The incredibly successful statistics from China throw out a big question of which more below. Between 1952 and 2018 GDP averaged 8.1%. Life expectancy has risen from 35 in 1949 to 77 today. 770M people have been taken out of poverty since 1978. More than $2 trillion has entered the country as foreign direct investment since 1980. This has all been as a result of China’s willingness to accept foreign influence and to embrace new ideas. Why then is China currently following a line of inflexibility and authoritarian rule in the case of Hong Kong? Writing this from Hong Kong this morning, the argument that China cannot afford to allow any state or region to depart from the single policy approach does not wash. Hong Kong has thrived on invention and ingenuity and curtailing that spirit has resulted in today’s pro democracy movement. An enigma indeed for its leaders which China would do well to overcome-quickly.
According to McKinsey the jobs of 140M knowledge workers in developed economies will be at risk in the next 10 years. This translates into 50% of clerical jobs and 29% of finance and insurance jobs. It is worth examining the impact of much improved technology and what has already taken place in the past 10 years since the financial crisis: much of what McKinsey is forecasting has already occurred with changes in business practices, off shoring and faster business processing due to IT enhancements. That is certainly our experience at SGM-FX which has benefitted our customers and meant that we can handle larger volumes with fewer administrative staff. Our view is that those savings should be reinvested in the customer experience with more and better client facing staff which is what we have done.
Competition is forcing private banks to provide better and therefore more costly services to their clients. Those who accept lower profits will survive and those who do not, will not. Our experience is that many of the larger banking groups do not accept this situation and that has meant that SGM-FX are seeing a steady stream of their clients in search of better currency services and pricing which has been to their benefit judging by the comments that we have received.
Discussion and Analysis by Humphrey Percy, Chairman and Founder