Institutional Asset Manager Newsletter 17.02.23

UK inflation figures hit six month low

This week brought news that UK inflation might be heading in the right direction, achieving a six-month low, with total inflation for January coming out at 10.1 per cent, but observers say there are many obstacles ahead in getting it back down to the target of 2 per cent.
Hussain Mehdi, Macro & Investment Strategist, HSBC Asset Management, said: "Inflation is heading back down fast, aided in particular by easing energy price pressures. But for the Bank of England, hurdles remain in getting inflation on the path to 2 per cent. Despite a slowing economy, wages are still rising rapidly in a backdrop of stagnant labour supply, which risks keeping services inflation elevated. This means the Bank’s Monetary Policy Committee is likely to deliver another rate hike next month, with some chance of further tightening at subsequent meetings if wage growth measures remain inconsistent with the Bank’s 2% target.
Commenting on the decline in UK CPI Andrew Aldridge, Partner at Deepbridge Capital, said: "Today’s inflation figure of 10.1% for January—paired with last week’s better-than-expected GDP figures—is a promising sign for the UK economy, signalling that it is on the road to recovery."
Aldridge is particularly keen on government supporting entrepreneurs and, in this spirit, he must be pleased for investment consultancy bfinance which has completed a management buyout of its business, with the purchase of a 51 per cent stake formerly held by Baird Capital, in a transaction supported by Beach Point Capital Management.
The firm’s revenues have increased by c.70 per cent since 2018, with particularly strong growth in the Private Markets and Portfolio Solutions divisions, the firm says.
A survey of decentralised finance by Avantgarde has revealed that the majority of institutional investors plans to increase its use of DeFi. The firm writes that the study reveals a shift in both the focus and intent of institutional investors, as 78 per cent of respondents say that the collapse of centralised crypto entities in 2022 (FTX, Alameda, Three Arrows Capital, Celsius, etc) has made them "more likely" to use DeFi technology today than 12 months ago.
Beverly Chandler, Managing Editor

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