Foto: Biblioteca nacional de España, Flickr, Creative Commons. Capital Group lanza su estrategia de renta variable estadounidense, Investment Company of America, en Europa
Capital Group, an active investment management firm with US$1.4 trillion of assets under management, has announced that it plans to launch its longest-established strategy, Investment Company of America (ICA), in Europe. Consistent with the plan announced in 2015 to provide European investors access to some of its most successful investment strategies, and following the launch of Capital Group New Perspective Fund (LUX) last year, Capital Group will make its flagship strategy from the US available to European investors in June 2016.
ICA will be launched in Europe as a Luxembourg-domiciled fund (UCITS) and will follow the same active, time-tested investment approach that has proved successful for more than 80 years. The new fund will be managed by the same investment team that manages the US strategy. Since its launch in 1934, the Capital Group ICA strategy has achieved a return of 12.9% per annum, compared with 10.7% for the S&P 500.
“The strategy’s research-driven, fundamental investment philosophy has remained consistent for eight decades with long-term investment horizons, valuation discipline and a focus on seasoned companies with an emphasis on future dividends. This has provided growth over different market cycles and has typically offered downside protection in depressed or volatile market conditions,” said Richard Carlyle, Investment Director.
“The ICA strategy can therefore be an attractive option for investors looking for long-term active exposure to US equities as part of a core equity portfolio, or looking to manage downside risk versus a passive investment approach.”
Hamish Forsyth, European President of Capital Group Companies Global, said “This new fund launch represents a further stage in our strategic plan to make available the best of Capital to European investors and to support the growth of our business activities across the region. We have had a very positive reaction from both institutions and financial intermediaries for our Capital Group New Perspective Fund (LUX), and believe that providing European investors with access to one of our largest and longest-standing strategies provides an important next step in this process.”
Capital Group has been serving investors in Europe since 1962, when the company opened its first ex-US office in Geneva. Capital Group employs more than 500 associates in Europe. It has offices and sales branches in Amsterdam, Frankfurt, Geneva, London, Luxembourg, Madrid, Milan and Zurich.
La gestora seguirá teniendo su sede en Róterdam.. Robeco da autonomía a su gestora separando sus actividades de las del holding financiero y con cambios en su cúpula
Robeco Groep N.V. will separate its activities into Robeco Institutional Asset Management B.V., which will have its own Supervisory Board and executive management to emphasize its position as an autonomous global asset manager, under the name Robeco, with its headquarters in Rotterdam, preserving the strong name and history, and Robeco Group (“RG”). The latter will be transformed from an operating company into a financial holding company.
The new corporate governance structure will further separate the holding activities of RG, and the asset management businesses of its subsidiaries: Boston Partners, Harbor Capital Advisors, Transtrend, RobecoSAM and Robeco. The new structure reflects current global industry and market trends, guaranteeing continued expertise in investments, distribution and client servicing.
Robeco will get its own dedicated Supervisory Board. The Supervisory Board of Robeco will consist of the following members: Jeroen Kremers (chairman), Jan Nooitgedagt and Gihan Ismail. Further members of the Supervisory Board will be announced in the near future. Both Jan Nooitgedagt and Jeroen Kremers serve as members of the Supervisory Board of Robeco Groep. Gihan Ismail has 20 years’ experience in the financial services sector and is currently executive director at Marine Capital Limited.
Day-to-day management remains with Leni Boeren, Roland Toppen, Peter Ferket, Ingo Ahrens and Karin van Baardwijk, who form the Executive Committee of Robeco. Leni Boeren will lead the transition to the new governance and remain a member of the team until the transition is completed. The executives all have deep roots and experience within the asset management sector and all members have served Robeco for many years already, ensuring stability and continuity for the new Robeco, meeting the challenges of the future in the best interests of our clients.
Makoto Inoue, President and Chief Executive Officer of ORIX Corporation: “Robeco employs absolutely world class investment talent. All members of the Executive Committee of Robeco have developed themselves through the ranks of Robeco, which clearly underpins the quality and talent available at Robeco. This new structure will allow for this talent to flourish and help Robeco to further expand on its strong foundation.”
Leni Boeren, who has been a member of the Management Board of Robeco Groep since 2005, will leave Robeco Groep once the transition is completed. Currently Leni Boeren is vice-chairman of the Group Management Board and holds several board positions at Robeco’s subsidiaries Boston Partners, Harbor Capital Advisors, Transtrend, Robeco Institutional Asset Management and RobecoSAM and is Vice-Chairman of the board of the Dutch Fund and Asset Management Association.
