Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Just before we got started,
Speaker 1: one thing I want to mention to you. You may
Speaker 1: remember that last year we recorded some of our podcasts
Speaker 1: at Pama House in Edinburgh as part of the Edinburgh Fringe.
Speaker 1: We are doing that again this year. The show is
Speaker 1: called The Butcher, The Brewer, the Baker and marinsum set Web.
Speaker 1: I will be discussing all sorts of exciting political and
Speaker 1: economic things with a variety of fascinating guests. Tickets are
Speaker 1: on sale now at the Fringe website. It's on the
Speaker 1: twenty second, twenty third and twenty fourth of August and
Speaker 1: we very much hope that we will see you there.
Speaker 1: Welcome to Merindrog's Money the podcast and with people who
Speaker 1: know the markets explain the markets. I'm merriornsum set Web.
Speaker 1: Now there is a growing sense among global investors that
Speaker 1: it is time to start looking outside the US for
Speaker 1: your equity investments at least, and we have talked about
Speaker 1: this a lot on the show. We're calling it, as
Speaker 1: our others, the Great rotation where capital that once flowed
Speaker 1: almost entirely to the US and we've looked at the
Speaker 1: numbers on that over the last few months is now
Speaker 1: beginning to move elsewhere. In particular, we've been talking about Europe.
Speaker 1: The dollar is softening, valuations in Europe achieved, the geopolitical
Speaker 1: landscape is all over the place. It no longer makes
Speaker 1: sense to ignore the markets in Europe. Institutions are responding.
Speaker 1: There is a lot going on, and we are going
Speaker 1: to talk about some of the things that are happening
Speaker 1: in markets globally and particularly in Europe with this week's
Speaker 1: guest to is Stefan Boujna, who is the CEO of
Speaker 1: Urinex and the chairman of its managing board. Welcome, Stephan,
Speaker 1: Thank you so much for joining us today.
Speaker 2: Thank you for having me.
Speaker 1: Before we start talking about markets, tell us a little
Speaker 1: bit about Urinex, right, it's the biggest exchange operator in Europe.
Speaker 1: You've been through a series of acquisitions, you are and
Speaker 1: quite a lot of stock markets. Now, tell us a
Speaker 1: little bit about what you do.
Speaker 2: While Yournax is a company that was funded twenty five
Speaker 2: years ago that went through all sorts of bumping times,
Speaker 2: was reipod after seven complicated years under the ownership of
Speaker 2: New York's Regent. It was reipled in twenty fourteen, for
Speaker 2: a market cap of one point four billion euro. Today's
Speaker 2: a company with the market cap between fifteen and sixteen
Speaker 2: billion euro, so it's much larger. And this success is
Speaker 2: the outcome of a significant work in terms of consolidating
Speaker 2: a market infrastructure culture. So today we consolidate and we
Speaker 2: operate with a single liquidity pool, a single of the book,
Speaker 2: a single technology platform, the market infrastructures of Paris, Amsterdam, Brussels, Lisbon.
Speaker 2: And in twenty seventeen eighteen we both the Irish trapic change.
Speaker 2: In twenty nineteen we bought cost the birth VPS Way.
Speaker 2: In twenty twenty we both the VP securities the CSDS
Speaker 2: of Copenhagen. In twenty twenty and twenty one we both
Speaker 2: the box set in a group in Milan. And we
Speaker 2: are in the process or in a possible acquisition of
Speaker 2: the Elginate Change of the ten Stocking Change. So a
Speaker 2: significant part of our business is about consolidating marketing infrastruction
Speaker 2: in Europe. It's not what we do only, but this
Speaker 2: is very important and UK audience, it's important to bear
Speaker 2: in mind that this single liquidity pool in Europe is
Speaker 2: now twice a larger approximately than the London solid change
Speaker 2: every day. We trade around ten to twelve billion euro
Speaker 2: of on the single integrated market of URNX, and the
Speaker 2: aggregate market capitalization of the company is listed on the
Speaker 2: single market of uron X is around seven billion euro,
Speaker 2: which is approximately towards the size of the London so
Speaker 2: Change get market capitalization. So this is for equities, for sure,
Speaker 2: the leading platform in Europe. Obviously, alongside that, we are
Speaker 2: very active in soft commodities now, agricultural commands, in inequity trading,
Speaker 2: in fixed income trading in particular in sovereign depth trading,
Speaker 2: but also in poex trading in London, Singapore and New
Speaker 2: York and and and for sure in also the diversified
Speaker 2: services corporate solutions culture. So historically our change business a
Speaker 2: single integrated stocking consiness, the largest player inequities in Europe
Speaker 2: and the diversity sided business.
