Economy

Economy

By how much will interest rates continue to drop? What is the economic fallout of the coronavirus pandemic? What is our current view on globalization? And what are the consequences for the Netherlands of tomorrow? We will explore these issues here.

Theme
Income
Collection Contents
9 Publications

“When will the rise in the housing market stop?”

Published on: 24 June 2021

Current issues related to economy, (sustainable) investments, pension and income: every week, an expert from APG gives a clear answer to the question of the week. This time: macro-economist and senior strategist Charles Kalshoven, about the forecast of the Dutch housing market.


The prices of owner-occupied homes keep rising. Can that continue to go well? Kalshoven suspects it will. The economist thinks that the most likely (base)scenario is that the housing market is not going to collapse for the time being. The crucial factor in that is the interest rate.

“In the early nineties, we were still seeing percentages around 10% and the average interest rate in that decade was well above 6%. But it will not go up that high this time. We also expect that the rise will be very gradual, while incomes grow along with the economy. But for now, the ECB is keeping interest rates low, which is also reflected in mortgage rates. We think it may take five to ten years before interest rates reach a new, somewhat higher equilibrium. You shouldn’t think about the levels of the 1990s, or the ‘years zero’ - when interest rates averaged about 5 percent. For the homeowner, this is a favorable scenario, because low interest rates make everything more expensive. Stocks and bonds as well as homes.”

 
Surge

In a more unfavorable but also unlikely scenario, a new virus variant rears its head, with accompanying lockdowns. The global economy would be dealt another blow. 

Kalshoven: “In that scenario we would see low interest rates, but also high unemployment and many bankruptcies. Banks may then put the brakes on the provision of mortgages. In that case, a buyers’ market would emerge, with house prices falling. We see no signs of this scenario at the moment. There is no sign that the housing market is cooling.”


Another unfavorable scenario arises when the economy is going too well, strangely enough. In a tight labor market, employers are more likely to meet new wage demands. And that can lead to permanently high inflation. “Central banks would then have to raise interest rates. Borrowing then becomes more expensive and house prices may come under pressure. This happens especially if interest rates rise abruptly, because then the negative interest rate effect dominates the positive effect of rising incomes. But such a wage-price spiral is really still a long way off.”


Anyone who wants to understand the Dutch market for owner-occupied houses cannot ignore the scarce supply of houses. “That supply is not so flexible here. We live in a small country, where you can’t just build more - partly also because of the strict rules. So, if demand increases, the housing market can only respond in one way and that is by raising prices. There are now plans to build 1 million houses by 2030, but I have yet to see it. You can’t live in plans.”


Big bag of money
So, the Dutch are putting more and more money on the table for their homes. As to where that money is coming from, Kalshoven doesn’t have to think long. “Since the early 1990s, interest rates have fallen sharply and, at an average of 1.6 percent (April figure - ed.) they are still historically low.  As a result, buyers can bid more on a house, which drives prices up. For those who don’t own a house yet, it is unfavorable, of course.”


Besides those low interest rates, there are other reasons why we can enter the housing market with such a big bag of borrowed money. “The lending standards have also become more flexible. In the 1980s you could only get a mortgage on the income of the breadwinner. Later, you could also add the income of the part-time working partner - usually the woman. And women have also started working more, so double earners can get higher mortgages.


Buoyant

So it is mainly the persistently scarce supply and the long-term low interest rates that are the foundations of the Dutch housing market. Unless the economy surprises us unpleasantly, those foundations are not going to fall away anytime soon. The market for owner-occupied homes will remain buoyant for the foreseeable future.”

Volgende publicatie:
“Will the computer chip shortage lead to inflation?”

“Will the computer chip shortage lead to inflation?”

Published on: 17 June 2021

Current issues in the fields of economics, (sustainable) investment, pensions and income: every week an APG expert gives a clear answer to the question of the week. This time: chief economist Thijs Knaap, about the economic consequences of the worldwide shortage of computer chips.

