Macquarie’s Bold Bet On Research Paying Off

Australian investment banking major says it intends to continue investing heavily in research, after its strategy of doing so paid off during the global financial crisis.

Richard Sheppard, Macquarie deputy managing director said that the investment bank’s commitment to research has helped the company vault from a niche regional player, into one of the top ten investment banks in the world. Macquarie now covers 3000 stocks including more than 50 per cent of the US market.

According to Mr. Sheppard, the investment bank saw the crisis as a unique opportunity to expand in the US, and acquired Constellation Energy’s natural gas downstream trading operations, Fox-Pitt Kelton Cochran Caronia Waller a boutique investment bank and Delaware Investments, an asset manager.

“Typically we have taken a long-term view and seen these types of downturns as opportunities to get set for the next wave of expansion,” he told an American Chamber of Commerce in Australia lunch in Sydney yesterday.

Mr. Sheppard said that there were people who saw the possibility of a credit crisis as early as 2006 and were able to short the market and run a profit.

“There were signs that this was coming and if you look at the longer-term history of the world, these times will probably come again. So there are big benefits of investing in research.”

Macquarie says it expects a period of fiscal austerity, which will mainly be offset by central baks maintaining lose monetary policy.

“The combination is bearish for currencies, but positive for risk assets such as stocks and corporate bonds,” Mr Sheppard said.

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