Speaker 1: Now, okay, brilliant. Well, obviously a lot of growth under
Speaker 1: your tenure. I hope you have shares.
Speaker 2: I have some shares, but it's it's a litt state company,
Speaker 2: so I make revenue, I don't make capital, of course.
Speaker 1: Okay, Well, I enjoyed that talk about how everything is
Speaker 1: much bigger than London. But of course, we must bear
Speaker 1: in mind that if you bring together the markets of
Speaker 1: several large economies, that that market will definitely be bigger
Speaker 1: than the market of a single economy. And I will
Speaker 1: just point out that if you look at the Global
Speaker 1: Financial Centers Index, London still always comes at second New York, London,
Speaker 1: Hong Kong, and the first financial center that even makes
Speaker 1: it onto that list as Frankfurt at number eleven. So
Speaker 1: you know we still have something going for us here.
Speaker 2: No, no, that's for sure. And I love your country
Speaker 2: and we have more than one hundred people working there
Speaker 2: and that we have more employees to date and before Brexit.
Speaker 2: My point is just to highlight the fact that when
Speaker 2: it comes to equity market, you need to compare Apple
Speaker 2: with apples, and you have to compare the London section
Speaker 2: equity market with the alternative, which is not a location
Speaker 2: in a cellar collection of locations, but which is a
Speaker 2: single inte greeted market. That's why we have much more
Speaker 2: international ieos and much more IPOs than anywhere else in
Speaker 2: Europe because we operate a single integrated European market and
Speaker 2: size that matter. And when it comes to liquidity, all right.
Speaker 1: I'll give you that so you will have oversight then
Speaker 1: of pretty much everything happening across European extu markets. And
Speaker 1: so let's talk about the extent to which you are
Speaker 1: seeing this great rotation capital leaving the US for European markets.
Speaker 2: I don't want to repeat things that are probably well
Speaker 2: known by your audience, but there was a trend that
Speaker 2: started at the end of last year, before the Trump moment,
Speaker 2: which was all about the US is expensive and Europe
Speaker 2: is cheap. The concept of evaluation multiples getting extremely expensive
Speaker 2: in the US and valuation multiples in Europe not being
Speaker 2: justified by the respect of the company. That was part
Speaker 2: of a process that initially DIDs some form of relocational
Speaker 2: asset before January then, so that that's what we could
Speaker 2: characterize as a votation. What has happened since January is different.
Speaker 2: This is a massive global reallocation of trust. It's not
Speaker 2: a votation. It's a global reallocation of First because slowly
Speaker 2: the world the investors realize that the US as we
Speaker 2: knew it is not recognizable. And that's why First is
Speaker 2: being relocated across the globe across as a classes. By
Speaker 2: the way, uh, everyone talks about equity, but what is
Speaker 2: happening on the sovereign debt world is absolutely fascinating. So
Speaker 2: what is happening on the equity sign as mine? The
Speaker 2: perception is that weeks after weeks, the US are accumulating
Speaker 2: all the features of what used to be called when
Speaker 2: we were young and slim an emerging market. The US
Speaker 2: is becoming an emergent market in every respect. The role
Speaker 2: of law is dislocating, and that's one feature of an
Speaker 2: emergent market. Usually, the volatility of decision making of the
Speaker 2: leadership is there. The leadership is appointing very strange people
Speaker 2: in very senior positions. The conceptual bedrock of decisions is debatable.
