Thematic Commentary – 31 July

In today’s rapidly evolving market, investors need to stay on top of the latest trends and themes that fuel growth. In this monthly publication, we offer our market commentary across our themes, covering new opportunities and potential challenges. By providing a deeper understanding of our themes, we aim to help you make more informed investment decisions and achieve your investment goals.

Circular Economy^{1 2}

Sustainable Food³

In July, Russia refused to renew the wartime deal that allowed the safe shipment of Ukrainian grain through its ports in the Black Sea. Ukraine and Russia are two of the world’s largest agricultural producers and almost 33 million metric tonnes of grain have been exported since the Black Sea Grain Initiative was brokered a year ago. Russia’s foreign ministry said the termination of the deal also means the

“withdrawal of navigation safety guarantees, curtailment of the maritime humanitarian corridor, and restoration of the regime of a temporarily dangerous area in the northwestern Black Sea”.

Russia has since attacked targets in the Odesa region including critical river port facilities and grain silos. These developments could spell trouble for food prices, as well as global food security, just as inflationary pressures are easing. Impacts have been felt on global markets with wheat, maize and soybean oil prices rising notably in July. The UN’s food-price index, which measures prices across a basket of commodities globally, rose by 1.3% in July reversing a downward trend that has seen the index fall -6.0% this year to the end of July.

Building resilient infrastructure is a key aspect of climate adaptation. Arcadis, NV5, and Great Lakes Dredge & Dock Company, LLC are all leading the way in engineering and infrastructure solutions. Arcadis, for example, focuses on designing and engineering infrastructure that can withstand the impacts of climate change, such as extreme weather events, rising sea levels, and flooding. This includes resilient transportation systems, water management solutions, and urban planning. With the imminent flood of investments in adaptation-related industries, there are numerous opportunities available for impact investors who look beyond crowded clean energy and climate mitigation trades.

non-steroidal anti-inflammatories. About 21% reported a decrease in opioid-based medication use with cannabis. The study suggests medicinal cannabis could serve as a harm-reduction tool, particularly for veterans seeking to reduce pharmaceutical drug usage. However, the study has limitations, including self-reported data and potential funding biases. Furthermore, congressional efforts to explore marijuana’s medical potential for veterans have encountered obstacles.

Digital Payments¹⁰

In July we had quarterly earnings results from card payment networks Visa and Mastercard. The closely monitored earnings reports for these companies act as a global barometer of payments activity. In Q2 2023, Visa and Mastercard experienced revenue growth driven by cross-border volumes thanks to resilient consumer spending and a gradual return to travel. However, the year-over-year growth rates were slower due to the current macroeconomic environment that contrasts to the post-Covid travel surge from the previous year.

Visa reported a 14% increase in international transaction revenues, significantly lower than the 48% growth seen during the travel recovery period. Nevertheless, cross-border card transactions remained strong, with Visa’s travel-related cross-border volumes up 41% compared to four years ago. Mastercard saw a 24% growth in cross-border volume, higher than Visa’s, but slower than the previous year.

Both companies also provided updates on their B2B offerings, with Visa mentioning a partnership with Alchemy Pay in Mexico and Mastercard launching Mastercard Cross-Border Services Express to accelerate customer onboarding.