 

“The simplest and most immediate effect is that chip machine manufacturers are doing well. As of the end of October, ASML’s share price has now risen by 85 percent, while the AEX has risen ‘only’ 37 percent over that period. But of course, this will not continue. For an investor in chip machine manufacturers, it is helpful to know that the demand for chip machines has some of the same characteristics as the hog cycle. When the demand for pork chops - and therefore the price - is high, hog farmers expand. On the other hand, when that new meat comes onto the market, there is immediate excess, which then brings the price down. The same is true of the market for chip machines. As with pig farmers, it takes a while for new supply to be created. This carries the risk that in a few years there will be a surplus of chip machines and chips. An investor in chip machine manufacturers must therefore know exactly when to stop.”


Bottleneck
The indirect effect of the chip shortage is much greater, Knaap explains. “You can’t think of anything without a chip in it nowadays. The shortage is a well-known bottleneck for car manufacturers, but it is currently affecting the entire supply industry. When it doesn’t get enough chips, it also leads to a shortage of other parts. There is a risk that the Western economies will stall because of this shortage.

Everything is expensive now, not only chips but also oil. If the prices of many components and semi-finished goods go up, in the worst-case scenario a situation similar to the oil shocks of the 1970s will arise. The big question hanging over the market is: will it lead to inflation? That is the fear of many investors. Central banks are now pursuing a loose monetary policy by buying up government bonds and corporate bonds, among other things. This is good for investors, because it pushes up the prices of bonds and shares. But if inflation does occur, central banks lose the excuse to pursue this broad monetary policy. They must then stop buying bonds and in that case the mechanism works the other way round. The chance for stock markets to fall increases and, because the current monetary policy has been pursued since 2008, you could even see a major correction. It may be a bit of a shock to investors.”


Crypto currency
The main cause of the worldwide shortage of chips was the extremely high demand caused by the Covid-19 pandemic. Working from home, and the increased demand for game consoles in particular, played a role in this. Still, according to Knaap, that’s not the whole story. “The demand for chips has also increased due to the increased popularity of crypto currencies. A lot of chips are needed to mine bitcoins. And there is also a lot going on on the supply side. In the early 2020s, many companies in Asia were at a standstill due to lockdowns. You can still see that in the availability of goods, including chips. Plus, Covid-19 made us ask ourselves whether we want to be so dependent on foreign producers for certain products - mouthguards, medical equipment, and so on. The answer is no. There will be more production in Europe and the US again, rather than in China. That’s good for our independence. But it does mean that everything will become more expensive.”

Volgende publicatie:
“My wife would be proud of me because I am enjoying life”

“My wife would be proud of me because I am enjoying life”

Published on: 25 March 2021

How do you deal with work and money for now and later in life? Do you live day by day or do you deliberately plan your financial future? And will you deal with “later in life” yourself, or are you part of a pension fund?

Ruud Vorstermans has been enjoying an excellent pension for the past year and a half. But he would trade it all in if it could bring back his wife.

 

 

Ruud Vorstermans (68)

Profession: retired, worked in automation and as a labor expert

Weekly hours: full-time

Income now: 3,200 Euros net per month

Saving: about 50,000 Euros

Pension arranged? Yes

 

You have been retired since August 2, 2019. How do you like it?

“I did not experience any black hole, even for a second. In fact, I don’t have enough time. I was really ready not to have to do all kinds of things anymore. That is also because, in addition to my work, I was the primary caregiver of my wife for years. She had metastasized breast cancer and died of that in 2018.”

 

That is sad, you must really miss her.

“Yes, my wife brought out the bet in me. We were married for nearly 43 years; what we had was unique. Of course, I miss her, but getting stuck there doesn’t help anything. Four weeks after her cremation, I went to Italy for a month with a camper. I traveled around Toscani, to places where we used to go together every year. A trip down memory lane. I enjoyed it a lot. I am keeping the memory of her alive. On our first wedding anniversary after her death, I got dressed up and went to her favorite restaurant, in a suit and tie and sat down with a picture of her across from me. I really enjoyed doing that and I still do it every year.”