Speaker 2: You don't recognize whether they do things that are good
Speaker 2: for them or why what's the need for themselves? So
Speaker 2: the lack of abviouse rationality behind decisions is also one
Speaker 2: feature of an emergent market. And what is fascinating is
Speaker 2: is the fear in their eyes, the fact that they
Speaker 2: feed intimidated and they don't want to confront the leadership
Speaker 2: because there is a level of brutality in interactions with
Speaker 2: the leadership. That is that is again one specificity of
Speaker 2: an emerging market. So it's okay to do business in
Speaker 2: the emerging market. It's fine. You just need a higher return,
Speaker 2: quicker returns, and slower evaluations. And this is what is happening.
Speaker 2: So behind the global reallocation of trust, there is an
Speaker 2: element of okay, we understand the world, the dis environment
Speaker 2: precisely than before. There is a much stronger level of
Speaker 2: uncertainty and unpredictability, So I need lower valuations.
Speaker 1: But nonetheless, the usxrely market hits new high after new high.
Speaker 2: No, but I'm telling you what is happening. As you know,
Speaker 2: the US valuation requires more than everywhere else, a clean
Speaker 2: distinction between the Magnificent seven and the others. And that's
Speaker 2: the dominant test that needs to be applied before making
Speaker 2: across the line and comments about the level of markets.
Speaker 2: What I'm telling you is that behind the recovery, the
Speaker 2: stronger recovery of Europe markets in part continental europeen markets
Speaker 2: versus the US, there is a number of US companies
Speaker 2: who tell us we can't do proper valuation of US
Speaker 2: industrial companies because we don't know how to block the
Speaker 2: basic metrics. What is going to be the inflation, what
Speaker 2: is going to be the interest rates? What is going
Speaker 2: to be the accent rate. What is going to be
Speaker 2: the cost of inputs, What is going to be the
Speaker 2: probability the visibility of export for any industrial company. Many
Speaker 2: of those factors are open in the air because of
Speaker 2: the volatility of the current type war. So this is
Speaker 2: there now on the dead side, Kelly. You can't add
Speaker 2: so much depth and so much deficit without some form
Speaker 2: of reassessment of the pricing of the yield. And that's
Speaker 2: what the rest of the world is doing. So we
Speaker 2: are not an institution where the world is massively shortening
Speaker 2: us that to massively belong on your pen equity or
Speaker 2: in Europeen debt. We are in a world where people
Speaker 2: don't reinvest, don't all out when they redeals an asset,
Speaker 2: the answers switching quietly, so that that's what is behind
Speaker 2: the great votation. A part of it is sustainable, basically
Speaker 2: the real location of multiples, I mean career. The current
Speaker 2: valuation of the US market remains of a valued in
Speaker 2: the eyes of many investors. The part is just going
Speaker 2: to stabilize when the dust settlers in the US. Even
Speaker 2: when if and when I think it's not a market correction,
Speaker 2: it's not even the vrotational asset. It's a fundamentality allocation
Speaker 2: of trust across the planet. I was in in Asia
Speaker 2: a few days ago and in the Gulf in a
Speaker 2: few weeks ago, a few months ago, and people aren't
Speaker 2: telling us show us assets in Europe because we want
Speaker 2: to diversify your way from US, because we have been
Speaker 2: used to be too consultated on US assets. I've seen
Speaker 2: some people in Asia telling me, okay, we were exposed
Speaker 2: some larger funds were we had a strategical location of
Speaker 2: five percent to Europe only we want to move to
Speaker 2: ten percent. Well, ten percent is not a lot at
Speaker 2: global level, but it's just the double of what they
Speaker 2: were allocating to Europe.
Speaker 1: It's interesting, though, isn't it that from the point of
Speaker 1: view of non EU, non US investors, you could say
Speaker 1: that the EU, and certainly independent in different countries inside
Speaker 1: the EU, are remarkably politically volatile as well. And I
Speaker 1: mean that situation in France is appalling on a par
Speaker 1: with Americas. So it's it's more the level of trust
Speaker 1: in the US come down to meet the level of
Speaker 1: trust in European as it's rather than anything else.
