The times when chocolate was a luxury good are long gone. Consumption has increased continuously and amounts to about 5.2kg per person and year in Europe. While demand has been on the rise, climate change and social problems in production constitute challenges that cause an imbalance of supply and demand. For the cacao farmers, the chocolate dream can easily turn into a nightmare. We talked to Stefan Rößler, quantitative analyst in the ESG team of Erste Asset Management, about how this situation could be changed.
Our latest issue of our sustainability magazine (ESG-Letter) deals with chocolate.
Austrians love chocolate, no matter what aggregate state. Solid, as melting bar, liquid, as hot chocolate, or gaseous, as perfume or aphrodisiac. We have a sweet tooth and love our chocolate. But what does this have to do with sustainability? A lot, as we believe.
Everybody who has read academic literature on the performance of shares will know about the fact that value shares (and small cap shares) outperform so-called growth shares in the long run.
Gerhard Beulig, fund manager and responsible for the YOU INVEST line, expects capital markets to remain highly volatile for a while. The central banks are trapped by their own extreme interest rate policy; interest rates therefore remain at practically zero percent for short-term investments, with no trend reversal in sight. Investors who want to earn at least the rate of inflation in the long run, will find no way around investing on the capital markets. At the moment the fund management team prefers the USA to the Eurozone due to the positive interest rate differential; we regard equities as neutral. The foreign exchange risk remains hedged.
The Council of the European Central Bank (ECB) further loosened its monetary policy on 10 March 2016. In view of the decline of the leading economic indicators and the excessively low inflation in the Eurozone, the bundle of measures introduced by the ECB is necessary. But, to paraphrase Mohamed El-Erian, the expansive central bank policy is “ the only game in town”. Effective fiscal policies and structural reforms have been a long time coming. At least the effectiveness of the central bank policies, while it has declined, does still exist.
The economic indicators are falling but do not suggest a recession. The central banks are implementing expansive measures in order to fight deflation risks and to stabilise the financial markets. Hence, the data is slightly better than capital markets were expecting. This gives room for a little breather.
The United States are currently in the spotlight, given the primary elections for the US presidential election in November. But what does the US economy look like at the moment?