Zakaria YOUNCHAZakaria YOUNCHAJuly 17, 2018


Big Data’s main potential is to help companies improve their operations in the sense that they’re able to make faster, better and more intelligent decisions by collecting and analyzing the data with the aim of gaining a useful edge and increasing revenues. Are finance and Trading exempt from this massive improvement in Data Science?

Big Data… What’s that?

Big data has been used since the 1990’s, with the computer scientist John Mashey making it more popular. It includes data sets (A specific collection of data) with sizes exceeding the ability of commonly used tools. Its main philosophy involves encompassing data, be it unstructured in the form of texts and images, semi-structured or structured in the form of numerical inputs and tables. In order for it to work, Big data requires a set of techniques with more advanced integration forms, able to reveal insights from the massively scaled, complex and diverse collected data sets.

By the 21st century, researches and reports have associated Big data and its data growth challenges with a stack of characteristics.

  • Volume: Represents the quantity of generated or stored data. The value and potential insights are often determined by the size of the collected data.

  • Velocity: Represents the speed at which the data processing is done. A threshold is often set in order to meet the requirements and challenges lying in the path of a company’s growth.

  • Variety: Represents the nature and type of data used. Classifying the collected data will often help the analysts determine an effective use of the resulting insights.

  • Veracity: Accurate analysis heavily depends on the quality of data sets. As such, captured data are forgone an extensive veracity analysis with the aim of increasing the insights’ performance.

  • Machine Learning: Often used as an introductory operation to Big Data, it explores the study and implementation of algorithms able to learn from and make predictions on data. In other words, machines are given the ability to learn without being explicitly programmed.

As such, Big data begins to have a predominant role in feeding computers and servers thriving on useful knowledge, enabling the companies to maintain a competitive edge in their respective environments.

That’s great… And what about Financial Trading?

Like any other forms of trading, financial trading is all about buying and selling financial instruments, be it shares, forex, bonds or derivatives in the form of CFDs, futures, swaps and options. It doesn’t matter which financial instrument is involved, the outcome should be common: To make a profit, which is easier said than done! In financial markets, millions of firms, individuals and even governments simultaneously tend to attempt making profits from trading.

However, with all these traders colliding against one another, the prices of the instruments tend to move in a rather random pace, making it very hard to predict the future prices, with the conventional methods at least. Some markets tend to be very volatile in the sense that not only it is moving a lot and bringing more profit opportunities, but also increasing the risk

Which bring us to the enigma of risk! No matter what instrument is being traded, who’s trading it or where the trade is taking place, it is all about balancing the potential profit against the involved risk.

Big Data and Financial Trading… How do they correlate?

Good question. As financial markets tend to be some of the most dynamic entities to exist, the trading methods must follow the same dynamism in order to consistently generate profits. As such, traders will consistently develop trading methods that are temporarily profitable for the corresponding market conditions and constraints. But what will happen if the conditions change? The methods will ultimately show their failures.

This leads us to the infamous enigma of traders: Is there a way to build and implement a system able to consistently calculate the optimal probability of executing profitable trades? We all know that it has become almost impossible for the trader to keep up with the overwhelming surge of incoming data from market analysis, especially with the use of classic methods involving market monitoring.

This is where Big data analytics come to the rescue. Traders are starting to switch from the classic, manual trading strategies to what we call to this day, Quantitative Trading. Exactly as its name states, it consists of trading strategies based on quantitative analysis, which by itself relies on mathematical computations and number crunching with the hope of identifying trading opportunities. As quantitative trading is effective for extremely large-in-size transactions, it is mostly used by Hedge Funds and financial institutions. That doesn’t matter anymore since even individual investors are getting used to it!

For now, let’s break the quantitative trading down. The very first things a trader needs are data inputs. For a quantitative analyst, the most commonly used inputs are the price and volume. Next, the trader is prone to select the technique they wish to use, such as high-frequency trading or statistical arbitrages, and then couple it with the quantitative tools like the moving averages, stochastic indicators and oscillators.

But here’s where it gets more complicated. The trader creates their mathematical models and then develops a computer program able to simulate the model with the help of historical data. Of course, depending on the obtained results, the model may forgo backtests and optimizations, and once validated, the model is hence implemented in real-time markets. This leads us to understand how quantitative trading works best: It uses all the possible analogies, patterns and trends in order to predict the outcome of a specific event, which in our case is the future price.

Based on the Big data’s characteristics we’ve already mentioned above, financial organizations and retail traders are finally able to extract a great deal of information, helping them in their trading decisions.

Quantitative traders, rejoice! Thanks to the predictive capabilities Big data has recently given, historical data (Prices) can easily be crunched with the advanced techniques of Machine Learning and Artificial Intelligence, and then be explored to identify patterns allowing the traders to refrain from order punching and switch to the more creative aspect of estimation. This will notoriously help the trader park their capital at the right time and place.

A simple proof of Big Data being extremely useful for automated trading is the fact it is widely used by the biggest financial institutions like J.P Morgan, which are, for the record, mass-recruiting Data scientists who perfectly understand Machine Learning and Data analysis using Big Data.

Going even further, some financial institutions have begun to use the sentimental analysis technique, which by itself is a form of data mining. Also known as opinion mining, it involves computationally identifying and categorizing opinions (Buy at a specific timespan, Sell at a specific timespan, Indifferent, Waiting for the market to move, etc) usually expressed in the form of texts. The aim is to properly determine whether a specific population of traders’ attitude towards a specific financial instrument at a specific timespan is positive, negative or neutral. This technique can show some very interesting results when coupled with the previously stated predictive models using Big Data.