Speaker 2: One guy told me Europe today is perceived as a
Speaker 2: large Switzerland. It's not like everyone is getting fascinated about
Speaker 2: the growth prospects of the European economies or the political
Speaker 2: stability of the pot The points you are making about
Speaker 2: the political fragmentation in the French landscape is there. It's
Speaker 2: just the feeling that the institutional framework is stable and predictable.
Speaker 2: You know where you are, you know how to make assumptions,
Speaker 2: and you know the bandwidth on things where your business
Speaker 2: is going to be operated. So the amount of uncertainty
Speaker 2: is much more reduced, so you have probably a lower
Speaker 2: yield but much lower risk, hands a better return than
Speaker 2: a situation with a yield that can be strong, but
Speaker 2: the significant volatility and suddenly so forth certain in lessers
Speaker 2: and that that leads to other decisions that are happening
Speaker 2: below the screen. I've met the CEO of a larger
Speaker 2: European company and telling me that it's rapet creating physical
Speaker 2: assets from from the US that were ac custodied by
Speaker 2: a large custodians. They don't want to run the risk
Speaker 2: of weaponization of assets under custody in the US.
Speaker 1: So when you when you say physical classes in the
Speaker 1: ussuming gold.
Speaker 2: Not necessarily gold. Gold is a very important debate. And
Speaker 2: you know you have been you've been made aware of
Speaker 2: the of the rumors about some central banks in the
Speaker 2: European Union decided to attatriate some gold and as you know,
Speaker 2: they're the public on those decisions, but they did not
Speaker 2: deny the rumor. But I'm talking about security shares or instruments,
Speaker 2: all sort of that can be custodian uh and by
Speaker 2: by US under custody of some US institutions that are
Speaker 2: being repatriated. So these things happen. So that's why I
Speaker 2: think it's very scary, is that people are doing things
Speaker 2: below the rather are and these things are happening. A
Speaker 2: part of it cornsets into iiO evaluation. A part of
Speaker 2: the iiO evaluation in Europe in relative terms is driven
Speaker 2: by a renewed appetite in relative terms visa bit the US,
Speaker 2: and as you rightly pointed out, in relative terms via
Speaker 2: the US. It's not like all of a sudden the
Speaker 2: growth prospects of Europe are appearing significant Clusier. It's just
Speaker 2: that Europe appears much much more predictable. Okay.
Speaker 1: The other part of this great rotation of the best
Speaker 1: ti best to talk about when we'll come back to
Speaker 1: maybe to growth in Europe. But the other part of
Speaker 1: the Great rotation is also the patriotic side of it. So,
Speaker 1: for example, you've probably been following the debate in the
Speaker 1: UK about the extent to which pension funds, for example,
Speaker 1: should be obliged to invest in UK assets, and the
Speaker 1: extent to which people who have money inside a tax
Speaker 1: wrapper in the UK and ISO or whatever should be
Speaker 1: obliged to invest in UK assets. And certainly this is
Speaker 1: something that has come up in France, this idea that
Speaker 1: it's ridiculous to be sending your productive capital of European
Speaker 1: countries to be invested in the US, and the sense
Speaker 1: that there should be some way to actively encourage, possibly
Speaker 1: even mandate the investing of European saves money inside the
Speaker 1: European Union as opposed to outside.
Speaker 2: One preliminary comment and then the fundamental answer diogression. The
Speaker 2: preliminary comment is that it's very different to advise the
Speaker 2: issue in the UK and in Europe because within the
Speaker 2: European Union you can build relatively diversified portfolios. In a
Speaker 2: block of four hundred and fifty million people. With the
Speaker 2: list the second largest economy in the planet, you can
Speaker 2: be the diversified portfolio across Europe. Since we cannot have
Speaker 2: it's forbidden by your open law, any forced allocation by
Speaker 2: country in any way whatsoever, then it could make sense
Speaker 2: at some point of time to consider incentives to invest
Speaker 2: some assets within the European Union without harming reasonable diversification.
Speaker 2: I think it is more complicated in the UK, just
Speaker 2: because the UK economy is smaller, and therefore any force
Speaker 2: or incentivized allocation within the UK economy which would lead
Speaker 2: to a disproportionate concentration that you don't get when you
Speaker 2: can invest Acrossure. So that's a metastasis of Brexit or
Speaker 2: contradiction of brexit. You can take back control, but the
Speaker 2: more you reduce the size of the village, the more
Speaker 2: you end up into force incestuous relationships because the pool
Speaker 2: of assets is too small.
