Financial institutions are operating under much higher regulatory burdens today than was the case ten years ago. Whilst additional regulation was clearly necessary in the wake of the 2008 crash the ongoing rise in the legislative burden is raising costs, squeezing profits, and forcing many firms to decide whether they want to continue operating in certain market segments.
In biology, ‘dead zones’ refer to low-oxygen areas in bodies of water where microorganisms have used up almost all the oxygen to degrade large amounts of biomass. The accelerated growth of biomass can arise from an enrichment of waters with excessive nutrients such as phosphor. Our excursus in marine biology serves to illustrate recent developments in financial markets.
It’s fair to say that 2018 was tough for equities, but it was far from a smooth ride downwards, with many highs as well as lows. By the close, though, major stock markets across the world had suffered their worst year since the financial crisis a decade ago. There were plenty of causes, not least trade tensions between the global powers China and the US, while growing concerns over rising interest rates and ongoing geopolitical issues such as Brexit also combined to batter equity markets.
I founded ARK Invest for two reasons: first, to focus solely on disruptive innovation, primarily in the public equity markets, and second, to open up our research ecosystem, becoming the first ‘sharing economy’ company in the asset management space. Our original research dimensions the exponential growth associated with five major innovation platforms: DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology. Not since the late 1800s have multiple innovation platforms evolved at the same time.
The Islamic finance industry has grown substantially over the last two decades, and Asia in particular has played a significant role in this growth. As at end 2017, the region’s Islamic financial assets amounted to USD 528.7 billion, or 26% of the world’s sharia-compliant total. It is also the largest market for both Islamic bonds (sukuk) and Islamic funds (Chart 1). Asia contributed to 60.7% of global sukuk outstanding and 42.8% of global Islamic assets under management (AUM) as at end 2017.