In a nutshell

Big data is starting to show its notoriety when it comes to Quantitative and High-Frequency trading, whether done by financial firms or private investors. As firms receive petabytes of live tick data from electronic transactions and feed them to the dedicated server, they are used as historical inputs for developing quantitative models and algorithms based on the obtained trade decisions. As mouth-watering as it may sound, it also presents imperfections. Of course, not only big data and machine learning have drastically reduced the margins of error caused by human decisions, but have also made it possible to trade more accurately, and thus dramatically impact the way transactions are executed. However, traders need to understand that not all the market scenarios can be predicted or at least recreated. You could have all the possible data sets, coupled with the best patterns generated by Big data, and then use the best quantitative model there exists, but still end up with a trade loss! This can be explained by the incompleteness of Big data patterns, in the sense that they do not include the sudden market surges caused by human errors and/or false rumors. Nevertheless, it won’t be very long before Big data becomes a mainstream necessity for financial institutions… Or has it already?



(MBA, 2nd year, Trading and Financial Markets, ESLSCA Paris)

Keywords: Big Data, Machine Learning, Sentimental Analysis, Financial Markets, Quantitative Trading


Engy KHALIFAEngy KHALIFAJuly 16, 2018


Interview mit Mr. Khalid Gabr. Mr. Gabr is the regional director of BFC Bank UK “ EzRemit”, member of BFC group holdings “ BFC Group”. EzRemit is a money transfer product that offers fast, reliable, and cost effective global money transfer services in minutes. EzRemit has an expensive network of over 55000 agent locations where customers can send or receive money to over 40 countries worldwide. Khalid has B.A in commerce from Ain Shams University in Egypt. Moreover; he proceeded his post graduate’s studies in one of France leading business schools “ESLSCA Business School” specializing in “Global Management”. Khalid has been working in the money services industry since 2005, his specialization is the money transfers.

EK: Please tell us about your relationship with banks, Do you compete with them or you work together?

We don’t compete with banks, as we have mutual benefits together. Banks are our intermediate source of exchanging money. As according to the Egyptian law, money transfer can only be done through banks.

EK: What about the challenges you are facing?

The Central Bank of Egypt is encouraging money transfers companies and is giving banks the validity to take the decision with comparison to other countries. However; the challenges we are facing lies in the long procedures in banks, technology access, bureaucracy, too many departments involved in the process like compliance, legal, and many other departments, too many documentations. Also some banks have a lack of communication as they are not updated with the other banks in the world. I do suggest that Banks should communicate with correspondents’ banks to get more information about the market and the governmental new rules and regulations. For instance; the taxes and its effect on the amount of transfers. Banks have to increase the payment channels by working as a union. In addition to the lack of marketing internationally of the money transfer services as the blue collars market is having difficulty on dealing with the banks’ products concerning with money transfers. Finally I do suggest the intervention of the monetary policy in Egypt as we really need the basic steps of initiation to make it easier for money transfer clients.

EK: What Privileges do you give to your clients ?

I would first introduce to you how the money transfer companies work. For a company owning a money transfer system to be established; first it has to get its license, either from the united kingdom or from the United states. Its more easier to get it from the united kingdom as you just have to set two main offices. One in the united kingdom and the other one in any country you desire. “EzRemit” established an office in UK and our headquarters is located in Bahrain. The departments of our companies are divided as follows compliance, Anti Money Laundry, Business team, operations team, implementation team, marketing, and sales. The main services of our company is to send and receive money. Also you need representatives in every country you transfer money to. So you need to build the receive network then the send network. Our representatives main duty is to market for us. The privileges that we are giving to our clients are the services we give to our clients. Those services are:

  • Account to Credit: Money are transferred directly to the client bank account.
  • Cash to Door: Money is transferred directly to the clients addresses through a courier company managed by the bank.
  • Cash to Cards: Money are transferred to cards that are established with no account base and a KYC “Know Your Customer” application is only done once.
  • Cash to ATM: Cash are transferred into ATM with no cards or accounts.
  • Mobile Services: Money are transferred to a mobile line.

EK: Would you tell us more about the regulation authority supervising your line of business?

Our company works under the supervision of the Financial Service Authority, Financial Conduct Authority, and the Money Laundry Regulations in the united Kingdom. In Egypt we work under the rules and regulations of The Central Bank of Egypt. Also in Egypt every bank we deal with have its own set of rules.

EK: How do you deal with them ?

When dealing with the authorities of the UK or Egypt, we have no problems as long as we are abiding to their rules and regulations. However we might face some problems with banks due to several reasons. No centralization in money laundry policy in Egypt; as each bank has its own rules. No centralization on the money transfer reports in Egypt. Also the money transfer business in Egypt needs a lot of attentions as there are a lot of wasted opportunities if it has been efficiently used, investments and economy can be built on it.

EK: How do you perceive the Egyptian Economy now in Egypt?
There are a lot of encouragements of investment in Egypt by the Egyptian Government specially the (SME’s) small and medium sized Enterprises and start-ups companies. They give total support to new entrepreneurs, and the youth of Egypt are being directed a lot as there are a lot of created opportunities to them. Moreover; the cost of investments is low in comparison to other countries.

EK: Has it changed during the previous years?

Absolutely; as the concern in the previous years were about the heavy and large investments. As what keeps the economy of a country going is the success of their SME’s business.

EK: What would you say to young entrepreneurs?

I have been a while in the Ecosystem of Entrepreneurs; the problem lies in both the ecosystem and the entrepreneurs themselves. The main problems of the entrepreneurs lie on the fact that they don’t want to take any risk, as no one needs to compromise. They ignore the aspects of business and they lack marketing and financial knowledge, they also lack the knowledge on how to retain their customers. They also lack the procedures to make their business going. On the other hand; the Ecosystem lacks a lot of aspects as they are seeking publicity and ignoring a lot of aspects. Lack of information which makes it difficult to proceed. Lack of feedback and the quick loss of interest. As I do suggest the availability of a government authority to guide and lead the entrepreneurs through the way. For example; the establishment of a consultancy office for some postponed fees in finance, investment, marketing, and research. Also, the incubators of the Ecosystem should establish a committee to evaluate the entrepreneurs to help them to proceed in aspects like when to start, understand market penetration, market resistance, and enable them to know when is the right time to take decisions. Also, they shouldn’t assume that the entrepreneurs knew every aspect in business. They only have good idea and needs help to accomplish it.