Speaker 1: I don't think expectations ever to ask anyone for one
Speaker 1: hundred percent of par asses and a lot better take
Speaker 1: the diversification argument.
Speaker 2: No, but that's why the debate is slightly different. But
Speaker 2: now because fundamentally more it's true that both in the
Speaker 2: UK and in the US, we are generating significant savings.
Speaker 2: More savings in the European continent than in the UK.
Speaker 2: You guys in the U kid have dept more than
Speaker 2: we do in the incontinent. So it's about between thirteen
Speaker 2: and eighteen percent of this posible income which is saved
Speaker 2: in the in the Europe. I don't know what other
Speaker 2: numbers in the UK should probably slightly round that or
Speaker 2: maybe slightly lower. And most of these savings is exported
Speaker 2: in the form of investment in the US. Up until there,
Speaker 2: it makes perfect sense because the best thing you could
Speaker 2: do with your savings was to allocate a part of
Speaker 2: your savings to projects, whether it's growth, and for the
Speaker 2: past ten years it was growth in the US, so
Speaker 2: it was making perfect sense in the search of neal
Speaker 2: to invest in the US. What became complicated is that
Speaker 2: when you combine the export of Europe and savings with
Speaker 2: the strength of the US equity markets, you get to
Speaker 2: the formation of huge in situations. I mean, very often
Speaker 2: people associate the success of the US economy to the innovation,
Speaker 2: the technology, energy, etc. And that's true, paliwel to an
Speaker 2: entrepreneurship and innovation. Technology is one leg of the US success.
Speaker 2: The other leg that nobody talks about enough is the
Speaker 2: fact that the success of the US economy is driven
Speaker 2: by the size of their pension savings. For everyone in
Speaker 2: the US, if you want to have some income when
Speaker 2: you are old, you need to buy shares when you
Speaker 2: are young. In Europe, when you want to have some
Speaker 2: income when you are old, you just need to hope
Speaker 2: that people around you continue to pay taxes and social contributions.
Speaker 2: So you get to a situation with some nuances in
Speaker 2: the UK, but with the strength of your corporate pension
Speaker 2: well and.
Speaker 1: Also our order and Roman system, so you know, we
Speaker 1: have a new vast sum of capital rising up in
Speaker 1: our auto.
Speaker 2: Large by and large many difference between a location of
Speaker 2: savings in the US and in the in Europe is
Speaker 2: the dominance of pension savings in the US that feeds
Speaker 2: long term defered liquidity instruments that are equity, and that
Speaker 2: what has created large companies like like Clarge, players like
Speaker 2: Black Hog, Van Guard, Felity, etcetera. So those guys then
Speaker 2: themselves work on diversification or strategical location and look at Europe.
Speaker 2: So the import they manage a mixed pool of European
Speaker 2: savings exported to the US. Local savings collected from the
Speaker 2: US auseholds and this combined pool is partly invested in Europe.
Speaker 2: So that's why we have this paraducts of the US
Speaker 2: players bumping a lot of savings from Europe and exposing
Speaker 2: a lot of equity within European company.
Speaker 1: Yeah, and then you have European savers savings captain cash.
Speaker 2: Absolutely because we don't have the incentives to prepare for
Speaker 2: retirement with instruments that produce a better yield than cash
Speaker 2: and then which go with defer equidity that you can
Speaker 2: don't have with cash.
Speaker 1: So if you wanted to incentivize European savers to invest,
Speaker 1: you should slash the size of the welfare states significantly
Speaker 1: so that faced into it.
Speaker 2: I would not go that far. That's the intellectually pure conclusion,
Speaker 2: but clearly you should have an incentive set of incentives
Speaker 2: in some country have it. And by the way, because
Speaker 2: the European Union, I mean, these pension arrangements are our
Speaker 2: member states level. I mean the UK when it was
Speaker 2: part of the European Union as at the moret soficing
Speaker 2: indeendon pension schemes many.