 

How do you spend your days, now that you are no longer working?

“To start with, I walk and ride my bike a lot. I have made it into a daily routine to walk about seven kilometers. I ride an electric bike, because then I can also cycle on vacation in hilly landscapes. And I have given myself a new hobby: doing jigsaw puzzles by Jan van Haasteren. Once in a while, I buy a second-hand puzzle through Market Place or Facebook. If the seller lives within a 20-kilometer radius from where I live in Bergen op Zoom, I go and pick it up on my bike. That gives me a nice goal for my bike trip.”

And what else do you do?

“Sudoku, cross word puzzles, sometimes I write poetry, I have a blog, I cook. My wife was a great cook. When she got sick, I started to use her recipes so that she could give me instructions. I took pictures of everything and made it into a cooking blog. That helped me a lot, especially right before she died. I also do volunteer work for the breast cancer society. My wife did that too, from the day she got breast cancer until she died from it. She was given an honorary membership for that. It soothes me to continue her work. I have a Facebook group for women with metastasized breast cancer. Because I see the positive in everything, I try to give others who don’t do that a different vision. Life doesn’t stop when you’re sick; try to enjoy what you do still have as much as possible.”

 

Don’t you miss your professional life at all?

“No. I enjoyed my work for 46 years, but that was enough.”

 

What kind of work did you do before this?

“In 1975, I started at the former GAK (common administration office, ed), my dad worked at the head office in Amsterdam. I had no idea what I could do with my high school education and my dad said: why don’t you try working here. I got to try out automation and I stayed there for 25 years, and eventually became a manager. But at a certain point I needed a change. In the early nineties, I went back to school and completed 3 higher education courses; a legal one, related to personnel issues, commercial economy and business management. After that I started to work as a labor expert. First at the former UWV and later in health and safety services. That’s what I did until I retired.”

 

Did you do that full-time?

“More than that. I started at six in the morning and didn’t go home until after rush hour. I worked about 12 hours a day. But that really paid off. All those extra hours provided me with a 30 percent bonus and if you achieved a certain target, you could get an extra bonus on top of that. That’s what I used to buy our first camper.”

 

What was your income before you retired?

“My monthly salary was 5,500 Euros gross.”

 

And what is your income now, from your Old Age Pension and your company pension?

“Annually about 55,000 Euros gross, which works out to about 3,200 net a month. In addition to Old Age Pension and my own pension, I also get a survivor’s pension of 87 Euros a month. My wife only worked part-time for about fifteen years.”

 

Are you happy with what you get?

“I realize every day that I have an excellent income. I would trade all the money in the world to get my wife back, but that is not an option, and I’m very happy with this. It is very comfortable. In fact, I am able to save 1,000 Euros every month. My kids, who make a lot more money than I ever did, say: come on, Dad, why don’t you buy a new TV? But why should I? Would it make the programs any better? I spend my money consciously. When I didn’t have a lot of money, I bought all kinds of things, but now that I have money, I’m like Uncle Scrooge.”

When we realized that my wife was not going to get better, we shifted our life into 6th gear

What are your regular expenditures?

“I spend about 1,500 Euros a month on my mortgage, car, taxes, insurances and subscriptions.”

What else do you spend money on?

“I enjoy eating out and going to the theater. These days, during corona times, I sometimes order take-out. And I regularly go on vacation. The camper is ready to go to the Veluwe in two months.”

 

How much do you have in savings?

“About 50,000 Euros. It used to be a lot more, but when we realized that my wife was not going to get better, we shifted our life into 6th gear. Before that, we already did a lot, but instead of going to a concert in De Kuip, for example, we would go to concerts in London, Dusseldorf or Dublin. Just to make it even more memorable. We also took trips to America and Indonesia. In about six years we spent about $100,000 in savings. It was a little scary to my wife sometimes; she would worry that we wouldn’t have enough left for the maintenance of our house. But I wanted us to enjoy our life together while we still could and make memories. And I still enjoy them every day. I think she would be proud of me, because, despite the fact that I miss her, I am enjoying my life to the fullest.”