For entrepreneurs, I suggest that they should be risk takers and they should believe in their ideas. They also should know the difference between the “Red Ocean “and the “Blue Ocean” and should decide which one they want to position themselves in. It’s all about competition. If you don’t have a competitive edge, do not compete. As no blue ocean lasts forever. You should continuously own a competitive edge, always have a new aspect to introduce to the market. Don’t burn yourself, don’t give all your cards at once. Never ever go to the market based on assumptions. Finally; never go to the market without a second and third plans.

EK: What do you think about financial inclusion in Egypt?

In Egypt, we are just applying terminologies, we need more applications. As large wholesalers are the one who gets the benefits from the financial inclusion, but when it comes to the small and medium- sized traders it will be too costly on them. Unless there are rules and regulations that will be on their favour and will be less costly on them. I see that the most successful financial inclusion in the world happened in “Kenya”; when the cholera disease spread in the country; the country prevented the exchange of paper money in the market, and Vodafone entered the market and implemented an application called
“M- Pesa”. By this the people were forced to apply the financial inclusion.

EK: What does it need to be more activated in Egypt?
I think the best way to activate the financial inclusion is through the implementation of laws, and maintaining the tools to help in achieving it and create substitute channels. Also, giving support to the companies that works in FINTECH. Start-ups and provide the support to them. The financial inclusion should be spread by both the public and private sector. Rules should be applied strictly to face the resistance to the financial inclusion from the market, besides the right tools should be created to face the resistance.

EK: What do you think about the application of the KYC in Egypt?

There is major bureaucracy in applying the KYC “Know Your Customer”, as institutions in Egypt don’t accept passports, or car License. They only accept ID’s although they contain the same information and they are issued from the same government authority. The KYC channels should increase by creating a union platform system to decrease the bureaucracy; as KYC, can lead products to failure if it wasn’t managed correctly. Although some banks have created a solution which was sending a bank officer to the client addresses and obtain their KYC, but what we need is an implementation of KYC all over Egypt. The KYC can be the main gate for the financial inclusion to be spread all over Egypt.

Matthieu VITEAUJune 21, 2018



Resilience is the capacity of a system, be it an individual, a forest, a city or an economy, to deal with change and continue to develop. It is about the capacity to use shocks and disturbances (a financial crisis or climate change for instance) to spur renewal and innovative thinking[1]. I would contend that  “continuing to develop” means “continuing to create value to similar levels to the situation preceding the occurance of a shock”.

“Value” here is to be understood as a generic term similar to output: basically anything that a system creates to sustain itself, grow and reproduce before it expands its energy and degenerates. Value can be as obvious as life (manifested in the tendency shown by ecosystems and human beings to survive after the occurrence of, for example, natural disasters, terrorist attacks, wars, industrial accidents, even layoffs to an extent), goods and services. It can also be abstract and far less visible such as personal data, intellectual property, etc.

Systems are a set of elements linked together and interacting according to rules or principles. They can be living (ecosystems, human beings, etc.) or not (supply chains, transportation systems and energy grids); either tangible (human communities including companies and cities) or intangible (computer systems, satellite communication networks, etc.).

A shock is a situation either short (an event in a point in time) or more prolonged (such as war, a long lasting economic crisis, a constant threat etc.) that has a dramatic impact on what is considered by the system elements to be a (their) normal course of action.

A continuum of shocks?

As a consultant in strategy, I’ve been increasingly called upon to help decision makers shape, improve or step up (if not downright create) resiliency in the organisations they manage. Discussions I have when developing such a project usually reach a point where the question of opportunity arises: “how much will the creation of a redundant network of communication, the establishment of an alternate headquarters, the reduction of social tension, etc. cost my organization?”

This is where I believe vision and conviction come in. I have observed that the need to launch resiliency-related projects emerged at about the same time shocks, no matter their nature, were perceived to be occurring in unending strings. Organisations felt they no longer had the time necessary to recover from one shock before the next one occurred. Contingency plans’ purposes appear to not only make organisations better at reacting to a shock but also at inscribing them into a continuum of shocks (or situations perceived as such).

My perception is that an organization is deemed resilient if it is geared to endlessly absorb shocks while still being able to generate an amount of value close to the pre-shock situation. It may just be impossible for systems to sustain such a rhythm over an extended period of time, especially when it comes to living biological systems[2].

Shocks are the brutal confrontation of energies

Each shock entails the brutal encounter of at least two forces. Complex and/or successive shocks within a given timeframe usually involve more than two types of energy. Systems, whether abstract such as organisations or living like human beings, generate energy: this is what keeps them moving forward and generating value. Organisations have goals to meet, constraints to observe, resources to achieve their target objectives. These inputs go through a complex process to meet these objectives and they require energy to be processed, no matter if the objectives are met or not. Once an organization has settled into a rhythm (often noticeable by monthly, biannual and other time-sensitive reports), the amount of efforts needed to deliver on the target objectives decreases. The organization can enter into a sustained rhythm of delivery and work processes, until comes the shock.

The shock will disrupt that “cruising speed” and will endanger, at least momentarily, the organisation’s ability to generate value. The shock may be as radical as wiping a system out (living beings are killed and physical assets are destroyed; durable lack of confidence and reputational loss lead to the disintegration of the customer base and a company goes out of business), or just disruptive to a lesser degree (it may however translate into a temporary or permanent loss of competitiveness for instance).

