A market miscellany
INDIA SOMERSIDE
Associate – UK Wholesale
NICOLE WARDLE
Senior Associate – Private Wealth
TOMISLAV SURENDER-NOVAKOVIC
Investment Associate
PATENTS ARE A VIRTUE
“Beijing’s ambition is not simply to match Western innovation but to surpass it.”
CHINA’S RAPID RISE IN HIGHER EDUCATION IS RESHAPING THE WORLD’S ACADEMIC LANDSCAPE.
And that is a key cog in Beijing’s campaign to achieve global leadership in innovation. Between 2016 and 2025, the number of Chinese institutions in the QS World University Rankings more than doubled, from 30 to 72. And, for the first time, China had two universities in the global top 15.
Given its population of 1.4 billion and millennia-long history of scientific invention, you could argue China is actually under-represented. After all, Singapore, with 6 million citizens, also has two of the top 15. But the momentum is unquestionably with China.
That is no accident. For over two decades, Beijing has been strategically investing in higher education and research capacity. The results are impressive. In 2022, China awarded more than 50,000 science, technology, engineering and mathematics (STEM) PhDs, over double its 2007 total and far more than the US (nearly 34,000), as Figure 1 shows.
This expansion of STEM talent is delivering innovation in areas from artificial intelligence and advanced materials to semiconductors and clean technology. Just look at the numbers for patent applications: China now files far more applications annually than any other country (Figure 2).
But patents alone don’t bring success. China has created a nationwide innovation chain, a state-orchestrated system closely linking universities, laboratories and industry. So, while many of the patents filed may be incremental improvements rather than breakthrough inventions, they are rapidly and efficiently commercialised by China’s powerful industrial base.
Beijing’s ambition is not simply to match Western innovation but to surpass it, often by creating parallel technologies at lower cost to render competing products obsolete. ⬤
INDIA SOMERSIDE
Associate – UK Wholesale
“That tempting arbitrage opportunity created a transatlantic gold rush, one of the largest movements of physical gold bars between Europe and the US in decades.”
SOME CONSEQUENCES OF THE TRUMP TARIFFS WERE PREDICTABLE. OTHERS CAME OUT OF A BLUE SKY.
If you flew from Europe to New York in 2025, you may have been unwittingly sitting on a mile-high gold mine.
The threat of US tariffs unsettled precious metals markets in early 2025, helping drive gold prices to new highs. They also caused an abnormally large price gap between gold’s two main trading hubs: London, the centre for the physical gold market; and New York, a hub for futures contracts – agreements to buy or sell a specific quantity of gold at a fixed price on a future date.
Later in the year, Trump’s announcement of 39% tariffs on imported 1kg and 100oz bars from certain countries such as Switzerland caused another jump in the price gap. At the peak of this disparity in early August, gold was worth over $90 an ounce more in Manhattan than in the Square Mile.
That tempting arbitrage opportunity created a transatlantic gold rush, one of the largest movements of physical gold bars between Europe and the US in decades. By buying gold where it was cheaper and selling it where prices were higher, banks could capture risk-free profits. However, transporting physical gold internationally involves complex logistics, entailing security, insurance and transportation costs. So swift execution was critical. Traders at top financial institutions, including JPMorgan and HSBC, rushed to transfer gold from London to New York. In most cases, this involved a stop-off in Switzerland to melt down and re-cast the bullion to fit American vault requirements, before onward transportation to the US. The safest and most cost-effective way to move such a valuable asset? Not Goldfinger’s Rolls-Royce, but the cargo compartments of commercial passenger planes. Any arbitrage normally continues until dealers’ buying and selling erodes the disparity in prices. Sure enough, as our chart shows, by mid-February, the initial widening had faded, with the spread falling away for a time. By August, however, it was clear a reversal of policy was needed. Traders had been incentivised to repackage gold into nontariffed forms, such as smaller bars or coins. Perhaps realising the tariffs would fail to restrict supply and would actually increase volatility in the market they sought to control, Trump backpedalled later that month. In these increasingly digital times, when blockchain and cryptocurrencies enable instantaneous transactions across the ether, it’s almost reassuring to find a resurgence in transactions of tangible assets. But, if the spread widens once more, you’ll know why you’re paying those higher excess baggage charges. ⬤
NICOLE WARDLE
Senior Associate – Private Wealth
Source: Federal Reserve Bank of New York
“As automation absorbs many of the tasks that once justified entry level hiring, the traditional stepping stones into corporate careers are disappearing.”
UNIVERSITY HAS HISTORICALLY BEEN A GOOD CAREER INVESTMENT, LEADING TO IMPROVED JOB PROSPECTS. BUT CHANGE MAY BE AFOOT – SINCE 2022, GRADUATE UNEMPLOYMENT IN AMERICA HAS BEEN HIGHER THAN THE NATIONAL UNEMPLOYMENT RATE.
In mid-2025, the US unemployment rate for recent graduates – those aged between 22 and 27 – was 4.8%. That compared with 4.0% for the general population and 2.7% for college graduates of all ages, according to the Federal Reserve Bank of New York. Even top graduates are vulnerable – at Harvard Business School, 23% of MBAs from the class of 2025 were still seeking work three months after graduation, up from 20% the year before.
The explosion of generative AI since the November 2022 launch of ChatGPT could be behind this shift. Entry level corporate job listings have dropped 15%, while applications per role have risen 30%, according to Handshake, a career platform. Handshake also found that employers are increasingly emphasising AI skills: mentions of AI in job descriptions have surged 400% over the past two years.
The strain is most visible in technical fields. Research from Oxford Economics shows unemployment is concentrated in areas like finance and computer science, where AI has advanced most quickly and there are greater benefits from using a machine over a highly qualified – but highly paid – graduate.
However, job growth across other white collar sectors has also slowed, with entry level roles hit hardest. Many traditional graduate tasks, like data collection, transcription and basic analysis, can now be executed efficiently by AI systems.
Research from Goldman Sachs estimates that 2.5% of US jobs would be at risk if current usages of AI are expanded economywide. If AI is adopted for even more use cases, it could displace around 7% of the workforce. However, the bank argues much of this displacement could well be transitory, as AI would also create many new jobs.
As automation absorbs many of the tasks that once justified entry level hiring, the traditional stepping stones into corporate careers are disappearing. Unless employers invest in new ways to bring graduates into the fold, an entire generation may struggle to secure a foothold in the white collar workforce.
We are no Luddites, and businesses should seek efficiency gains. But, if this trend continues, legions of unemployed graduates, weighed down by student debt, could in time become a political and economic powder keg.
TOMISLAV SURENDER-NOVAKOVIC
Investment Associate
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