Volgende publicatie:
"We need a different definition of a good life"

"We need a different definition of a good life"

Published on: 22 February 2021

Two economists on a different form of economic growth

 

Economic growth is beginning to take its toll on people and the environment. Nature has reached its limits and people are rebelling against the unequal distribution of wealth. According to economists Hans Stegeman of Triodos Investment Management and Charles Kalshoven of APG, we need a drastically different way of thinking. "People are getting a different sense of what is valuable."

 

Hans Stegeman is a Chief Investment Strategist at impact investor Triodos Investment Management. He regularly publishes about the boundaries of the current economic system. Charles Kalshoven is a macro-economist and senior strategist at APG. In his columns, he discusses economic developments and how they affect our daily lives.

 

Hans, as an economist, you regularly publish about your belief that the current system of striving for endless economic growth is no longer sustainable. What do you mean by that?

"I'm not against economic growth, but it does have major negative consequences for the planet: climate change, increasing social inequality and the drastic decline in biodiversity. Some say that new technology can solve those problems, but I haven't seen any convincing evidence for that. I sincerely hope technologies such as CO2 capture (capturing CO2 as soon as it is released during combustion and thus preventing it from entering the air, ed.) will help, but I have my doubts. I really think we need to move to a different form of growth. Incidentally, I think economic growth is a limited concept for measuring progress. Growth doesn't always equate to happiness or well-being."

 

Charles: "Classic economic theory sees economic growth as the outcome of capital and labor. But since the industrial revolution, an important factor has been added, namely energy. And so far, this has mainly been fossil energy. This comes at a price, in the form of damage to people and planet. But it's not or insufficiently passed on in the price of products."

 

Still, poor countries need economic growth to get out of poverty.

Charles: "That's a dilemma. If you want to fight poverty, you need economic growth. And that in turn leads to a greater demand for energy. On the other hand, you want to limit the use of energy to combat climate change. So we have to look for a different kind of growth that requires less energy and makes more use of renewable energy. We need to handle raw materials more carefully and reuse them; we have to transport less stuff and people all over the world. What helps is that economic development usually leads to smaller families and thus lower population growth. And that benefits the climate."

 

Hans: "The boundaries of our ecosystem are rock-hard. There's only one planet earth. That can't be changed. We'll have to find a way to create prosperity for everyone within these limits. Prosperity is very unevenly distributed. The richest 10% of the world - and that includes most of the Dutch - are buying more and more stuff, without really being happy about it. While at the same time, there are billions of people who are starving and barely have a roof over their heads. This should be fairer."

 

How do we get such a sustainable, fair form of economic growth off the ground?

Hans: "We have to think differently in the West. We live in a competitive world where everyone wants to race to the top. With an expensive watch or designer clothing as a status symbol. But do they really make us happy? Or are they values such as togetherness and being satisfied with what you have? To achieve such a change in thinking, all parties involved must cooperate, the government, businesses, consumers and investors. You have to play chess on all boards. And each game starts from a different point. That's very complex."

 

Charles: "We need a different definition of 'a good life'. Currently, it's mass consumption. And status. But the things that bring status can change. The younger generation no longer thinks it's 'cool' to work 80 hours a week, and attaches importance to other things than making a lot of money. The government also has a role to play in this. It has to create a remote prospect, something we all want to aim for. And then stimulate this with laws and regulations. For example, by including the costs of CO2 emissions in the prices of products."

    Hans Stegeman (left) and Charles Kalshoven

 

Has 'corona' changed our way of thinking? Has it brought a sustainable economy closer?

