International Finance
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Time in the market is better than timing the market: Vivek Sharma

IFM_ Vivek Sharma_ Edelweiss Wealth
Areas of banking that depend on economic activity may suffer – consumer banking, consumer/business loans growth, credit card usage, mortgage business etc

Vivek Sharma is a Senior Executive Vice President & Head of International Clients Group, Edelweiss Wealth. He is a finance professional with more than 17 years of experience in the Capital Markets, Investment Management, and Wealth Management industry. In his professional stints with Edelweiss, both in India and in Singapore, he has been instrumental in conceptualizing and building businesses from startup to growth phase. Vivek also brings with him diverse experience across Investment strategy, institutional sales, and business strategy along with managing diverse teams and P&L responsibility. Vivek has also been instrumental in building and managing some of the marquee group-level global partnerships at Edelweiss, in international markets.

In his current role, he has the mandate to build and grow the International business across Capital markets and security services under Edelweiss Wealth Management. Prior to his current assignment, Vivek was the Head of Asia for the asset management business at Edelweiss. Vivek is a passionate business leader and enjoys working with diverse stakeholders to achieve collective business growth. He is a regular speaker at capital market forums and is associated with Market Advocacy initiatives for the group. Vivek is an Economics Graduate and holds a Master’s degree in Business Administration from Symbiosis.

As a young veteran of 18 years, Vivek commenced his career graph with the consumer banking business at Citibank, followed by a product investment role at ING Investment Management which led to varied roles at Edelweiss. He is among the few Indian financial services business leaders to traverse roles across the value chain from wealth management, asset management and institutional securities in India and abroad.

Vivek has spent the last few years propagating the India growth story to global investors, a natural people’s person and compelling storyteller. Not one to let cynicism cloud his judgment, Vivek believes in looking at objectives with a realistic lens. He believes that the pandemic has been a blessing in disguise for India in a lot of ways. “Our ability to fight the pandemic and emerge with a new wave of businesses and ideas, has made India look more attractive than at any time in the past. As the country approaches the $5 trillion mark in terms of GDP, the international community would only welcome the opportunity with open arms,” he avers.

According to Vivek, qualities such as collaboration, accountability, transparency, and clear communication are the key mantras to successfully grow and build business’s in the long term. In his interview with the International Finance Magazine, Vivek Sharma shared insights on topics like Digital Banking, Fin-tech, Asset-Management, Crypto, and much more. An excerpt from the interview:

Q) Tell us about the products/services/solutions your company provides and how they get value out of it?

A) Edelweiss Asset Services, which was established in 2013 (a custodial arm of Edelweiss Wealth Management), is a SEBI (Securities and Exchange Board of India) registered DDP (Designated Depository Participant) and offers the regulated business of custody and clearing services to global investors that invest in India’s capital markets. The firm has global offices in Singapore, Hong Kong, London, Dubai, and New York. We offer a plug-and-play model and fully integrated services across Securities Custody & Safe Keeping, Derivatives Clearing, Setup Advisory, Research & Execution Services, and Compliance Support that meets every business requirement of Foreign Investors to invest in Indian markets.

Our clientele includes Foreign Portfolio Investors (FPIs), Mutual funds, Alternate Investment Funds, Portfolio Management Services, Domestic Brokers, Corporate Treasuries, and High Net-worth Individuals (HNIs). Our focus within the FPI segment is across institutional formats such as Hedge Funds, HFT’s Quant Funds, Proprietary Trading Firms, Long only & Family offices.

Edelweiss has been present in the Indian Financial Services space for about 25 years and has emerged as a choice of India Partner for global institutional clients, primarily because of the specialist role we play and for the support we provide throughout the investment life cycle right from set-up to advisory to transactions to closures. Today, Edelweiss Asset Services has grown exponentially to become the dominant clearing member of the country and commands a significant market share in the NSE (National Stock Exchange of India) F&O segment.

Q) Banking has become digital in most countries, what is the biggest challenge that you see with digitization?

A)  The compatibility between different systems is one of the biggest challenges. As a custody and clearing services provider to global clients, different clients will have different back-office systems depending on their legacy systems, choice of other service providers, degree of outsourcing etc. One of our biggest USPs is the ability to adapt our service to be compatible with the systems that our clients are using. Unlike many similar players in this space, we are able to do this because we have developed our digital systems in-house and thus, able to customize it to suit our client’s digital requirements.

Another challenge with increasing digitalization is data privacy and security. Clients are concerned with ensuring the data that they provide to us, which can include some very sensitive personal information of their directors, and UBOs for KYC purposes, are well safeguarded. This is a big concern with rising cases of hacking, scams, and data leaks.

Q) Is the global economic downturn threatening Fintech growth?

A) The structural factors behind the growth of the fintech industry remain intact despite volatility in the economic and business cycles. In many countries, there is a substantial portion of the population that is unbanked or underserved when it comes to basic financial services, with the incumbent banking players remaining unable or unwilling to fill the gap due to a variety of reasons – legacy systems, capital constraints, regulations, industry structure, etc. This is dovetailed with the fact that the younger generation in these countries is digital natives and thus comfortable with fintech services delivered through technological platforms that circumvent traditional routes of delivery.

Q) As recession looms, how do you see the future ahead?

A) There will be short-term volatility and downside risks in the short term, especially with a tighter monetary policy regime globally, a stronger US dollar, high inflationary pressures from supply chain disruptions, geopolitical tensions, and robust post-pandemic demand.

Beyond short-term market gyrations, the long-term demand for investment services and investors choosing to stay invested remain robust. We have seen a strong activity from our client base in terms of new FPI account openings, and continue to have a strong pipeline of global clients looking to set up their FPIs this year.

Q) Crypto is not legally accepted in many countries, what’s your take on it?

A) The technology underlying bitcoin and many other cryptocurrencies – blockchain, decentralized finance, distributed ledger technology – will have long-term adoption and use-cases. We are seeing new fin-tech players utilizing these technologies and pioneering new forms of financial services or new modes of delivering existing financial services from these technologies.

The highly speculative elements of cryptocurrencies make them hard to value and subject to extreme volatility. This means they are not a useful asset class from a portfolio management perspective, besides their function as a speculative investment.

Q) How will an unstable economy impact the banking sector?

A)  Areas of banking that depend on economic activity may suffer – consumer banking, consumer/business loan growth, credit card usage, mortgage business etc. Banks with robust asset and wealth management arms that can generate stable fee incomes, independent of margins and loan growth, would benefit as investors position their portfolios defensively to weather the uncertainty.

Capital market activity will tend to slow down as deal-making becomes tactical and opportunistic as companies adopt a wait-and-see approach before doing acquisitions. Trading activity will also tend to slow as financial market participants become defensive in the face of uncertainty.

Q) What would be your advice to asset-management firms?

A) Have a clear strategy for establishing a strong competitive advantage, given that the asset management industry is becoming increasingly crowded. This can be in the form of scale or niche expertise in a particular asset class or geography. Improve processes and productivity through technological solutions or service providers who can offer superior technological offerings.

Q) Since the economy is passing through bouts of instability, what kind of investment advice will you like to give to our readers?

A) Remain invested in the market through a well-diversified portfolio as time in the market is better than timing the market. EM countries like India offer good long-term growth prospects and should definitely be in a well-diversified portfolio.

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