Drawing upon energies to recover from shocks

As soon as the shock occurs, energy will be taken from inside the system to 1) protect it as much as possible, 2) repair it as quickly as possible.

A resilient professional organisation will have, before a shock occurs, thought of a business continuity plan. The latter contributes to the creation of output at close-to-normal levels while the organization mends itself.

However, no matter how resilient an organization is, it will have to readjust some or all of its internal energies to make it possible to absorb the shock and repair itself. It may also have to resort to external energy (asking for governmental support, for instance, or from its suppliers).

Organisations will require endless amounts of energy and investments if they begin to look at their environments as strings of endless shocks and expect themselves to be resilient over the long term. Their efforts will be commensurate to the degree of complexity and dynamism those environments experience.

In other words: if organizations start wanting to be resilient about everything over the long term, they risk exhausting all their resources. They will not only lose sight of their purpose and vision, but also they’d spend all their energies in into absorbing shocks instead of using it to move forward and fulfill their goals.

Resilience and systems of system

Resilience over the long term can only be achieved if systems evolve in environments that support them. That is, for example, companies can draw constant energies from their suppliers, customers, employees, shareholders, regulators, even competitors. That can only work if the supported organization also supports the other elements in the system of systems (the system of systems being here the fabric of an economy whatever its scale).

Environments are diverse and varied. They can be ecological, social, regulatory, cultural, financial – any nature, as environments are all facets of a single reality. They are everything phenomena that impact an organization’s ability to meet its desired end state. An organisation’s resilience is likely to be stronger when its environments contribute to the absorption of shocks. Resilience is not turned inward but outward: when a shock occurs, the energy needed to absorb it will be shared among various components of the system of systems the organization belongs to. The burden on a shocked organization will be less intense thus.

Resilience within, resilience without

The bottom line of resilience is that it is a systemic notion. It is not so much about an organization but the environments the organisation belongs to, what it contributes to them and what it can draws from it when disaster strikes.

[1] This generic definition is used by the Stockholm University and the Royal Swedish Academy of Science. The definition goes however further: “Resilience thinking embraces learning, diversity and above all the belief that humans and nature are strongly coupled to the point that they should be conceived as one social ecological system.” While this position may be seen as somewhat restricted and restrictive for tangible applications, it also has the advantage of considering humans within the physical environment. That is, they generate and are impacted by energies and shocks that may contribute to the unbalance of the ecosystems they live in.

[2] The most obvious and time-tried manifestation of that limit are armies. Military commanders and planners are fully aware that human beings (soldiers) and materiel (jets, ships, weapons systems etc.) need to recover after a given period of time otherwise they will stop “performing”. A soldier’s career follows a rhythm of “training, fighting, recovering”. The same goes for materiel as it is maintained, used in combat and repaired. Not recognizing these constraints and overusing either human beings or materiel leads to critical failures at dire times.

Rihab HAFIDHIRihab HAFIDHIJune 17, 2018


When we think about inflation, the first thought that comes to mind is prices going up. But what does it really mean?

Let’s say you’ve got a 2% raise at work. But right after that, prices rose by 5%. This means you did not get a real raise, because after adjusting for inflation, you have actually lost 3% of your purchasing power.

We all know that prices tend to go up over time. The average movie ticket in the France today is 10€. In 1960, when Gone La Dolce Vita was released, it was 28 cents. So in order to compare box office sales between different years, we must adjust to inflation. To do so, economists first pick a list of goods representing what an average consumer buys in a year that we call consumer basket. This allows us to follow the evolution of the basket price throughout the years. You can pick the base year of your choosing in order to determine the consumer price index. The CPI traces how prices have evolved between during the years, and it’s the most commonly used measure of inflation.

It’s worth mentioning that the CPI isn’t perfect because it supposes that the market basket is constant over time, a traditional CPI does not adjust for either new products on increases in product quality. A 1950s black and white TV is nothing like your 40-inch flat screen.

Government economists use adjustment elements to account for technological progress and keep two different years comparable. But in general, we can use the Consumer Price Index to calculate the rate of inflation and how quickly the price levels could rise from one year to another.

In France, prices sped up in the ’40s right after the war, slowed down in the 50’s and 60’s and then sped up again during the ’70s and ’80s, since then it has been slowly rising. On the other hand, prices in Japan have been falling for the past 25 years.

So what causes inflation? What happens exactly?

Let’s say we gave Alan 1 Million euros and asked him to start buying goods. If other people also have the same amount of money, they will be bidding up the prices of goods and services. If Paul offers 15€ for a Pizza, Alan might counter-offer 20€, then Anna would counter-offer back 50. And so it goes on. This is actually called “Demand Pull Inflation”; when there’s a lot of money, chasing much fewer goods.

Another cause of inflation would also be the decrease of availability of a vital productive resource, like oil for example. An oil shortage would increase the prices of gasoline, which itself would increase the cost of processing and delivering flour, cheese, and other ingredients, thus increasing the cost of making Pizza. And therefore a smaller number of Pizzas can be produced. Economists call this Supply Shock, and this causes “Cost Push Inflation”.

So in general, higher demand and lower supply means higher prices.

On the other hand, when it comes to the 2007 Subprime mortgage crisis it’s hard to explain the rise in home prices with only supply and demand. The American population didn’t suddenly skyrocket or get that much richer and there was no shortage of building materials. So what happened? Home prices have diverged from these fundamentals, between the years 2001 and 2006, into what economists call “bubble”. In the early 2000s, low interest rates and fraudulent lending practices encouraged people to buy homes, thus raising demand and increasing prices.

People assumed that this upward trend would continue forever so they liquidated whatever they had and bought houses in the hope of making a profit. The more buyers were pulled into the market the faster prices rose.

