, and even Tyson Foods (which held a 5% stake before selling it in 2019). Celebrity backers like Leonardo DiCaprio, Jessica Chastain, Chris Paul, and Snoop Dogg also supported the company.
On May 2, 2019, Beyond Meat became the first plant-based meat company to go public, raising $240 million in its Nasdaq IPO; its share price surged 163% on the first day, making it the best-performing IPO since the dot-com era.
By 2020, Beyond Meat had expanded into over 80 countries and partnered with McDonald’s to co-develop the McPlant. Continued innovation led to new versions of its burger and beef products in 2021 and 2024, improving taste and reducing saturated fats through ingredients like avocado oil. However, the company faced challenges amid declining sales, leading to layoffs in 2022, 2023, and 2025, including the closure of operations in China.
It has been an interesting week for this share, Beyond Meat Inc. shares erased a gain of as much as 112% on Wednesday to end the day lower, capping a turbulent run for the latest company to get swept up in a revival of the meme-stock frenzy.
The struggling maker of plant-based burgers and sausages began the session by surging to as high as $7.69, extending a surge that had pushed the price up over 1,300% since Thursday. But then it gave back the gains to tumble over 27% before then bouncing back to end down 1%.
The loss snapped a sharp rally that had started Friday and picked up steam Monday, when Business Insider reported that a trader named Dmitri Semenikhin has been touting the stock on social media.
The momentum may have been fuelled by day traders trying to snap up the shares to squeeze short sellers, who had bet against the company by selling borrowed shares and needed to buy them back to close out positions. About 64% percent of the shares available for trading had been sold short as of the end of September. Roundhill Investments added Beyond Meat to its Roundhill Meme Stock ETF, the firm said in a post on X late Monday, in another sign of the return of the meme-stock trend first seen during the pandemic.
The rally had taken another leg higher on Tuesday when the company announced that Walmart Inc. would expand the availability of its products to more than 2,000 stores, according to a statement. Wall Street analysts, however, remain sceptical of the company’s prospects. Beyond Meat has six sell-equivalent recommendations, five holds and no buy ratings.
The once-popular stock received a boost as the pandemic pushed more people to ditch meat in favour of healthier alternatives. The trend, however, has not lasted, and the brand has since struggled as consumers were increasingly put off by excessive processing, high costs and taste.
The stock on Wednesday swung between gains and losses, with trading halted more than a dozen times due to the volatility. Option trading volume hit a record earlier in the trading day, according to exchange data compiled by Bloomberg.
Beyond Meat shares still remain above where they were before early last week, when the company said nearly all creditors had accepted a debt swap that will lead to a substantial dilution for shareholders.
This tale is an interesting case study of a company being built on the hype and perceived sanctity of a vegan lifestyle – either too soon for the general public or perhaps missing the point of a ‘clean eating’ vegan lifestyle with an ultra-processed product.
The Chinese AI model DeepSeek is rapidly expanding across Africa through partnerships with local tech ecosystems and companies such as Huawei.
DeepSeek’s parent company, High-Flyer, has partnered with Huawei Technologies Co., which is integrating DeepSeek’s large language model (LLM) into its cloud and data storage services across sub-Saharan Africa. DeepSeek’s LLM is marketed as being comparable in performance to OpenAI’s models but at a fraction of the cost and power requirements. This allows widespread access to AI tools among African startups, universities, and governments that lack expensive computing infrastructure.
African innovation hubs such as Qhala in Nairobi have begun adopting DeepSeek for applied AI research, business automation, and local language projects, because of the model’s simplicity and affordability as key reasons for choosing it over Western platforms.
The expansion underscores China’s growing influence in Africa’s digital and AI sectors. By embedding its technology through Huawei’s networks, China is creating an ecosystem alternative to Silicon Valley’s dominance, positioning DeepSeek as a cornerstone of its “AI diplomacy”. While the West sleeps and ignores Africa, China is working quietly in the background, gaining market share that the West is going to find difficult to supersede. It also raises geopolitical questions about technological dependence and digital sovereignty in emerging markets.
Chinese exports – are they feeling the tariff hit?
Six months into Donald Trump’s trade war, the resilience of Chinese exports is proving just how essential many of its products remain even after US levies of 55% (and threats of more). Every day, about a billion dollars worth of goods is crossing the Pacific from China to the US, with the amount ticking up in September from August. These are goods destined for the Black Friday/Black November sales – now often higher than Xmas sales. Despite double-digit drops in the value of overall trade during the past half a year, some products have recently seen an increase from 2024, defying trade strains between Beijing and Washington.