Hans: "People are getting a different sense of what is valuable. For example, I asked if this interview could start 15 minutes earlier, because I wanted to pick up my son from school on the sleigh. What I've learned is that people are motivated by positive rewards, not by the deterrent effect of a negative outlook. If we want to change something in our economic thinking, we achieve the most by inspiring with positive examples. In particular, indicate what is possible and how this can contribute to our well-being."

 

Charles: "I've noticed that corona has had an influence on politics. In Europe, corona has really given a boost to green initiatives, such as the Green Deal (an action plan to make the economy of the European Union sustainable, ed.). The attitude of governments has also shifted from austerity and financial discipline to investing in society and supporting affected people and businesses. Increasing public debt is no longer as taboo as before.

 

Hans: "The virus has made us more aware of our relationship with nature. I do think that the government has missed an enormous opportunity by not attaching any conditions to support for businesses, such as Schiphol. This would have been a great opportunity to accelerate the sustainability of Schiphol. Maintaining something that isn't sustainable is actually a waste of money."

 

What role can pension funds and investors play in making the economy more sustainable?

Charles: "We play an important role with the money we manage on behalf of our pension funds. And that goes beyond excluding producers of bad products. We talk to businesses. For example, about how they can make the switch from fossil to sustainable energy. Or because we think they're doing very well and we want to share their example with other businesses we invest in. One example is Arcadis, which started to report on how they contribute to the Sustainable Development Goals, partly through discussions with us. The challenge is that there's still far too little information about the sustainability of businesses and projects. We therefore press businesses about it and contribute to the development of sustainability standards, so that as many investors as possible speak the same language."

 

Hans: "As an investor, you need to know where you want to go. And contribute to that. That goes much further than a CO2 footprint that's lower than the market. The market as a whole is a reflection of the world and the world is far from sustainable. At the start of our investment process, we determine which positive developments we want to contribute to and that's what we invest in. Examples include micro-finance, solar panels or online platforms where you can buy food products directly from the farmer. Things like nuclear weapons and fossil energy are not part of that."

 

Triodos Investment Management has customers who consciously opt for a 'green' investor; APG serves pension funds which participants must be affiliated to. Does that make a difference in the way you can implement responsible investment?

Hans: "Triodos once started excluding certain investments on ethical grounds, and that has evolved towards a focus on positive impact. APG naturally has to deal with the expectations of participants in the pension funds for which it works. APG is given a specific mandate from the pension funds and this involves a specific policy. But it could be stricter, as far as I'm concerned. There has to be a lower limit. If the core of a business isn't sustainable and improvement discussions come to nothing, you have to leave. APG could also explain in more specific terms what positive impact it wants to achieve."

 

Charles: "We believe in the power of engagement (improvement discussions with businesses, ed.). If you sell all fossil energy companies, it won't make the world any greener. By talking to them, you can bring about positive changes. Companies such as Shell and BP understand very well that we have to move to a different form of energy. There's a lot of knowledge and money in the energy sector. We must take advantage of that. With assets of over € 500 billion, we can also take relatively large stakes in companies, which allows us to exert influence. But we also sell a company if engagement doesn't work in the end."

 

Hans: "There are fossil companies that are switching to green energy. Ørsted from Denmark, for instance. But the real change isn't going to come from the big oil companies. Most still want to milk their oil supplies for as long as possible. Rather, change comes from small businesses with smart, new ideas. We take relatively large stakes in these types of start-ups and non-listed companies. This allows us to exert influence right from the start."

 

Is investing in a sustainable economy at the expense of the returns you can achieve?

Hans: "Not in the longer term. Of course, in a year of rising oil prices, we won't benefit from it. But we won't be bothered by this in the longer term. Also, sustainability information provides additional insight into a business. It's a persistent myth that sustainability comes at the expense of returns. There are numerous studies that indicate that this is not the case."

 

Charles: "I agree. Responsible investing not only tackles financial risks, but also other types of risks, such as the risk that your real estate properties will flood due to climate change. If you know exactly where this is happening and take preparatory measures, you actually reduce the risk of your investments. Unsustainable investment, now, that's a risk."