The main problem with a bubble is that it depends on an ever increasing supply of buyers, even if each buyer is betting that they will be able to sell at a higher price to the next person. And eventually, you run out of buyers and the bubble bursts.

Bubbles aren’t new. We can all remember the early 2000 stock market crash due to the reckless behavior of investing in anything that ended with a .com or a .net.

Perhaps the mother of all bubbles was the 1630s Dutch tulip mania. Tulips became a status symbol among the upper classes that competed for the rarest bulbs, driving up the prices. At the height of the mania, people traded or sold their possessions, including properties, to participate in the Tulip mania. Eventually the bubble burst and tulip bulbs are now worth less than a euro.

Kevin ROMANTEAUKevin ROMANTEAUJune 6, 2018


From an early age I have been fascinated by finance and in particular hedge funds. At the age of 16, I started trading and my passion grew for corporate strategic actions taken by activist hedge funds. My previous experience both in speculative hedge funds – and my current position in investment banking, gave me the necessary tools to analyze markets and develop strategies. Recently, I have been invited to speak at the Middle East Investment Summit in Dubai, Factset, BFM Business and French Ministry for the Economy and Finance on the “Shareholder Activism” topic.

Activism is a strategy in which an investment firm takes a minority position in a public company with the ultimate goal of unlocking value. It targets companies with poor stock price performance, ineffective and/or inefficient capital deployment and/or poor corporate governance.

By deploying a wide range of private and public tactics, Activists can achieve improvements in company performance and share price. Activists typically follow a familiar pattern of escalating pressure by focusing on corporate strategy, performance, capital structure, boards of directors and M&A activity.

Sharing my activist vision, this article will detail the understanding ‘Shareholder Activism’.

Activism Overview
In the late 1990s, a new actor entered in the corporate governance scene. At this time, the term ‘activist shareholder’ was synonymous with ‘corporate raider’ – a term many of you may be familiar with. Since then, the activist role has become a niche sector where few hedge funds, including Elliot Management, decided to develop sophisticated strategies to unlock the value of these companies through corporate strategy action such as capital structure allocation, Board actions, and M&A activity.

This is mainly due to the recent financial crisis, which has created one of the most challenging business environments since the Great Depression. As a result of the financial crisis, in the past few years companies around the world have significantly strengthened their capital structure by deleveraging, reducing capital expenditure, increasing equity base and maintaining a conservative strategy. The result has been the accumulation of a large pile of cash for corporates.

The number of activist campaign had nearly doubled in the last 5 years. At least 50% of the campaigns were located in the US focusing mainly on Industrial, Telecom and Services sector. The economic condition in Europe and the Middle East and Africa convinced Hedge Fund to focus in. Now, this region is becoming a new ‘Eldorado’.

Last year, Activists deployed a record amount of capital through 805 campaigns. Through these campaigns they were able to leverage their credibility with traditional shareholders and access large pools of capital with almost $200 Milliard and so target the largest companies globally. The campaigns on large cap companies such as BHP, Credit Suisse, Erickson and Nestlé confirmed that national champions and every industry can be targets and that no company is exempt.

What is driving the rise in shareholder activism?
The most compelling reason for the gaining popularity is that activists have outperformed the market and achieve significant returns for their investors. There has also been a fundamental shift in the perception of shareholder activism. They are no longer seen as the “corporate raiders” but more like legitimate investors seeking to increase shareholder value.

What is shareholder activism?
Activism is a strategy in which an investment manager takes a minority position in a public company and elaborating a course of action that unlocks value in order to transforms the long-term performance of the target company.

There are numerous ways which activist shareholders exert influence on the board of directors or company management. Activist investors typically start with simply engaging in dialogue with the company leaders to encourage change. Some activist shareholders also take their concerns public, using the media to illustrate their perspective and expectation.

Activists seek to influence a company, rather than control it. They are relatively long-term investors and frequently structured to provide ‘patient capital’. Finally, you understand that activism uses a hybrid approach between private equity and hedge fund.

Activists are vital for strengthening Corporate Governance, Merger and Acquisition operations, Operational improvements decisions, Capital structure adjustments.

In terms of track records, last year 70% of the activist campaigns were successful and deliver an average return of 20% per year depending mainly of the strategy and target’s geography.

How activist select their target, what are the target criteria?
Often activists identify business issues with strategic and/or operational decisions that CEO or management have made. For example some companies lack a clear strategic plan and have underperforming businesses, or keep locked excess cash on the books. Another hot topic for activists is criticizing governance issues such as CEO compensation, Board diversity or the number of independent directors. They are looking for to take a Board seat to have more influence and convince other shareholders to intent action. The most reason is that in many cases, the companies have lost their way or vision and are unable to operate within a new environment.

Isn’t management supposed to anticipate change to reduce risks and thrive in any environment?
Current management, perhaps managed well the company in the past, is no longer effective – as you know, the past is not always a reflection of the future. A company constantly needs to develop new products and innovations to compete in the new economic environment and meet evolving customer demands.

When a company fails, it is due to a lack of strategy, poor asset utilization, disruptive technologies, or simply poor management decisions. When management does not have answers, someone needs to step in with new ideas and “out of the box” thinking to fix the corporation issue and restore corporate performance and shareholder value.

How unlock the value?
‘Firstly, get to know the business well as well as the company’s accounting policies. Wealth creation requires investment that must be financed and be sufficiently profitable.’

The activist has been the instigator in a sense to show where the value really lies and once that’s shown to the public.

How activist hedge fund can pretend to understand the company better like the management?
Activist Hedge Fund simply engages its own due diligence on public company. Let’s thing about it, when a Private Equity Fund acquire a stake in a private company, a due diligence is realized. I would like to remember you that the shareholder of public company has the rights to inspect books and records of a corporation. But it does mean that the corporation will always comply. Shareholder must turn to the courts assistance. After the activist get a deeper understanding of the company can challenge the management and the Board.