The upshot is that US tariffs appear somewhat limited in their ability to control what American firms import, as China’s sway over sectors such as rare earths and electronics makes its products hard to dislodge, at least in the short term. That may change over time, especially if Trump further hikes tariffs, as the Republican leader has repeatedly threatened to do.
Chinese exports to US Are still down 17% this year
Chinese firms still reported shipping $317 billion worth of goods – it is going to take time for the US to build back that manufacturing capacity that Trump longs for – and Xi knows it. The 90–day tariff truce is set to expire in November, hence the importance of the meetings this week.
In the third quarter, more than $100 billion worth of Chinese goods arrived in the US, helping Beijing keep economic growth on track for its annual target and pushing the bilateral trade surplus up to $67 billion. The upcoming meeting could still be canned if Trump gets miffed about something. Rare earths, fentanyl and soybeans are top of the agenda.
The pairing between the world’s two biggest economies goes beyond products whose global supply is dominated by China, such as magnets critical to American manufacturing or chemicals in widely used medicines. While almost all the top 10 exports to the US slumped last quarter from a year earlier, shipments of e-cigarettes rose, according to a Bloomberg analysis of China’s customs data. E-bikes are also seeing strong US demand, with Chinese firms exporting more than $500 million worth in the three months through September, slightly up on a year earlier.
Exports of refined copper cathodes have soared in value terms from almost nothing to $270 million in the past three months, with electrical cables rising 87% to $405 million. While both sides may reduce dependence on each othe, it cannot be reduced to zero.
American importers are able to pay a lower levy by declaring the customs value of goods based on their first sale in a third country, and then raising the price when the items reach a US port. Trans-shipping via Mexico or Vietnam means some firms are likely not paying the full tax. There are a lot of loopholes; US Customs just don’t have enough manpower to address them.
In the July-September quarter, companies in China shipped almost $8 billion worth of smartphones, laptops, tablets and computer parts to the US. While that was less than half the amount sold in the same period last year, it still represented a substantial haul considering the high tariffs.
Small Packages Trade Slumps
Shipments have halved since May, but are still around $1 billion a month, despite the end of the “de minimis” rule allowing small parcels to enter the US duty-free. US consumers have kept buying billions of dollars worth of packages from e-commerce platforms such as Shein Group Ltd. and PDD Holdings Inc.’s Temu. While tariffed at 54%, Chinese data showed about $5.4 billion worth of these small packages were sent to the US since the Trump administration closed the loophole in May.
Business-to-business e-commerce exports also soared, jumping to $201 million in September from about $31 million in August. The surge may indicate Chinese online platforms are moving from selling directly to US consumers to shipping first in bulk and then breaking that down into smaller packages in the US.
There’s been a collapse in exports of game consoles, with companies such as Nintendo Co. and Microsoft Corp. choosing to deliver them from Vietnam and elsewhere instead of paying the higher tariff to ship from China. And US consumers now look to be buying TVs elsewhere, with a 73% drop in the value of LCD sets exported from China to the US last quarter.
At least some products are showing complete decoupling.
When it comes to other products, such as commercial ships, the US had decoupled from China before Trump imposed fees on Chinese-built vessels docking in US ports.
Despite the resilience, the damage done to US-China trade this year is already worse than during Trump’s first presidency, according to the International Monetary Fund.
“Bilateral trade decoupling between the United States and China appears to be happening sooner when compared with the 2018–19 tariff shock,”
China’s push to replace the dollar
China is leveraging its position as the world’s largest creditor to help broaden usage of the yuan, offering overseas borrowers the chance to benefit from economically depressed interest rates at home by ditching the dollar.
Ethiopia became the latest this week in looking to convert at least part of the $5.38 billion owed to Beijing into yuan-denominated loans. A growing number of sovereigns are also seizing on cheaper Chinese financing via bonds.
But the strategy is coming at a price to China, forcing it to stomach some losses along the way as domestic rates hover well below those on the dollar. Kenya said it cut annual debt-servicing costs by $215 million by converting its Chinese railway loans from dollars earlier this month.
The benefit for China in exchange for less revenue is that the renminbi becomes a more internationally used currency.
People with knowledge of official thinking said China supports converting dollar loans originally intended to pay for its goods and services. Such an approach makes it easier for borrowers to pay for Chinese merchandise in yuan, elevating the currency’s role in trade settlement and financing. The same principle could apply to new loans extended to countries beyond Africa, one of the people said.
What makes the trade-off worthwhile for China is that it’s embedding the yuan deeper in international commerce and payments, blunting the financial edge of the US at a time when the world’s two biggest economies are at loggerheads. It’s also entrenching its influence in Africa, a continent that’s become a much bigger destination for Chinese exports after Donald Trump ratcheted up US tariffs.