Speaker 1: Cos we also had one of the highest highest rates
Speaker 1: of pension savings to GDP, which some people suggested there
Speaker 1: was a jolly good reason to live in a hurry.
Speaker 2: My point is that it was not incompatible with being
Speaker 2: member of the European Union. So since you left, we
Speaker 2: have other countries with a significant share of GDP in
Speaker 2: pensions funds, like Sweden, Netherlands and Denmark. So member states
Speaker 2: have to address exactly the point you are making, which is,
Speaker 2: if I incentivize people to invest in pension funds, does
Speaker 2: it create a risk of pumping out resources for the
Speaker 2: pair as you go state? Isn't such the first political
Speaker 2: problem that ever country as to address. There is another
Speaker 2: one which is less visible, but which is very fundamental,
Speaker 2: is that most European countries, not all of them, but
Speaker 2: many of them. It's not for the gest of on
Speaker 2: in Sweden, with the case of Italy, Spain, Frances have
Speaker 2: incentives directly or indirectly to incentivize people to buy sovereign debt,
Speaker 2: so the liquidity of the central debt is usually encouraged
Speaker 2: by all sorts of tax incentives. Now, clearly the reason
Speaker 2: why people keep cash or cause it cash is because
Speaker 2: they have they are offered protected liquidity and protectly yield instruments.
Speaker 2: Who to GOVI is if you want people to swep
Speaker 2: up their investments from govies to long term equity, then
Speaker 2: you adduce mechanically some of the equality of the sovereign
Speaker 2: debt and governments have to accept at to make an
Speaker 2: arbit frunde. Do they want to bonsor or to support
Speaker 2: or to encourage the liquidity of their own debt or
Speaker 2: do they want to support encourage the equity funding and
Speaker 2: the growth of their companies and that in the in
Speaker 2: one case, if you want to encourage liquidity, the equity funding,
Speaker 2: the risk taking capabilities of your companies, you encourage pension
Speaker 2: funds and long term equity investments. If you want to
Speaker 2: encourage to facilitate the liquidity of your debt, then you
Speaker 2: put all sorts of incentives for people to buy govies.
Speaker 2: And this is another debate, the arbitwie between equity for
Speaker 2: companies or money for gobies to find death, which is
Speaker 2: complementary to the for debate, which is pensions, individual saving
Speaker 2: buses that pully solidity skills.
Speaker 1: Part of what's happening as a result of this conversation
Speaker 1: is this promotion of the European Savings and Investment Union
Speaker 1: or the what was the European Capital Markets Union, and
Speaker 1: that is going to work to do exactly as you say,
Speaker 1: to take all this counts and deploy it one way
Speaker 1: or another into European equities in the main. Is that
Speaker 1: what that's designed to do, and that should be another
Speaker 1: another boost to European acquities across the board that inflow
Speaker 1: of capital.
Speaker 2: Yeah. I mean, the reason why there was there's a
Speaker 2: waking up is the multiple reason why the this saving
Speaker 2: investment Union is going to happen. Since we're talking to
Speaker 2: UK audience, I really want to explain why we are
Speaker 2: where we are and why the Capital Market Union stopped
Speaker 2: and did not deliver for the past ten years. The
Speaker 2: Capital Market Union was a very smart idea of Jonathan
Speaker 2: Hill when he was the UK Commissioner at the European Union.