In the coming years, Activism will adopt a more constructive approach by working closely with corporate boards in a cooperative way. Fund managers will have greater interaction with the companies they invest in, but retain their sense of Activism as opposed to asset-stripping. Finally, I see Activism becoming more sophisticated and spread across European and emerging markets such as Asia and the Middle East and Africa.

Kevin Romanteau, Mergers & Acquisitions at BNP Paribas, UAE

Matthieu VITEAUJune 2, 2018


The 21st century is the world of complex and dynamic change. Investing in the age of disruption is obviously a challenge judging by how often the topic is addressed. John Mauldin and his network of analyst hold an annual conference (the Strategic Investor Conference) entirely dedicated to that issue.

I hold the view that short term asset management, the search for constant high yield and leveraged return on investment have had a destabilising factor for decades on the real economy. My conviction is that it is high time finance and the economy got reconnected, and I believe impact investing is one way to reconcile both.  To make it short, impact investment seeks to generate social and environmental impact as well as financial returns. This is taking place all over the world, and across all asset classes. What I especially appreciate about impact investing is the structuring effects of invesment on businesses, communities and nature.

When considering long term value and investment risk in a rapidly changing world, one needs to look at trends – societal trends – which pave the way to tomorrow’s economic landscape.

Macrotrends underpinning economic realities

  • Demographics: the world population will continue to grow, but with significant differences according to the regions considered[1]. Migratory flows toward cities have been growing and will likely continue to grow over the medium and long term. Migration is driven by economic, social, political, demographic and environmental factors[2]. These factors do not uniformly affect migratory flows, especially when they have an international outreach: some factors can be relatively less important compared to others. Migration has the potential to deeply destabilize societies – both sending and receiving societies – as those who leave do not contribute directly to local empowerment and to the development of the local capacities in their country of origin. They may however indirectly contribute to these endeavours by sending remittances back home [3]. The bottom line of demographics is that they shape economic and broader societal trends.



  • Sustainable development: a critical mass of humankind seems to have become conscious that it lives in a finite world with finite resources. If the legally-binding objectives of the 2015 COP21 agreement are abided by the 195 signatory parties, 4/5 of fossil fuels should remain in their reservoirs. There is a growing awareness – made manifest by societal demands and the advent of new businesses – that humankind’s footprint on the Earth should lean towards the minimal. This shift in perceptions is yet to be translated into behavioural changes: sustainable development is overwhelmingly seen through the technological lens. The blending of societal wishes, behavioural changes, regulatory frameworks and business practices is necessary to make sustainable development tangible.


  • Technology: the 3rd industrial revolution[4] is said not to have reached full maturation yet and still it has profoundly changed societies over the past two decades. That revolution is based on the use of the renewable energies which themselves rely on information society. Looming ahead are artificial “intelligence” and the Internet of Things and all the technologies stemming from these. There is a common element to all these high technologies: they all rely on finite raw components (rare earths) to function. There is a problem though: these rare earths are 1) limited in supply[5], 2) are not renewable[6], 3) restricted in availability[7].

Suggestions of assets for an impact investing portfolio

Investors who seek to create long term sustained value may wish to organize their portfolios according to the macrotrends described above. Here are some proposals for the tangible applications for investments.

1. Local business endeavours: the point about investing in local business endeavours is that they create sense to their local communities. Their resilience is likely to be higher than multinationals whose interests are not necessarily in line with the environments they extract value from. Local businesses – starting with small and medium businesses – form the backbone of an economy. The shorter the supply and value chain, the more resilient a company is – and together with it, the societal fabric it is anchored in. Local employment means a higher likelihood for migrations for economic reasons would decrease. Not only would individuals feel empowered but dynamics would be triggered that local value creation would occur.

2. Low technology businesses: for all the potential bestowed upon artificial “intelligence” and digital technology, they carry the risk of increasing the dependency of communities and businesses toward external suppliers whose interests may not be common to their customers’. For high technology to work (and these are indispensable for renewable energy technologies, smart cities, the digital economy, etc.), energy needs to be constantly supplied to machines. This entails efficient, resilient and redundant infrastructures that are usually fragile and quite sensitive to local climate conditions. Finally, high technology needs robust[8] computer software to ensure confidentiality, integrity and availability of the transmitted data. Low technology ought probably not to be discarded right away as it is often more suitable to some physical environments than high technology. Low technology businesses are likely to be less vulnerable to systemic risks, less energy intensive and require less specialised workforce to maintain[9].

3. Circular economy[10] businesses: this is where technology may meet behavioural change. Because so little raw material are reused globally, these businesses are likely to yield the most unexpected return on investment – including on the short term. As high technology increasingly needs finite materials, the shift of paradigm in production processes, consumption and reuse underpinning the circular economy may make these businesses pivotal for sustainable development.

4. Education businesses: people, however much qualified they are, need to constantly train and retrain to adapt to societal changes – these include the employability skills and job qualifications. As societies progress into the era of sustainable development, new business needs arise, new ways to conceptualizing challenges and complexity are needed. If societies and businesses are becoming more lateral than vertical in their organisations and processes, individuals need to shift their world views in order to find appropriate solutions to the quandaries they face. Education – both academic and vocational – will always be relevant as the need to adapt is continuous.