Volgende publicatie:
APG advocates ‘just transition’ in the automotive industry

APG advocates ‘just transition’ in the automotive industry

Published on: 16 November 2020

Corporate Human Rights benchmark includes sector for the first time

 

The shift to a low-carbon business model has taken center stage in the automobile sector, but the implications for workers and communities are often overlooked. That is one of the findings of the Corporate Human Rights Benchmark (CHRB) published today, of which APG is a co-founder. On behalf of our pension fund clients, we advocate a ‘just transition’ and urge car manufacturers to invest in employee resilience and prevent human rights risk in the supply chain.

According to the CHRB, automotive companies do not yet sufficiently demonstrate that they work with suppliers or set expectations to prevent human rights issues. This is particularly relevant given that the sector relies on supply chains with numerous areas of risks for human rights violations. It is the first time that the automotive sector is included in the benchmark.

Increased awareness

Anna Pot, Head of Responsible Investments Americas at APG Asset Management US, welcomes the inclusion of more companies and sectors in the CHRB. “The results suggest that the implementation of core human rights principles in still weak in the automotive sector. But experience shows that publication of the benchmark can have a positive effect on corporate awareness and overtime lead to improved human rights performance. The ICT sector, for instance, was added last year and now the average score of these companies has substantially improved.”

Although the automotive sector is newly added to the CHRB, the sector is not ‘new’ to APG in terms of human rights engagement. Pot: “On behalf of our clients, we have until the end of 2019 been engaging with thirteen large car producers to improve labor conditions and tackle child labor in cobalt mining. Cobalt is an indispensable raw material for batteries in electric vehicles. We have made progress. For instance, Renault initiated inspections of the cobalt smelters it does business with, and Daimler has created a program to support local communities.”

Insight in human rights performance

APG, on behalf of its pension fund clients, co-founded the CRHB in 2017 and actively takes part in the development of the benchmark. “We contribute to this since we, as stewards of capital, are keen to improve corporate human rights performance,” Pot explains. “The CHRB provides good-quality data about an increasing number of companies which we, as a responsible long-term investor, need to make investment decisions and engage with investees.”

The CHRB benchmarks the human rights performance of companies in the apparel, agriculture, extractives, ICT and automotive sectors. Companies are assessed on 100 indicators based on the United Nations Guiding Principles (UNGP), using publicly available data on issues such as labor conditions, workers’ safety and living wage. This year however, the full assessment was only made for the automotive sector; the other sectors were assessed on a smaller subset of indicators. 

‘Just transition’

The automotive companies included in the CHRB were also assessed by the Climate and Energy Benchmark. Interestingly, some car manufacturers that demonstrated action on climate issues – such as carbon reduction targets – disclosed little information on human rights (and vice versa). “This suggests that the sector considers climate and human rights issues separately, despite them being increasingly recognized as interconnected,” says Pot.

The emission-intensive automotive sector faces the challenge of shifting to a zero-carbon economy while upholding the principles of a ‘just transition’. Pot: “That is why we are engaging with car producers on the impact of this transition on the workforce and local communities. Automation, industry transformation and digitalization could result in the loss of thousands of car manufacturing jobs. We encourage producers to make their workforce part of the transition by offering training and development opportunities.”

With regard to the other sectors, the CHRB results show an overall improvement in the scores across indicators, especially on public commitments to protect human rights and grievance mechanisms. The lower areas of improvement relate to human rights due diligence. This is the process a business is expected to follow to identify, assesses and act on human rights risks. Pot: “A growing number of companies are getting better at the fundamentals, but there is still ample room for improvement.”

Volgende publicatie:
What the American elections (could) mean for our retirement

Trump or Biden?

Published on: 2 November 2020

 

What the American elections (could) mean for our retirement

 

Like a pebble in a pond, events on the other side of the world affect our economy. This is especially true for developments in the US, still the most powerful nation on earth. Will the next president also determine the coverage ratio of Dutch pensions?

