Hamilton Bermuda, 4 March, 1999 - Patrice Horner, for The Bermuda Sun:
One of Europe's highly successful investment companies has expanded its Bermuda presence by listing twelve of its funds on the Bermuda Stock Exchange (BSX). Lombard Odier Management (Bermuda) Limited (LOMB) CEO Bernard Rattray stated "listing Group funds on the BSX was a natural enlargement of our presence in Bermuda." Four Obliflex fixed income funds and six LO Invest equity funds will now be available on the BSX. It includes the US Dollar Bond Fund, which was ranked as one of the top 10 funds of its class by Micropal, an offshore fund reporting company. Bermuda exchange sponsor is Bermuda International Securities Limited (BISL).
Two senior Investment Managers of Lombard Odier offices in London made brief presentations after the announcement. Paul Abberley, Chief Investment Officer of Fixed Income discussed how to profit in a low interest rate environment. Mark Lloyd-Price, Director of European Equities outlined his strategy for global investing in a deflationary "boom".
Making Profits when Interest Rates are Low
CIO Abberley noted that there has been an evolution in the global markets for bonds. There are more Global Bond Investors than at any point in the past. They are likely to be investing outside of their own country and sensitive to changes in currencies. In addition, the are "bombarded with instant information" but not necessarily able to understand how this news affects the countries in which they have invested. Many of these new investors take profits too quickly and hold losses to long.
The herd mentality that these novice investors create can trample the savvy investor unless they also run with the herd. Hence, there are new trends in the markets that are more unstable and unpredictable. This volatility suggests that there are profits to be made by being a more active investor, trading more often and more shares. The level of profit per trade will be lower, .05-1.5 points after costs. In order to profit this way, it will take technical discipline and knowledge.
A Deflationary Boom?
Director Mark Lloyd-Price suggested that the economic environment we are facing has not been seen for over 100 years. Usually the word deflation is connected with a busted economy. Director Price said he thinks declining prices can be used to improve profitability.
The world is experiencing a deflation due to excess capacity in offices and manufacturing plants. The Asian crisis has reached America and Europe. The UK is facing a recession, with six months of consecutive decline in prices. At the same time real interest rates, after considering inflation/deflation are too high. Price predicts that both short term and long term rates will continue to drop.
The industrial economy has always reacted favorably to falling interest rates, so he is looking for the beginning of a turn in what he calls "the real economy." The technology sector or the "virtual economy" also benefits from low inflation and lower prices. In addition to falling interest rates, governments have been adding liquidity to the markets. The US has provided liquidity for the global economies. US monetary policy would have changed if the Federal Reserve had been looking only at the US market.
These trends suggest that the "virtual" economy will continue to boom and the €˜real' economy will join sometime in 1999. Price notes "The two may combine to create a €˜worldwide' boom. Although this can then lead to inflation, he thinks there are many reasons why it will not in the near future. He maintains an emphasis on global equities more than global bonds. Hold technology stocks, including those of companies in telephony. Pharmaceutical and food stocks may have run their course. There may be good values among stocks of companies that grow with the economy. Price pointed out the importance to be "flexible and not locked into a pure growth or pure value" approach to investing.
LOMB
Lombard Odier Management (Bermuda) Limited (LOMB) was had a local presence for over 30 years, since 1976. It was the first non-Bermudian company to be granted a trust company license in 1992. LOMB now has a local staff of 22 servicing their trust clients. Last year its parent company, private bank Lombard Odier & Cie of Switzerland celebrated its 200 anniversary. LOMB commemorated the event locally by sponsoring a middle school competition and sending students from winning Warwick Middle School to Switzerland.
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PREMIER PROTECTS OFFSHORE REPUTATION
Premier Jennifer Smith gave the opening address at the Lombard Odier Management Investment Presentation at the Hamilton Princess on Wednesday, where it was announced that Lombard is listing twelve of its funds on the Bermuda Stock Exchange (BSX). She stated "It was an auspicious occasion in the annals of the 200 year history of Lombard Odier." The BSX listing demonstrates the business community's comfort and confidence in Bermuda.
The Premier went on to say that the Bermuda government will vigorously counter and withstand any challenges to the reputation of Bermuda. "Bermuda has had fewer problems that other jurisdictions. It is unfair to lump us with others." She announced the government's decision to hire a PR Firm to promote Bermuda full-time in Europe and the UK. In part, this is in response to the aggressive actions of other jurisdictions.
The issue of offshore domiciles was discussed the OECD meeting recently held in Paris. Premier Smith was in attendance and reported that the meeting was "convivial" and that there was a "meeting of minds". She said that a report will be issued by the end of this week. There will be mutual negotiations and an agreed upon report issued later. It will be presented at another forum in Paris in May. She and other Bermuda representatives will be there to address any concerns.
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