5. Artistic endeavours, tourism and empathy-based businesses: this last proposal for investors may appear somewhat outlandish as what they produce is very often very arduous to assess. Because they are mostly based on personal experience, attributing an objectively measurable accounting unit to the value they create. Yet, what is increasingly sought by consumers is experience to live rather than products to hoard. The more exotic and unique the experience, the more sought after and valuable it is. The said experience need not be costly to be unique and highly sought after. By the same token, people spending most of their waking hours in front of a screen – either a computer or a smart phone – feel the increasing need to “disconnect” and “reconnect” to real life, emotions, whatever triggers an empathic stimulations that dematerialized processes and relationships cannot bring.



[1] See the United Nations population division’s website on the world’s population prospects 2017. As a very rough illustration of these differences in population growth, see the two graphs for the “more developed regions” and the “less developed regions”.

[2] For an overview of these factors, see “Migration and Global Environmental Change”, final report, the Government Office for Science, published by the United Nations, pp. 44-45.

[3] See “Migration and Remittances”, World Bank group, 2016

[4] See “the third industrial revolution”, Jeremy Rifkin, Palgrave Macmillan, 2011

[5] For instance, the ground holds 1,200 times fewer neodyme and 2,650 times fewer gallium than iron ore.

[6] Almost none of these rare earths see any recycling as the quantities used in batteries, smart phones, computers, turbines, magnets, etc. are so little that processes to reuse these materials are not considered cost-efficient.

[7] Less than 10 states hold the total known supply of rare earths on the planet. Of these 10, China holds the lion’s share. For a map of rare earths deposit locations, see:

[8] Robust here means: resistant to cyberattacks, adaptable to systems upgrade and protective of privacy.

[9] As an illustration, Europe is undergoing a dramatic shortage of information technology qualified labour.

[10] For a brief overview of the circular economy, see Ellen Mac Arthur Foundation:

Matthieu VITEAUMay 29, 2018


Misconceptions and uninformed perceptions about Iran are ongoing. Yet, political, and more broadly, societal dynamics in Iran are no more outlandish or exotic than those unfolding in most countries in the world. The tension betwen the rule of law and politics in Iran are no different than what can be witnessed in other parts of the world. In that regard, what’s happened in Yazd since May 2017 deserves notice in that regard. On November 3, Al-Monitor reported on an ongoing debate surrounding one Yazd city municipal Councilor. One of its members, whose mandate was renewed in the May 2017 municipal elections, stands to be evicted from his office by court order. The legality of the invalidation by the Court of Administrative Justice has been hotly contested since then and the mandate of Sepanta Niknam remains in limbo.

It is to be noted that Mr. Niknam’s victory was not contested by any of the other contenders at the time, is stated to have legally (as per the Constitutional provisions) and legitimately won the seat.

What is worthy of notice is the angle from which the battle is fought. The election of M. Niknam was deemed by the Council of Guardians contrary to what appears to be the spirit of the Constitution of the Islamic Republic of Iran, most likely Article 4:

“All civil, penal financial, economic, administrative, cultural, military, political, and other laws and regulations must be based on Islamic criteria. This principle applies absolutely and generally to all articles of the Constitution as well as to all other laws and regulations, and the fuqaha’ [mujtahids – author’s note] of the Guardian Council are judges in this matter.”

The Council’s move is opposed by those (not least the chairman of Yazd’s City council, Mr. Sefid, and the chairman of Yazd’s Bar) who contend that the Article 99 of the Constitution makes no explicit mention of the Guardians’ role in municipal elections and therefore the legal basis for the Administrative Court’s invalidation of Mr. Niknam’s mandate is not valid.

The Court of Administrative Justice handed down its award basing it on a “letter” written by Ayatollah Ahmad Jannati, Chair of the Guardians Council. This letter (“ نامه“ ), according to Iranian news agency ILNA, was published in the official journal of the Islamic Republic. Therein, Ayatollah Janati refers to Amendment 1 of Article 26 of The Council’s Elections Laws. Article 26, Section D reads: “the nominee must have faith in Islam and has proved in practice his obedience to Islamic values and to the governance of the Jurist”. Yet amendment 1 states that the “minorities recognized in the Constitution (here including Zoroastrians) must have faith in their own religion and prove in practice their obedience to their own religious values”.

From that perspective, the fact that the Court handed down an award using that letter as a legal base may appear as a minor point: whatever the legal value of that letter and no matter how eminent Ayatollah Jannati is, the text of the Constitution does not seem to provide for the Council to intervene in local elections. According to article 173 of the Constitution, it is solely the remit of the Court of Administrative Justice to judge the legality of Mr. Niknam’s election. One may be tempted to say that the Guardian Council’s move is “unconstitutional”.

The dynamics of Iranian politics are not much different from those occurring all over the world: politics are a means to redistribute assets  within a given human community. These assets can be tangible (land, hard money, real estate, jewelry, food, etc.) or intangible (the granting of/appointment to an office, a title of symbolic and/or social significance being bestowed, an alliance of any kind, etc.). The mechanics of redistribution can be more or less transparent, legal or legitimate. Politics is one way to achieve a final end state (whatever it is).

The way this redistribution is carried out, though, is often more impactful than the actual wealth (either material or symbolical) being redistributed. Here, the resource at stake could be the ability to influence the local government’s policies and decisions. One has to recall that the 2017 Iranian elections saw Reformist factions victorious not only at the state level (Presidency, the Islamic Consultative Assembly/Parliament) but also at the local levels (they notoriously won the Tehran City council and the mayoral office – two different institutions). Over the last few months, the more conservative factions of Iranian powerbrokers have been trying to reconstitute their capacity to influence politics.

The Guardians Council is a bastion of the status quo and principlist factions. It is also a state organ. Half of its members (the mujtahids) are appointment by the Supreme Leader, while the other half (the jurists) are elected by the Consultative Assembly of Iran (the Parliament) from a list drawn by the Head of the Judiciary, himself appointed by the Supreme Leader.

What’s happening in Yazd seems to pit the state – more precisely the ability of the most conservative groups of Iranian politics to influence the country’s political play – against a city council.

