ORQUIA, ANNDHREA S.

BSA-22

According to Pierre Gamegna, there are Three key trends that will drive the financial
markets of the future. They are Alternative investment funds, the rise of the digital economy and
sustainable finance are the major trends that will drive financial markets in Europe.

Digital development
The opportunity for digitalization is in re-aligning business processes and having
completely new ones emerge. More importantly, it is in capturing new business fields or even
new business segments. This enables companies to embrace new market conditions and data
situations, utilize them and build on them.
He stated that, ‘If we don't do so then in the years to come, the markets will open and the
winners will be those who have the best tech and the best data. And it will not be Europe, and I
am afraid it will not be the US either.’
He also focused on the topic of digitalisation, highlighting how shocked he was after his
visit to China to see the country's advanced work on fintech and the use of digital payment
services.
One of his example is the application of WeChat and alipay system, which everyone of us
is aware of it. Fortunately Alipay has chosen Luxembourg to be its European hub, in fact
Luxembourg has become the European hub for epayment, which is good news.’
However, Gamegna was concerned about the speed of adoption of epayment in Europe
citing a huge gap in terms of numbers, as China already has 1.1 billion customers using
electronic payment systems.
He admitted that a lot of Europeans will rightfully highlight how China doesn’t have the
GDPR regulation or private life protection which is common in Europe, but equally Gamegna
said there is a need to find the middle ground so the sector can grow more quickly.
Sustainable advance
According to him, we are already number one in sustainable investment funds in the
Luxembourg, they are almost having the market share that is above one third. But the absolute
number they are talking about is far too low.  
He also stated that fintech's growth will also help to support the development of
sustainable finance, which in his view is the third key market driver.
He pointed to recent UN conference, where the heads of states pledged to commit money
to invest in sustainability. Gamegna said Luxembourg is on track to double the amount that was
dedicated to this cause over the last five years.
Thematic investing
Traditional investing tends to be backward-looking. It often bases decisions on a
company’s past results despite the fact that that past performance is not necessarily indicative of
future returns. Certainly, the companies that make up an index earned their place there based on
what they have done, not what they will do.
By contrast, thematic investing is forward-looking. It starts by identifying megatrends –
major long-term shifts that are changing the social, economic and investing landscape – and then
looks for the individual companies best positioned to benefit from those megatrends over the
coming decades.
Thematic opportunities often present themselves as specialized businesses operating in
the world’s most dynamic industries. These companies tend to be small to mid-sized today, and
they may not have the scale to make it into today’s indexes. But they have the potential to
dominate the indexes of tomorrow.