The world’s 78 poorest countries are estimated to owe $67 billion to China. While China ends up getting less in interest by swapping bilateral loans from dollars to yuan, it’s focusing on wider issues,
China’s concern is that US control of the main international currency gives it strategic leverage, such as being able to impose sanctions through the dollar-centric financial system. Geopolitical calculus aside, a bigger global footprint for the yuan has become possible because China’s persistent deflation pressures and economic slowdown are warranting a loose monetary policy in response.
The rate differential between the US and China is enabling borrowers to lock in a favourable cost of capital just as many global investors look to diversify away from the dollar after Trump’s erratic policies at home and abroad. Already this year, Hungary and Kazakhstan sold bonds denominated in the Chinese currency, while Sri Lanka announced it would take a yuan loan equivalent to $500 million for a highway project. Indonesia is meanwhile planning its first offshore yuan bond sale.
While Beijing has officially said little and never confirmed discussions around the loans. Bilateral currency swaps are another part of China’s push for greater international adoption of the yuan, an arrangement that about 30 countries around the world have with the central bank in Beijing.
Years of lending abroad by China have created a huge potential pool of economies that could benefit from revamping their liabilities. The world’s 78 poorest countries under a definition used by the World Bank, have about $67 billion in outstanding debt to China.
Hermès is still the crown jewel of luxury. The maker of the iconic Birkin and Kelly bags posted a solid quarterly sales jump, keeping its lead over rivals.
Hermès International SCA extended its run as the luxury industry’s strongest performer with another quarterly sales jump, even though the Birkin and Kelly bags maker’s key leather unit fell slightly short of expectations.
Revenue at the unit, Hermès’ main profit engine, rose 13.3%, far ahead of recent results from the likes of LVMH but still slightly below the 13.8% analysts had expected. Shares fell as much as 5% in early Paris trading. (We have often talked about how shares at the moment are being severely punished to the downside if they miss earnings targets.)
Expectations for the luxury industry have grown after rival LVMH posted reassuring sales last week, pleasing investors and sending its shares higher. Hermès’ stock drop notwithstanding, the company remains among the most resilient luxury brands, posting strong sales gains despite a global cooling of demand for high-end goods and tariff worries.
The company’s business model of keeping items scarce to drive demand continues to spare it from the spending vagaries of aspirational customers who’ve cut back since the early post-pandemic boom years. That helped it report a 9.6% jump in overall third-quarter revenue at constant exchange rates to €3.88 billion ($4.5 billion). Analysts had expected a gain of 9.3%. The growth came as the company continued to attract wealthy shoppers — especially in the US — willing to splurge on its coveted products. Alleviating concerns that the Trump administration’s tariffs would hit consumption, the region that includes the US outperformed expectations as revenue there rose 14.1% in the quarter. The strong growth in the US was across categories, with a steady progression in visits to its stores, helped by the fact that adding that Hermès didn’t hike prices again in the country following its one-time increase in May to counter the effect of tariffs.
In the region that includes China, Hermès did better than in the first half of this year.
Author: Dawn Ridler
This week, I thought I would write about our experience with Artificial Intelligence and where this might take the asset management industry in the future.
Two years ago, AI was an idea. What if we could create self-thinking supercomputers that could take over daily tasks? Nice idea, but could it work? What was an idea 2 years ago has slowly been realised through the efforts of computer scientists and the elevation of computing power in which Nvidia has played a critical part.
It all started with the creation of large language models.
Someone had to populate and train AI so that it could develop critical thinking. It’s the one thing that sets humans apart: the ability to think critically by considering a wide range of inputs. You can do all of that with your head, whereas AI requires vast amounts of computing power and a way to store data and outcomes. Enter the race for data centres and the push to be the best. This requires tons of money to be spent on the infrastructure, as is evident at a company such as Google.
So the race is on, and rather than looking for one winner, it has become evident to me that AI is a collective effort. Those who stand the most to lose are spending the most to retain their market share or to grab a piece of the evolving AI pie. What is interesting is that companies that have made it their business to sell information, knowledge and insights have seen their share prices fall this year. This is as investors question if their business models can adapt to AI. Here are some examples: Gartner Research (-47% YTD), Accenture (-27% YTD) and MSCI (-9% YTD). I make the distinction between private and public information quite regularly. Information on the internet has become democratised through AI, whereas private information, I think, will become much more valuable in the future. It will become the reason why you hire an information firm in the future. How companies that sell information evolve is going to be interesting to watch. And this brings me to the asset management industry.
The industry deals in information that has become public. Gone are the days when you need a Bloomberg terminal or a Reuters screen to view trade information. All of this can now be seen on the internet. So the first barrier to information has fallen, and the quality of the data offered has only been increasing. We use paid services as well as free data to gain insights into trade ideas and companies without having to resort to a Bloomberg terminal.