 

The global economy is a cohesive whole in which changes in one country can have a major impact on another. Global stock markets often react to events in the US and to statements made by US politicians. “It is a very important country from many economic perspectives,” Rabobank’s chief economist Menno Middeldorp recently said on BNR News Radio. “America is one of the largest economies in the world. In addition, we have more of our investments and pension funds in America than in any other country.”

 

Eyes and ears

When something changes in the US - for example due to elections – then, as an investor, you can notice it, confirms Thijs Knaap, Senior Investment Strategist at APG Asset Management. “Even if you haven't invested one dollar in the US. Even if you buy a purely Dutch company, such as Philips or Aegon, you still have to deal with the fact that these companies are active all over the world, including - for a substantial part - in the US”.  As a global investor, APG is active in the US, of course. Rajiv Mallick, Head of Risk Management, US, says that APG-US manages $108.3 billion (September 2020) for APG and its Dutch clients. From New York, he says: “Our pension funds and their participants benefit from extensive local investment expertise”. He describes the office as the “eyes and ears” of APG in the US.

 

Shocks and trends

The Dutch financial interests in the US are substantial. However, creating a link between the election results and the consequences for our economy - and thus our pensions - is not that easy, according to Knaap.  “Between the elections and the Dutch pensioners there is quite a bit of static on the line. Although it sometimes seems as if politicians have power over the economy, their influence is actually limited. A lot depends on economic shocks and trends”. Nevertheless, presidential elections do have an effect. Knaap remembers that the (unexpected) victory of Donald Trump in 2016 led to a rise in US interest rates. Investors expected the government to borrow more and that this would lead to inflation. The first thing happened, the second did not. Because of this expectation, the US 10-year interest rate at the end of 2016 was more than half a percentage point higher than just before the elections. Because interest rates respond to each other globally, the funding ratio of Dutch pension funds also increased as a result. This enabled many funds to avoid a discount.”


Healthy growth

Given the interests at stake, investors are closely following the U.S. elections.  Mallick is too. “We are carefully monitoring potential policy changes in several sectors, including healthcare, energy, finance, education and taxation. After all, one president is not the same as the other. An example: when Trump won the previous elections, he reopened the coal mines that his predecessor Barack Obama had just closed for environmental reasons. Heavy industry benefited. Joe Biden, as a Democrat, could undo that.” What Knaap pays particular attention to is the influence of America on global growth, and on international relations. “Trump has reduced corporate regulation and lowered taxes. At least in the short term, this is good for growth and for the profits that are ultimately shared with investors. In the longer term, however, you may wonder if we don’t need the rules for preserving our environment just as much for healthy growth.”           

 

America first

If Trump gets to stay, it is very likely that he will continue to implement the protectionist measures based on his “America first” policy. This could have consequences for the turnover and shares of Dutch companies, whose access to the large American market would then be impeded. World trade would also suffer as a result. The stock exchanges virtually always react negatively to such impediments.

Knaap is seeing that America has played a much smaller role in many international contexts under Trump in recent years, while tensions with China have increased. This incapacitates institutions like the WTO (World Trade Organization). “For the upcoming elections it seems to be a choice between a continuation of this policy and a - partial - return to the old situation.”

 

Blue wave

More attention is being paid, however, to a “blue wave”: a victory for Biden, with a majority for the Democrats, the “blues”, in Congress. Investment Manager Simon Wiersma gives a prediction on the ING website that the Democratic support and stimulus packages could lead to a broad stock market trend of investors who want to anticipate economic recovery. “No matter who wins, the financial market will be affected by the elections either way.”

Research conducted by the U.S. Bank over the past 90 years shows that the stock market rises by an average of 6.5 percent in the year after a president is re-elected, while growth with a new president is only 5 percent. But the bank also concludes that equities do much better under a Democratic president than a Republican in the longer run.

