Ludovic Subran decodes negative rates issues for Monaco entrepreneurs

On Wednesday 16 October, around 100 people attended a talk given by Ludovic Subran in the Café de Paris’ Salon Bellevue, as he shared his opinion on a thorny subject, the consequences of which are already being felt and could become a major issue.  

For the seventh year in a row Ludovic Subran, Chief Economist at Euler Hermes and recently of the Allianz Group, European insurance and financial services leader, treated Monaco Economic Board members to entertaining insights at a talk organised in partnership with Monaco Asset Management and Monaco’s Junior Chamber of Commerce.

His humour and total mastery of a complex topic captivated a well-informed audience. His previous talks in the Principality have centred on regions and geostrategic challenges, as last year with China’s New Silk Roads. At first glance his chosen topic seemed more specific, but proved not to be limited to the financial sector.

The economist started by unpicking the global slowdown, based on indicators such as industrial production, trade volumes and import figures of major economies. Not surprisingly all are down, a deterioration exacerbated over the summer by more tariffs in the China-America trade war, the Brexit imbroglio, confirmation of a general slowdown, protests in Hong Kong, uncertainty as the US presidential campaign gets underway, Italy’s political crisis, etc.

The central banks response, and to avoid recession in some countries, has been to implement stimulus policies by lowering interest rates, particularly in Europe where growth is notoriously sluggish; a windfall for individuals and companies who want to invest, and states taking advantage to borrow for political reasons.

But the economist warns this policy is not without consequences, like the impact on supplementary pension schemes as it may encourage life insurance companies and pension funds to take more risks, lower profits for banks, etc. Especially as recovery does not appear to be on the horizon, according to Ludovic Subran who is not convinced by talk of growth with the arrival of 5G and artificial intelligence. A “Japanisation” of the economy therefore to which Europe may have to adapt if investors start to turn away from the continent.

Questioned at the end of his talk on the Monegasque situation given the context, the Allianz Group’s Chief Economist had some advice: diversify investments to the maximum and invest in real estate now and more generally in the long term. And thanks to his mastery of sophisticated financial products, Ludovic Subran confirmed that the Principality has a card to play in promoting ethical products linked to social and environmental commitments.

For MEB members, it was another illuminating talk on what could have been a perplexing topic, made into an enjoyable and instructive occasion so essential in a fast-changing world.