Speaker 2: And at that time the idea was very simple, was
Speaker 2: to accelerate the integration of European capital markets because it
Speaker 2: was going to be good for Europe, but it was
Speaker 2: going to become excellent for London because at that time
Speaker 2: London was the largest financial center of the European Union
Speaker 2: and it was making plenty of sense. I mean, the
Speaker 2: Agricultural common Policy in the sixties and seventies was all
Speaker 2: about building food sovereignty for Europe, and it was a
Speaker 2: French project because it was good for Europe and it
Speaker 2: was good for friends. So you achieve a lot in
Speaker 2: Europe when there is a country that is a leader. Now,
Speaker 2: when the UK people, the British people, decided to leave
Speaker 2: you and Jonathan Hill left the Commission, the leadership to
Speaker 2: build the Captain Market Union evaporated, and honestly, for the
Speaker 2: past ten years or so, since let's say, the referendum
Speaker 2: of June sixteen and the departure of the UK, there
Speaker 2: was no leader or sponsor of the project. And since
Speaker 2: the UK decided that London would not be anymore than
Speaker 2: the largest financial center of the European Union, but will
Speaker 2: become the largest financial center of the United Kingdom, the
Speaker 2: situation has been proven. We are now in the stitution
Speaker 2: which is totally different. The Regi Report, the Letter Report,
Speaker 2: the sort of various wake up calls about the fact
Speaker 2: that we need to finance equity in Europe. Long term project,
Speaker 2: climate change, defense, the armament. All that requires a lot
Speaker 2: of equity. Is pushing for an acceleration of the capital
Speaker 2: mortgaging and the re assessment of priorities isn't going and
Speaker 2: I do believe that we are going to deliver very
Speaker 2: quickly in dius levels. Single supervision will happen and that
Speaker 2: will be a game changer because when rules are similar
Speaker 2: across Europe now as they are, they remain different. So
Speaker 2: the only way to have the same rules is to
Speaker 2: go for same interpretation of same rules through a single provision,
Speaker 2: and that will happen. Clearly, the new assessment of what
Speaker 2: are the best incentives for pension funds, even if three
Speaker 2: mans a member state level, there will be some form
Speaker 2: of harmonization and you can you should expect that the
Speaker 2: combination of Member states decisions with the European decision is
Speaker 2: going to create a station where five years from now
Speaker 2: the amount of would be massively more important. Is today
Speaker 2: actually the German the government has announced that they will
Speaker 2: launch a program. Under the previous government, they had already
Speaker 2: launched it and it was interrupted by the stamp elections
Speaker 2: and it is being renewed by the new coalition. So
Speaker 2: you will have significant progress. It's like everything in Europe.
Speaker 2: It is slow, because that's that's the nature of our project.
Speaker 2: We are better at reacting than the net acting. But
Speaker 2: even if it is slow, it will happen. The European
Speaker 2: Union is a Jesl car, so it takes time to
Speaker 2: get to full speed. But you know, shang gun irrasc
Speaker 2: the euro currency. So I remember all the bashing about
Speaker 2: the euro during a great financial crisis ten years ago,
Speaker 2: and we made it through. And I think the setting
Speaker 2: in the spentnion will happen. But it's it's going to
Speaker 2: be complicated it I was referring to the UK leadership
Speaker 2: that disappear in Europe. You have some countries that make
Speaker 2: finance and you have some countries that just buy finance.
Speaker 2: The point here is that we are at a moment
Speaker 2: where the momentum for the capital market union is definitely accelerating.
Speaker 2: I spent a lot of time in Brussels. I can
Speaker 2: tell you that the dynamic the ownership by political leaders
Speaker 2: to make it happen. Mister Merth in Germany, you know,
Speaker 2: mister Merth spended many years of his life at black
Speaker 2: Hawk and many years of his life in the board
Speaker 2: of Deutche Boxa. The leader of Germany is very personally
Speaker 2: focused on financial issues. The same in France, the same
Speaker 2: in the Lands. So we are on the right track
Speaker 2: to make it happen and Stepan.
Speaker 1: It's one of the motivations here possible from Germany in particular,
Speaker 1: it's one of the motivations to produce a pool of
Speaker 1: cant available for spending on defense. One of the things
Speaker 1: that you said recently is that we should, you know,
Speaker 1: we should look at ESG in the traditional sense, that
Speaker 1: we should also you know, look at it in a
Speaker 1: different way and say es G. And we've talked about
Speaker 1: this a lot on this podcast as well. ESG should
Speaker 1: now stand for energy security geostrategy, so a modern definition
Speaker 1: that is also about well being, long term well being
Speaker 1: being of a population. So one of the motivations behind
Speaker 1: providing this pool of cash is that it does go
Speaker 1: into defense.