The second barrier to entry is making sense of the data. In the past this required bright individuals with a strong work ethic. Their job was to sift through information and to distil this into a workable investment plan. Being first to recognise a trend or information that could lead to a change in stock prices was critical to success. In order to help with this process data vendors built tools that could quantitatively express risk parameters for individual counters and for funds. A company such as MSCI Barra comes to mind. Their whole business is about selling systems that can manage risk. But we have recently been able to replicate a risk management framework with the help of AI. The system allows us to view overall risks, portfolio drawdowns and market sensitivity. The AI module we used for this back-tests data and then expresses an opinion after crunching the numbers. We have less use for a dedicated quantitative analyst today.
The third barrier is the interpretation of the data and implementation of portfolio ideas. Active managers still do this part, whereas quantitative asset managers would let a system take care of this. I don’t think this is going to change soon, but in the works are trained AI bots. These bots could sit on your investment committee and make recommendations. They will consider all of the information available and then make a recommendation much quicker than a human can. I am already seeing evidence of this, and I believe this can be a reality soon. This makes me think that if the interpretation of information was what created investment excellence in the past, this may become a commodity in the future. This is going to require investment managers to adapt and think about their offerings. How this plays out is what makes this industry an exciting one to be part of today.
Author: Cobie Le Grange
EXCHANGE RATES:
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The Rand/Dollar closed at R17.25 (R17.38 (R17.50, R17.22 , R17.35, R17.33, R17.37, R17.58, R17.65, R17.44, R17.61, R17.74, R18.15,R17.76, R17.72, R17.90, R17.58, R17.89, R17.99, R17.92, R17.77, R17.95, R17.88, R18.04, R18.16, R18.39, R18.64, R18.89, R19.12, R19.10, R18.36, R18.21, R18.18, R18.20, R18.71, R18.35, R18.38, R18.41, R18,67, R18.38, R18.73, R18.03, R18.05, R18.11, R18.21,) The Rand/Pound closed at R22.96 (R23.34, R23.37, R23.19, R23.22, R23.35, R23.55, R23.73, R23.84, R23.53, R23.84, R23.84, R24.09, R23.88, R23.76, R24.22, R24.08, R24.49, R24.22, R24.35, R24.05, R24.18, R24.14, R23.95, R24.16, R24.40, R24.82, R25.10, R25.01, R24.73, R23.78, R23.55, R23.52, R23.50, R23.53, R23.19, R23.12, R22.85, R23,16, R22.93, R22.80, R22.99, R22.98, R22.72, R22.99, R22.73, )  The Rand/Euro closed the week at R20.06 (R20.26, R20.33, R 20.22, R20.30, R20.35, R20.38, R20.61, R20.62, R20.44, R20.56, R20.64, R21.04, R20.86, R20.61, R20.93, R 20.70, R20.91, R20.74, R20.68, R20.24, R20,37, R20.27, R20.13, R20.43, R20.78, R21.21, R21.52, R21.72, R20.93, R19.95, R19.72, R19.83, R19.72, R19.41, R19.20, R19.29, R19.02, R19,35, R19.31, R19.23, R19.09, R18.87, R19.19, R18.85, ,)  Brent Crude: Closed the week $65.04 ($61.27, $62.14, $64.28, $69.67, $66.57, $66.80, $65.52, $67.38, $67.73, $66.08, $66.07, $69.46, $68.29, $69.21, $70.58, $68.27, $67.39, $77.27, $74.38, $66.56, $62.61, $65.41, $63.88, $61.29, $65.86, $67.72 $64.76, $65.95, $72.40, $72.13, $70.51, $70.33, $73.03, $74.23, $74.51, $74.65, $76,40, $77.60, $79.98, $71.00, $72.38, $75.05, $70.87, $73.86, $73.99).  Bitcoin closed at $112,492 ($106,849, $111,888, $124,858, $109,446, $115,838, $115,770, $110,752, $108,923, $114,916, $117,371, $118,043, $113,608, $118,139, $118,214, $117,871, $108,056, $107,461, $103,455, $105,017, $105,643, $104,049, $103,551, $104,615, $96,405, $94,185, $84,571, $84,695, $82,661, $83,074, $84,889, $82,639, $83,710, $85,696, $96,151, $96,821, $96,286, $99,049, $104,559, $104,971, $99,341, $97,113, $97,950). |
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Cobie Legrange and Dawn Ridler,
Rexsolom Invest, Licensed FSP 45521.
Email: cobie@rexsolom.co.za, dawn@rexsolom.co.za
Website: rexsolom.co.za, wealthecology.co.za