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Vlerick Chief
Economists Debate
2015
6th edition
2
Why Start from Scratch? Buy Your Own Company
© Vlerick Business School
BUY YOUR OWN COMPANY CONFERENCE - 26 February 2015 Learn from successful buyout and buy-in entrepreneurs: • Dieter Penninckx (FNG Group: Fred & Ginger, Van Hassels,…) • Jo Van Steenvoort (Medio) • Harry Christiaens (Pharmavize) • Wiet Van de Velde (Palletkraft, RED,…) and many more
Get academic background from • Prof Hans Crijns (Growth Management) • Prof Gino Van Ossel (Retail Management) • Prof Mike Wright (Entrepreneurship) and others
KEYNOTE ON NEGOTIATING POWER by PROF KATIA TIELEMAN
SCHEDULE PRIVATE MEET-UPS ING, VD&P Corporate Finance, SDM-Valorum, Winx, Fibizpartners, Finactor, MNA, Vista Capital, Common Grounds, Sherpad, Sequensis, KBC, Belfius, Greenpark Investment Partners, PMV, Capital@Rent, Down2Earth, Buysse & Partners, KeBek, QAT, Think2Act, O.B.A., Vectis Participaties
© Vlerick Business School
THE GOLDEN TICKETS FOR THE BUYOUT CONFERENCE
Keynote Speakers
Chief Economists Debate Speaker Function and Company
Mr. Edwin De Boeck Chief Economist, KBC Bank
Mr. Peter De Keyzer Chief Economist, BNP Paribas Fortis
Mr. Geert Gielens Chief Economist, Belfius
Mr. Peter Vanden Houte Chief Economist, ING
Mr. Prof. Dr. Koen Schoors Moderator
How unsustainable is Greek debt?
Source: Bruegel
6
ING BELGIUM
Direct impact of a Grexit should be smaller
Banks’ exposure to Greece much lower Official sector has biggest exposure to Greek public debt
Foreign banking claims on Greece Composition of central government debt has changed dramatically
But contagion effects would still be huge as euro would prove not to be “irreversible”
0
20
40
60
80
100
120
140
160
180
200
Q1-2011 Q2-2014
On the Greek non-bank private sector On the Greek public sector
On Greek banks
USD bn
0
50
100
150
200
250
300
350
400
Q1-2011 Q3-2014
Bonds Notes Loans
EUR bn
7
Divergence in money growth between US and
Eurozone
8
5yr 5yr forward break-even inflation rate
9/24/11 9
ING BELGIUM
ECB QE programme
• Open-ended plan: €60 Bln per month until
September 2016 and at least until there is a
sustained adjustment in the path of inflation which
is consistent with the aim of achieving inflation
rates below, but close to, 2% over the medium
term.
• Risk sharing: 20% mutualised (mostly supra-
nationale bonds) and 80% non-mutualised
10
ING BELGIUM
ECB bond buying targets
>100%
25% issue limit 148.5
29.9
23.7
14.0
171.1
106.7
48.3
0.8
217.1
15.2
21.0
4.2
1.8
9.3
24.5
2.4
5.0
3.4
2.3
0 25 50 75 100 125 150 175 200 225
Italy
Belgium
Austria
Ireland
France
Spain
Netherlands
Malta
Germany
Finland
Portugal
Slovenia
Cyprus
Slovakia
Greece
Luxembourg
Lithuania
Latvia
Estonia
Allocation of €850bn worth of sovereign bond purchases based on ECB capital keys
9.0%
9.4%
11.0%
12.0%
12.8%
14.7%
14.7%
15.9%
18.2%
19.0%
19.1%
22.5%
28.8%
28.6%
36.8%
38.6%
48%
89.6%
0.0% 25.0% 50.0% 75.0%
Italy
Belgium
Austria
Ireland
France
Spain
Netherlands
Malta
Germany
Finland
Portugal
Slovenia
Cyprus
Slovakia
Greece
Luxembourg
Lithuania
Latvia
Estonia
Central government bonds to be purchased by country (EUR bn) Target amount as a share of current outstandings (%)
11
Chief Economists Debate Europe & ECB policy
Geert Gielens, Chief Economist January 2015
12
ECB Bazooka: fighting deflation/stagnation. The ECB used its QE bazooka and it is a big one
ECB meeting of January, 22 QE: purchases of €600 bln of government bonds and ABS/Covered bonds
between march 2015 and sept 2016 (open ended!) Maturities between 2Y and 30Y (linkers and FRN incl.) In the secondary market
Bron : Belfius Capital Markets / ECB 13
ECB Bazooka: fighting deflation/stagnation. The ECB used its QE bazooka and it is a big one
Bron : Belfius Capital Markets / ECB 14
Asset inflation. The fed balance sheet is the driver behind the price increase of stocks
Bron : FACTSET 15
Low rates do not equate high growth. Low rates: a necessary, not a sufficient condition
Bron : FACTSET
I (t)= 0,46 profit (t-1) + 30080 capacity utilisation (t-1)
(8,37) (12,36)
16
Financing: not “the” pressing problem in Belgium. Demand is lacking, not supply
Source: ECB; SAFE
H2 2011 H2 2012 H2 2013 H12014
competent staff 25% 15% 14% 21%
finding
customers 17% 16% 19% 18%
production- &
labourcost 24% 24% 22% 18%
regulation 7% 16% 16% 13%
competition 13% 13% 14% 12%
financing 10% 10% 9% 11%
other 5% 6% 7% 7%
total 100% 100% 100% 100%
17
Lower oil prices
A boost to global growth in 2015?