Speaker 2: Absolutely, I mean we and that that's the point for
Speaker 2: which the alignment with with the with the UK is
Speaker 2: essential and is perfect I mean clearly in the environment
Speaker 2: we are facing and the countries that have a tradition
Speaker 2: of building strength, of the projecting strength, of managing strength
Speaker 2: is quite something common between the between the between the
Speaker 2: UK and if you can't really like friends Norway is
Speaker 2: we don't exactly so so I think we are all
Speaker 2: facing the same issues. Uh, armament projects at a very
Speaker 2: low return on investment, a very low return on equity,
Speaker 2: so you need you need equity to fund this project.
Speaker 2: You need money for the government to pay as clients,
Speaker 2: so they will need some debt issue will have to
Speaker 2: be addressed to some public finance issues will have to
Speaker 2: buildreated on the client side, but on the maker side,
Speaker 2: on the supplier science, if you want to accelerate production capabilities,
Speaker 2: if you want to accelerate innovation, if you want to
Speaker 2: consolidate the players, you need more equity. So that that
Speaker 2: that that's why this concept of investing in the sovereignty,
Speaker 2: the open sovereignty of energy Situti and Joe strategy is
Speaker 2: getting your tractions with industries.
Speaker 1: Okay, Stephan, we are running out of time, so can
Speaker 1: I just ask you a couple of quick questions. That's
Speaker 1: something Is AI impacting your business at all? Yet I
Speaker 1: finding that the way you employ and the way that
Speaker 1: you manage is changing result being able to use it.
Speaker 2: Yes, yes, it does mainly on like many companies, many
Speaker 2: on the cost sign where we are reassessing many of
Speaker 2: our workflows and processes to wear eyes. It's not going
Speaker 2: to cure cancer, it's not going to to do everything.
Speaker 2: It's not magic. So on the revenue side we are
Speaker 2: more cautious because many of the things we are not
Speaker 2: transformed by eye. But on the class side, on the
Speaker 2: process sides, definitely has a very significantly.
Speaker 1: Pay And how do you feel about cryptters and asset
Speaker 1: class skepticism?
Speaker 2: This is typically a situation where I prefer to be
Speaker 2: late rather than be wrong. If the rest of the
Speaker 2: world two to play with matches and get to a
Speaker 2: situation where they they are comfortable with with these new instruments.
Speaker 2: I believe that exchanges, market infrastructures are full of trust
Speaker 2: from the general public, and I just don't want to
Speaker 2: be the shop around the corner with the window the
Speaker 2: day everyone realizes that there is an issue. There are
Speaker 2: too much assumptions, religious assumptions behind this. I said, class
Speaker 2: that need me to be skeptical for the moment? Fair enough?
Speaker 1: And finally, what are you reading at the moment?
Speaker 2: You know it's a good question because I have one
Speaker 2: or beyond in my life. I read one history book
Speaker 2: per week. So I read a book from an Australian
Speaker 2: writer and I read in French because it's more pleasant
Speaker 2: for me. His name is Clark. He has published a
Speaker 2: few months ago a book called eighteen forty eight, which
Speaker 2: is all about the consolidation of the revolutionary trends or
Speaker 2: movements across Europe in eighteen forty eight. Yeah, thank you
Speaker 2: very much.
Speaker 1: I've been reading A. Clark's book as well, by the way,
Speaker 1: and I think everyone should read it at the moment.
Speaker 1: It's quite it resonates quite well with our current world. Yes,
Speaker 1: thank you very much, indeed for joining us. Thank you man,
Speaker 1: thanks for listening to this week's Marin Talks Money. If
Speaker 1: you like our show, rate review and subscribe wherever you
Speaker 1: listen to podcasts, and keep sending questions or comments to
Speaker 1: Marrin Money at Bloomberg dot net. You can also follow
Speaker 1: me in John on Twitter or x I'm at marinas
Speaker 1: w and John is John Underscore Stepic. This episode was
Speaker 1: hosted by Meet Marin Zumzetweb. Its produced by Somersardi Moses
Speaker 1: and Amantala Amadi. Sound designed by Kelly Gary and special
Speaker 1: thanks of course, as always to Stefan Ba