David Gibson-Moore at AIM Summit in Dubai
The 13th edition of AIM Summit series was held in Dubai on November 21 and 22, 2022. The event served as a platform for discussion on investment and global market conditions at a time of considerable market volatility and uncertainty. The turmoil in the crypto sector gave additional urgency to many of the discussions. David Gibson-Moore moderated two keynote panels
On the first day the panel topic was “monetary tightening and market volatility – how to navigate between uncertainties”. Dr Nouriel Roubini spoke just before the panel and Dr Lawrence Summers, former US Secretary of the Treasury, spoke immediately afterward so the context for the discussion was truly authoritative.
How can investors prepare for a possible recession, how can investors build diversified, future-proofed portfolios and what factors should investors consider in planning an investment strategy that both preserves and grows wealth whilst at the same time mitigating risk? These are highly critical considerations and decisions have to be made. The expert panel comprised:
- Abdulmohsin Al Omran, Founder and CEO, The Family Office
- Rishi Kapoor, Co-CEO, Investcorp Holdings
- Yazan Abdeen, Chief Executive Officer, AD Investment Management
the importance of re-balancing strategic and tactical portfolio allocations was discussed and how this can best be done. The benefits of statistical portfolio optimisation were reviewed and the considerable difficulties associated with many portfolio optimisation analytics, namely that correlations used are ex-post rather than ex-ante and do not remain constant over time were discussed.
The likely perspectives for different asset classes and particularly the advantages of investment into private equity as a result of current market conditions were discussed. how this asset class was becoming more liquid through the development of the private equity secondaries market and collateralised fund obligations was highlighted. Eventually, more widespread tokenisation of private equity will also give greater access to this important asset class.
The hedge fund asset class through which many investors are seeking diversification was also reviwed. The most attractive hedge fund strategies this year have certainly been relative value market neutral, which does well in volatile markets, and event-driven strategies.
The consensus was that, in spite of all the prevailing challenges and uncertainties, we may well see reduced volatility prevailing sometime next year relieving some of the current uncertainty. Certainly a most timely and interesting discussion.
The second day of the event was dedicated to developments in decentralised finance and the topic of the keynote panel was “how far along are we on the journey of adoption”. The expert panel comprised:
- Reza Bundy, CEO, Atlas Capital Team L.P.
- Robert Cohen, Managing Partner, Benson Oak Ventures
- Sebastian Widman, Head of Strategy, Komainu
The collapse of FTX has had dramatic implications for the whole industry. And this comes after the events of this summer … the implosion of Luna and the related stumbles at TerraUSD, lost about $40bn for investors. Crypto hedge fund Three Arrows Capital and lending platform.
The fact that exchanges are highly centralised rather than constituting any form of decentralised blockchain use-case was discussed. FTX ‘accidentally’ lost $8bn, had no proper financial records, no list of its own bank accounts, did not even know how many employees it had. In fact, according to the Financial Times, “its problems were due to fraud, Ponzi schemes, and an unbelievable set of entirely inexperienced nerds”. The risks of further contagion in the industry are also high.
What was also totally shocking was that highly reputable VC entities such as Sequoia, Temasek, Soft Bank and so on, let alone the poor Ontario Teachers’ Pension Fund, could invest in such an undertaking demonstrating an egregious lack of due diligence.
As we look forward however, it was felt that that it is critically important to differentiate between blockchain as a technology with its associated enormous transformative potential and crypto as speculative hype.
The was a strong feeling that Web3 will be an inevitable enabler of growth and promoter of institutional adoption. A number of critical features are key in this regard: scalability and speed, inter-operability and decentralised protocols which were all disused at length.
In reality there are in fact also multiple promising crypto use-cases quite detached from speculative mania: for instance: crypto as NFTs based on securities or other investable assets and token-gated commerce applications to name just a few.
There was also the opportunity to discuss both stablecoins and CBDCs. The former, properly regulated, form a particularly interesting digital currency asset class.
An example is the innovative initiative currently being undertaken by Atlas Capital. As was amply discussed on the first day of the conference, the global macro environment faces significant and intensifying headwinds. The spectrum of Atlas solutions comprises an index, an ETF and a token and, by bringing together certain traditional asset classes – treasuries, gold, real estate – both high quality returns and impact for social good do not have to be mutually exclusive. Both be simultaneously provided.
Many more areas could have been explored and much more could have been said. However, the general conclusion was that, whilst crypto-currencies are being sorely tested, there are many other sectors of decentralised finance which appear extremely promising and will certainly encourage on-going institutional adoption.