 

2 Scenarios

Finally, we ask strategist Thijs Knaap to outline 2 scenarios: what are the financial prospects under 4 years of Democrats and under 4 years of Republicans?

 

Biden

It seems that the Democrats are looking for more international cooperation again. The inequality, which has continued to increase under Trump - although the trend has been going on for much longer - could possibly be reversed by Biden's plans for a higher minimum wage, among other things. Investors seem to think that this could boost spending in the U.S., and thus growth. Because the return on investments must ultimately always come from economic growth, that could be good for our participants.”  

 

Trump

The Republicans seem to be planning to build a different model than the one we entered the century with. That model is more bilateral (America trades with countries, not as part of coalitions) and transactional (“quid pro quo”); not based on rules. A consequence of that model, at least under Trump, is unpredictability of policy. In general, investors are not very keen on this, because it discourages investment”.

Volgende publicatie:
"Our ability to change is considerably larger than we thought"

"Our ability to change is considerably larger than we thought"

Published on: 12 June 2020

How do three top managers in Dutch business deal with the company- and personal challenges that the global corona crisis poses for themselves and the organization?

 

What insights has the crisis yielded so far, what does Activity Based Working mean for the organization and what will these managers take into account in the much-discussed 'new normal'?

 

These questions were at the heart of a virtual roundtable on leadership in crisis time with directors from different sectors. Board member Annette Mosman was one of them.

 

Read the full article (Dutch) in Management Scope.

 

Photography: ABN AMRO / Maartje Geels / APG

Volgende publicatie:
APG, NPS and Swiss Life acquire Portuguese toll road operator Brisa

APG, NPS and Swiss Life acquire Portuguese toll road operator Brisa

Published on: 28 April 2020

APG, the National Pension Service of Korea (NPS) and Swiss Life Asset Managers have entered into an agreement to acquire an 81.1% majority interests in Brisa, a leading European toll road platform. The sellers value the company at more than €3 billion.

Brisa holds a total of 21 motorways in Portugal with a total length of over 1,500 km. The network covers the fundamental axis of the Portuguese road system, with over 7.5 million customers driving on the roads per year.

 

Jan-Willem Ruisbroek, Head of Global Infrastructure Investment Strategy at APG: “This investment in Brisa, on behalf of our pension fund client ABP, matches our strategy to deliver stable, long term returns in prime infrastructure assets worldwide. The company benefits from a high quality and well diversified road network and is a key contribution of economic development to Portugal. We now look forward to working with José de Mello and our consortium partners to facilitate the continued delivery of high-quality service for motorists and commuters and continue innovating in the road and mobility services segment.”

APG makes this investment on behalf of its pension fund clients ABP and APG PPF.

Closing of the transaction is subject to approval by the relevant regulators, which should occur during the third quarter of this year.

 

Read the press release here

Volgende publicatie:
APG contribution to Netspar research on housing, care and pension

APG contribution to Netspar research on housing, care and pension

Published on: 1 February 2016

The theme of housing, care and retirement is high on the agenda of the ESC and various ministries. It is also subject within the broad social dialogue pension. From the point of financial planning for the individual household did the Netspar project "Housing and Retirement 'research into better alignment of the three domains.

 

Roadmap integrated approach

The government is taking in favor of a combination of more customization and choice, to better meet the characteristics and preferences of participants. From the point of financial planning for the individual household did the Netspar project group "Housing and Retirement 'research into better alignment of the three domains. On that appeared in early February 2016 "The roadmap to a more integrated approach to housing, care and retirement.

 

Big impact

The connection between housing, care and pension may, by the great impact it has on the financial life planning, relevant to many people, whether they are building up pension, have their own home or in need of additional (elderly) care. Housing takes the connection to retire somewhere else than care. Housing has as retirement savings a role in capital formation /, while care is more an insurance character. Nevertheless, there are relevant links between care and retirement living, think live at home longer by the elderly or the use of a one-off retirement for specific uninsured care needs. The report describes the trends, problems and solutions.