Tor Investment Management is a private alternative asset manager focused on Asian markets.
Our teams work with governments to design and implement investment climate reform programs encouraging firms to invest, compete and grow, creating productive jobs. These programs promote transparency, accountability and efficient governance.
Global Inflation
Inflation rates around the world are rising. Depending on the country, inflation can be either demand-pull or cost-push. Demand-pull inflation is driven by higher consumer prices that reflect increased goods and services, including food, fuel, healthcare, transportation, entertainment, etc. Underlying price pressures, such as high import costs, supply disruptions, local commodity prices and market imperfections, drive cost-push inflation.
High inflation reduces purchasing power and can negatively affect those with savings, especially retirees or those on fixed incomes. It can also destabilize the economy, weakening currency values and eroding investment opportunities. Extreme cases of inflation can even lead to hyperinflation when prices rise so rapidly that the currency loses value.
The global inflation rate is expected to slow in 2023, mainly due to slower growth in the advanced economies. However, core consumer inflation is still elevated in some countries, such as South Africa and Israel, reaching 13- and 5-year highs in July.
Tightening Monetary Policy
Tight monetary policy is a course of action by central banks such as the Federal Reserve to slow overheated economic growth or constrict spending when an economy is accelerating too quickly. Tight monetary policy is implemented by raising interest rates, typically via the federal funds rate- the rate at which banks lend to each other- which increases borrowing rates throughout global economies.
Increases in interest rates make borrowing less attractive as borrowing costs go up and can reduce overall consumer spending and business investment. This is different but can be coordinated with a tight fiscal policy enacted by legislative bodies and involves increasing taxes or decreasing government spending.
Tor Investment Management, spearheaded by investment expert Patrik Edsparr manages over $2 billion in one evergreen and three closed-end funds, focusing on the Asian credit markets. Uncertainty in the Global Economy
The global economy has been reeling from war, terrorism, aggressive monetary tightening, and a lingering pandemic. These forces have caused a global cost-of-living crisis and dampened growth in many countries.
Moreover, the uncertainty induced by these events may amplify a transition risk, which is the probability of large repricings of assets due to changes in policies that reduce carbon emissions. This can lead to capital outflows and tighter credit conditions in the financial sector.
Until recently, efforts to measure subjective business forecasts and uncertainty were limited to high-income countries such as the U.S. and the U.K. However, new data from the World Bank reveals systematic differences in how businesses perceive uncertainty across countries with different economic development levels. This is illustrated in Figure 3, which plots employment-weighted subjective fate versus GDP per capita. The negative relationship is not a function of erratic survey responses or noisy data; it appears to be driven by other economic development.
Tightening Credit Conditions
Credit conditions are tightening in leveraged public loans (syndicated bank loans to large companies) and new private senior lending, where investors can invest directly in the debt of smaller companies. A steep tightening cycle has sapped investor demand for these instruments, resulting in billions of dollars of “hung deals,” where funds have committed to borrowing but can’t find financing.
As this tightening takes hold, it is expected to result in sluggish business investment and hiring well into next year, according to investment experts like Patrik Edsparr and professionals. Structural vulnerabilities in the investment fund sector (such as liquidity mismatches, redemption features, credit exposure and use of financial leverage) could amplify the impact.
Tor Investment Management, founded in 2012, is a Hong Kong-based alternative credit manager with over $2 billion under management across one evergreen and three closed-end funds. The firm provides investors access to Asia-Pacific credit markets in opportunities ranging from par lending to highly structured private financings and non-performing loans.