February 2015
Edwin De Boeck
Chief Economist KBC Group
19
Oil- and commodity prices Going down…
Oil price falling more in USD than in EUR (price per barrel Brent)
20
China- Real GDP (y.o.y.-change, in %)
Lower oil- and commodity prices …reflecting some weakness of (a.o. Chinese) demand…
21
Demand & supply on the oil market (mln. barrels per day)
Source: International Energy Agency
Lower oil prices …but mainly a positive supply shock
0
2
4
6
8
10
12
US oil production (mln. barrels per day)
Tight oil production
Crude oil production (excl. tight oil)
22
Demand & supply on the oil market (mln. barrels per day)
Source: International Energy Agency
Lower oil prices …but mainly a positive supply shock
23
A ‘permanent’ or ‘temporary’ shock?
- What is the price elasticity of oil supply?
Global macro-economic impact?
- What is the net impact of an income transfer from oil producers to oil consumers?
- What is the impact on inflation (expectations) and monetary policy?
Lower oil prices Global macro-economic impact
24
Impact of a 20% oil price decrease after one year on real GDP (in %-points)
Lower oil prices Global macro-economic impact
A ‘permanent’ or ‘temporary’ shock?
- What is the price elasticity of oil supply?
Global macro-economic impact?
- What is the net impact of an income transfer from oil producers to oil consumers?
- What is the impact on inflation (expectations) and monetary policy?
25
Source: ECB staff
Cumulative impact of 10% oil price decrease after 3 years on real GDP
(in %-points)
Lower oil prices Impact on growth in Eurozone countries (ECB-estimates)
Oil consumption - Belgium vs. Eurozone (1980 = 100)
26
Lower oil prices Adding to deflationary pressure?
A ‘permanent’ or ‘temporary’ shock?
- What is the price elasticity of oil supply?
Global macro-economic impact?
- What is the net impact of an income transfer from oil producers to oil consumers?
- What is the impact on inflation (expectations) and monetary policy?
27
Investment themes 2015 ?
Buy
US-dollar
European stocks: large cap cyclicals that benefit most from lower oil prices and/or USD-appreciation
Emerging Asia
technology stocks
high dividend stocks
Underweight financials, basic materials and energy
Underweight US-stocks
Short duration
3/2/2015 | Economic Research 28
3/2/2015 | Economic Research
Slow recovery…
29
3/2/2015 | Economic Research
…one of a kind recession
30
GDP levels - Q1 2008 = 100
3/2/2015 | Economic Research
Low growth, low inflation
31
3/2/2015 | Economic Research
Important source of growth on its way back…
32
3/2/2015 | Economic Research
…and productivity growth lower
33
3/2/2015 | Economic Research
Not a lot of room for more public spending…
34
3/2/2015 | Economic Research
…but lot of room for more innovation
35
3/2/2015 | Economic Research
Conclusion
• Weak growth in Europe…
• …for some time to come
• Negative demographic backdrop…
• …and not a lot of fiscal space
• Growth will come from innovation and competition
36
Q&A
Finance Alumni, Your Financial Network
Thank you
Finance Alumni, Your Financial Network
Networking Drink
&
Upcoming events
Finance Alumni, Your Financial Network
Events Organizer Date
Chief Economists Debate Finance Alumni 03 Feb 2015
Meet the industry: Pharma Finance Alumni 05 Feb 2015
Burn-out door TE VRIENDELIJK MGM Alumni 09 Feb 2015
Company visit Tesla Belgium MGM Alumni 17 Feb 2015
Buying your own company Vlerick Business School & Vlerick Finance Alumni
26 Feb 2015
Vlerick Grand Ball Vlerick students 07 Mar 2015
Meet the CEO MGM Alumni 18 Mar 2015
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