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Q&A with Steen Jakobsen

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29 Aug 2018

Q&A with Steen Jakobsen

Steen Jakobsen first joined Saxo Bank in 2000 and has served as both Chief Economist and Chief Investment Officer since 2009. He focusses on delivering asset allocation strategies and analysis of the overall macroeconomic and political landscape as defined by fundamentals, market sentiment and technical developments in the charts. He recently visited Sasfin in South Africa and sat down with Sasfin Wealth Communications Manager Bryan Silke, to share some of his insights and worldview.

BS: You studied Economics at Copenhagen University. Why did you choose this path of study, and have you always had an interest in the global economy?

SJ: In High School I had a teacher who was very politically active and she thought I showed great potential. She said to me, “I think if you don’t know what you want to study, maybe you should take a degree in Economics”. I love trading - my uncle was one of the biggest traders in Foreign Exchange in the world at that time.

BS: South Africa has very low projected economic growth. What is the primary factor holding us back as a country?

SJ: It has to be education – and redressing this is critical to future success. If you look at the economic model, what drives growth is demographics, and more importantly, productivity - the ability to produce more per unit of input. South Africa is characterised as having one of the lowest productivity rates globally. You have a huge amount of people getting very little GDP. If we turn that on its head, what are the most successful countries in the world? Denmark, Australia, Germany, Sweden, Norway - what they have in common is only one thing, broad-based equal access to an education system.

In Denmark, we pay people $500 per month to go to school because we believe that is the way that society regenerates and also regenerates ideas. Anecdotally, we have no natural resources. We have literally nothing in the ground that you can use but we have a great education system and a nation of citizens that just want to trade and barter and be smarter and more productive.

BS: You have intimated that Trump is the iteration of the end of a cycle, and we will see a dramatic shift. Can you explain how you see this unfolding?

SJ: It seems the reason he got elected was based on inequality in society and the discontent of a big group of middle and low-income people who had seen their disposal income eroded. Actually, I predicted both Brexit and Trump. This was exactly based on the premise that inequality was so large that Mrs Clinton became unelectable, representing the status quo, and Trump represented the sort of anti-establishment vote. But being anti-establishment is not going to create economic policy.

BS: What are your views on cryptocurrencies – do you own any?

SJ: I don’t own any bitcoin or other cryptocurrencies because I’m not actually allowed to own them through Denmark’s Banking Regulation. However, I wouldn’t choose to own them anyway, although I have a permanent crypto-analyst on my team. My personal view on cryptocurrency at large is that the winning cryptocurrency is not yet born. I believe there are two minimum requirements for the cryptocurrencies to survive long term. One is Know-your-Customer. The other is that in the future, no one will be able to do anonymous trading, everything will be in full public view. If you fast forward to five, ten years from now, I think the winning currency is going to be a super national issued currency, perhaps issued by the World Bank or the International Monetary Fund, perhaps as an alternative to the US dollar.

BS: What is the greatest investment you have ever made?

SJ: My shares in Saxo Bank - I was a young trader at the time, having joined from UBS and I bought 1% of

the company with $100 000 of my own money. I certainly didn’t think at the time that I joined that I would still be with Saxo 18 years later!

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