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“Italy is a country of entrepreneurs” – Stephen Kamp and Alberica Brivio Sforza illustrate the importance of this strategic market
Article published in Corriere della Sera on 9 December 2023.
“Italy, historically Europe’s third most important country in terms of assets, is one of our strategic markets, as shown by the recent move of our offices (to Milan’s “golden quadrilateral of fashion” in via della Spiga): it remains a country of great entrepreneurs who create products of renown and who generate wealth in the segment we’re interested in,” says Stephen Kamp, 55, the Dutch national (though born and raised in Florence and a graduate of Bocconi University) who heads the southern Europe and Latin American region at Swiss private bank Lombard Odier. The wealth and asset management firm, founded in 1796, has always been one of the points of reference for entrepreneurs and their families, to whom it offers a wide range of services, from made-to-measure wealth management to succession consultancy.
The return of inflation, which quickly reached very high levels – albeit with a visible slowing down in the last few months – has profoundly changed clients’ investment choices, including those of Italians. “We are a wealth manager, helping our clients manage their portfolios: rising prices made them feel insecure, so they need to trust in their advisers more than ever. We’ve seen their portfolios become more liquid, and a “wait and see” attitude. Moreover, the share of fixed income securities, government paper or very highly rated corporate bonds has risen sharply, even if that depends on the client’s risk profile.” People also have faith in BTPs [Italian long-term treasury bonds]: “We have them in portfolios – they’re mainly requested by domestic clients, but also by foreign clients who wish to diversify. In today’s stable economic and political situation, there are BTPs in Italian and international portfolios.”. A big difference between the worlds of before and after the pandemic is that “the fixed income segment, before rates went up, was practically non-existent.”
In contrast, “investment in bonds, largely corporates and partly government paper, actually now represents 50% of portfolios,” adds Alberica Brivio Sforza, Lombard Odier’s Managing Director in Italy since 2021, specifying that the Italian client’s typical portfolio differs little from that of the global investor.
“In our business of individual high-net-worth investors, this is a temporary three-year period of inflation. For several years, our clients have been experiencing a high rate of inflation on everything they buy: travel, houses, luxury goods. But now, the rise in rates has pushed them towards government bonds, which never used to be considered. Assets with zero or limited risk were replaced by class I policies, with guaranteed capital. And the rest? Cash, equities or private investment.”
After the strong and rapid monetary tightening, Kamp now anticipates a hold on rates, with a gradual easing in the second half of 2024. “The slowing in inflation has greatly reduced the risk of rates being further raised; the central banks are now orientated towards maintaining rates at current levels at most, with the aim of bringing inflation down to an acceptable level. Our analysts are forecasting a reduction in US inflation in the second half of 2024 to a little above 2%. Even if it is above the previously fixed objective, this level should allow the Federal Reserve to cut rates at the end of next year given the results achieved by its restrictive monetary policy,” he says.
Prudence is in Lombard Odier’s DNA: in its 227-year history it has come unscathed through over 40 financial crises. “We have always been very conservative and risk averse. When all the banks have the wind in their sails, we do well, but it’s times of crisis that are positive for us, because clients seek out a “safe haven”; while we are a bank, we are also investment specialists with a faithful clientele spanning several generations. These families are very attached to Lombard Odier because one of our specialities is advising and supporting them in their business,” states Kamp.
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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