Of note: Mr. Niknam is a Zoroastrian. Zoroastrianism is one of the religions indigenous to Iran. It was the official belief of the Sassanid Empire before the Muslim conquest replaced it with Islam. Zoroastrianism holds a specific place in the Iranian Constitution (art. 13, art. 64) and it is a religion recognized by the state. Mr. Niknam was allowed to run, win and carry through his previous mandate (2013-2017) unhindered.

In other words, Ayatollah Jannati considers Mr. Niknam illegitimate to represent a constituency where the vast majority of people are Muslims. Under the guise of upholding the spirit of the Constitution, the conservative factions of the Principalists may be attempting to regain influence at the local level at the cost of the rule of law in Iran. The population of Yazd is one of the more traditional and religious in Iran. Yet a Zoroastrian was elected for a second term. It is perhaps no wonder that some factions that ended up on the losing side in May are anxious about their ability to regain some leverage to legally influence the mechanism of redistribution.

There may be local realities and less obvious dynamics which may have led to the legal and political play currently unfolding in Yazd city. Yet, this can only happen when a critical mass of a population has reached a certain level of political consciousness and economic empowerment. Contrary to what may be perceived from outside, Iranian society, very likely because of its high level of education and its demographic trends, is far more diverse and lively than meets the eye. What is being played out in Yazd is one manifestation of the complexities of Iran.

Matthieu VITEAUMay 29, 2018


One of the objectives often sought by companies is to merge. Whathever the reasons presiding over such a decision, it usually results in a larger structure. Global companies have nearly all begun as a small or medium size businesses. Bigger is not necessarily better, especially when doing global business. Medium and small-sized businesses may likely do better business abroad. This assertion may prove more accurate as each day passes and larger corporations become increasingly vulnerable to extra-territorial economic sanctions when doing global businesses.

Bijan Khajehpour, a frequent contributor to al-Monitor reports in this article:

foreign banks are slowly reconnecting with their Iranian counterparts and other Iranian economic agents. Amongst those he highlights are two from Iran’s main trading partners (China and South Korea), Russia, but also from Europe.

What is probably worthy of interest is the size of the European banks involved, as well as the countries they operate from. The Danske Bank is Denmark’s largest bank with a very strong regional footprint in the Baltic Sea region and with international outreach. Oberbank is an Austrian bank which capital structure is essentially made up of local and regional Austrian banks.

It is quite likely that this is no surprise for these banks to be amongst the first to venture into Iran-Europe business – and for them to feel to be “allowed” to do so by governments. I suspect the Dankse Bank and Oberbank not to be significant enough – at least not as significant as Barclays, JPMorgan and Société Générale – to warrant the attention and efforts of the Office of Foreign Assets Control of the US Department of the Treasury.

Additionally, although Denmark and Austria are member states of the European Union – and as such are as much instrumental as any other member states in the decision making process relevant to the EU’s Common Foreign and Security Policy -, they are probably perceived to have limited political interest in the eyes of the US State Department and the Treasury.

In short: any activity – be it of business and economic, political, social nature – from these countries are less likely to be noticed and impeded by international constraints.

There is no comparison to the Chinese and South Korean involvement coming with respectively CITIC group and China EXIM bank for the former, KEXIM for the latter. All three are government-owned financial institutions and both countries very likely carry a heavier weight in the US Treasury’s considerations.

Of note are both European banks’ investment policies: these promote and provide prudential services for medium size companies (Oberbank’s capital structure is especially telling in that regard) when doing business abroad and enter into international ventures. These projects do not usually draw anyone’s attention, contribute to the development of the economic fabrics at the local and regional level with possible long term snowball effects on society.

As much as all politics is local, business ties a more likely to be successful if developed at a local scale. Doing so heighten the chances no to draw international politics into deals’ decision making process, attract the attention of (international) competitors and to understand the local dynamics and complexity of the markets.

Matthieu VITEAUMay 29, 2018


Since 2009, the year when half of Greece’s main port – Piraeus – was leased out to China’s COSCO, Chinese state-owned enterprises have taken increased stakes in the EU’s economic landscape. China’s economic footprint spreads in Europe. The push to further gain European assets – either physical or intangible – has grow and although not new, the trend rarely reaches headlines. The following Bloomberg article is an attempt to sum it up after roughly 10 years of takeovers or just acquisition of capital shares.

The European Council of Foreign Relations as well as the EU (notably the EU Institute for Strategic Studies, the EEAS) have been keeping an eye in the EU’s eastern member States – yet perhaps not that much in its western half.

Now, 27 ambassadors of EU member States posted in Beijing are taking a stance on the One Belt-One Road strategy. Reflecting the Hungarian government’s policies of the past decade, the Hungarian ambassador to China did not join with the other 28.

Far more than just mere political posturing, the Chinese projects ought to be looked at and in deeper: how sound are the economic fundamentals of Chinese state-owned entreprises (SOEs) – and its broader economy – when figures and data are not transparent, available on a selective basis and shadow banking prevalent?

If SOE can be considered solvent as they are the Chinese state supposedly own them (what if it doesn’t at some point?), do they obey to the rules governing the EU’s markets?

Unbeknownst to many, the EU – namely the Commission – is efficient in increasing the resilience of the EU territory (and therefore, EU citizens) from unwanted geopolitical influence by successfully enforcing competition regulations and enacting the 3rd Energy package (the Energy Union).

The EU is not all powerful: it acts upon the powers conferred onto it by member States and citizens within the framework of the rule of law.

It is high time EU stakeholders – not so much states and public authorities but rather corporate decision-makers and even citizens – realised the more assets both tangible and intangible they sell off to non-EU entities for short term gain, the less options the EU populations will have over the long term to increase the resilience of human communities in the EU.

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