The secret ingredients to decades of global steady growth are vanishing. Easy access to capital, supercharged demand from China and low-friction geopolitics have all disappeared, triggering multi-decade highs and financial-market losses that run into the trillions.
Set out as the backdrop for the year ahead by AltoVita’s CEO and Co-Founder, Vivi Cahyadi Himmel, the panellists settled in for the third session to lay out their predictions and key macroeconomic trends for 2023.
Walter Gubert, Former Vice Chairman of JP Morgan Chase & Co, began the discussion by emphasising that the real issues for investors, corporations and governments are inflation and interest rates. They are here to stay – higher and for longer. He also added that recession is inevitable and business owners have to accept the reality and manage it accordingly.
Adding to this, Miguel Nigorra, Partner & Co-Head (Europe) at Fifth Wall, started by sharing his thoughts in relation to the session’s title: ‘thrive’. He highlighted that we are living in a “once-in-a-generation transformation” in multiple industries as a consequence of two things: the first is the climate and the amount of capital needed to make all industries sustainable (equating the transformation to that of the Industrial Revolution); the second, as discussed many times, is the effects of the pandemic and long-lasting trends in relation to work, travel and life.
How are these trends impacting investment decisions?
Walter noted that this is a historic opportunity for investors to be flexible and innovate as everything is being transformed. Positive changes like decarbonisation will happen a lot quicker, as the sectors and companies that are transforming industries will get as much money as they need. It’s about the right company and business model in the right sector.
Miguel agreed and remarked that the equivalent of the whole US economy GDP needs to be deployed into real estate technology and innovation to decarbonise the built environment in the next 20-30 years – it’s both a very challenging time but also a huge opportunity for businesses to thrive.
Both then discussed their top tips over the next twelve months. Acknowledging that rising interest rates means hard times for venture capital firms, it was illustrated that investments done at this point in time are the ones that promise to generate better returns and can show healthy run rates.
For investors, it’s an amazing opportunity to find great technologies and entrepreneurs out there that will revolutionise their sectors. It’s going to be a time where you can differentiate winners and losers way better than many years ago and where sustainable growth and capital consumption will definitely be a key advantage in the market.
Quickfire closing thoughts
The session then turned into quickfire question and answers, revolving around a range of topics including predictions for 2023. Here are some of the highlights:
- Top currencies in 2023: Euro and yen…maybe the dollar too.
- Where will the fed rates go? According to Miguel, more than 5% (around 6.5%). Walter predicts 4-6%.
- Japan: What will the current leader’s successor do in 2023? Walter and Miguel both predict they’ll follow the fed (with a lag).
- Slowdown in China? Miguel suggests it’ll be lower than 5%, Walter and Vivi both agree.
- Energy prices: Where will the European economy be? Miguel and Walter agree we’re already in a recession and that the problem will not be solved overnight.
- Crypto? Yes or no? No to the currency, but yes to the tech behind it says Miguel. Walter agrees that there’s a vast opportunity when it comes to blockchain.
Finally, fielding a question from the floor, the panellists highlighted assets such as great talent, capital efficiency and scalability as AltoVita’s key attributes for its attractiveness to investors.
If you want to discover more about the 3rd annual Alto Awards and information on the sessions, speakers and categories, click here.
You can watch this session on demand here.