Leni Boeren: “It has been a privilege to have been with Robeco for almost twelve years. The company has an impressive 87 year history and I am confident that these changes mean that Robeco is well-placed to continue to meet clients’ needs by delivering superior investment returns. It was a great pleasure to work with so many passionate professionals worldwide. I also want to express my appreciation to our clients for the trust they have put in me over all these years.”
Makoto Inoue: “I am grateful to Leni for her commitment to Robeco Groep and the valuable contribution she has made to the strong growth of the company and its subsidiaries. She also has successfully led many transitions within the group over the years.”
As a financial holding company, RG will not perform any asset management activities. Subject to final regulatory approval, the Supervisory Board and the Management Board will be replaced by a simplified financial holding board chaired by Makoto Inoue.
As part of the new governance structure, the outgoing chairmen of the two boards, Bert Bruggink and David Steyn respectively, have stepped down and will join ORIX Group. The other members of the Supervisory Board of Robeco Groep will step down once the transition to the new governance is completed.
Ken Hsia, Investec - Foto cedida. Investec: “En Europa el viento de frente ha virado hasta convertirse en viento de cola”
Investec’s European Equity team is a part of the broader 4Factor investment team, one of seven distinct investment capabilities at Investec Asset Management. The 4Factor team is responsible for between $30-35 billion dollars of client assets. Ken Hsia, Lead Portfolio Manager of the European Equity Fund, summarized this investment process during his recent visit to Miami.
“We believe that equity markets are inefficient by definition, but the level of efficiency varies depending on the headlines,” he explains. Right now, investors are hearing news on the slowdown, the United States’ presidential election, or the referendum in the UK, the type of news that grabs their attention and which has created volatility in recent times, causing major inefficiencies in the markets. “As securities’ selectors, our job is to be able to exploit these inefficiencies.”
Why do these inefficiencies exist? “Due to market participants’ behavior errors; there are certain patterns that, when it comes to investing, cause investors to buy expensive and sell cheap” replies Hsia, adding: “We believe that by doing things right you can achieve better results consistently over time.”
To achieve this objective, they apply− from a benchmark, style, and capitalization agnosticapproach− their “4Factor” process, which leads them to analyze four different aspects: high quality− those companies that have created value for their shareholders in the past−, attractive valuation−, those that are cheaper than the average in terms of cash flow return on investment and asset based valuations−; improved operating results−, those that are seeing their profit forecasts revised by analysts−, and increasing attention from investors−those starting an upward trend−.
The first two, both traditional ones, are the ones which help to find high quality corporations at attractive valuations, and the last two, related to behaviors, the ones which help to choose the right moment to take or leave positions and to avoid behavior errors.
Why Europe, and why now?
Corporate revenues and profits will grow, thanks to commodities.
European markets, which Hsia considers to be at an early stage of the profit cycle, have not had any returns in recent months to evidence the start of the recovery to which the fund manager refers, but he explains that the fall in commodity prices during the last 12-to 18 months (e.g. oil has dropped from more than $ 100 a barrel to oscillate between 35 and 45, and iron has dropped from over $ 100 per ton to between $40 and $50) is weighing heavily on the ROEs. And whether or not they appear in his own portfolio, Royal Dutch, Total, BHP Billiton, or other securities with exposure to commodities, weighed on the fund’s benchmark- the MSCI Europe.
“The two most interesting facts are that for 2017 analysts expect an increase in earnings in European corporations of an ample double-digit, and that commodities will shift from curbing their growth, to propelling it,” while during 2014 and 2015, the underlying trend in earnings per share (EPS), excluding commodities, approached 5%, and for 2016 the general consensus places it at between 4 and 6%.
There are signs of recovery.
“We have identified two cyclical sectors that provide some recovery signs”. On the one hand, car sales, which are a clear indicator of the confidence of investors, have been recovering since 2013, and in Europe grew by 8% in the first quarter of this year, although with differences between countries. Although still at a level of 15% below their previous highs, the fund manager is confident that these will once again reach their previous peaks, as car sales have done in the US during this recovery; the other sector with telltale signs is the cement industry. For example, the greatest difference between this product’s peak and lowest consumption rates in Spain was 80%, and 50% in Italy, both of those markets are now in recovery.
Given the slow recovery process−which frustrates some investors− and to provide depth to the study, the team looks at each sector in detail, therefore, Hsia speaks, of commercial real estate, for example, which, especially in southern European countries, is in the hands of private families or insurance companies, which have received no incentive to reinvest. “Energy efficiency in Italy or Spain is not optimal, as only 15% of office complexes obtained the highest (“A”) rating, while in France and Germany more than 30% have achieved that rating, with up to 40% in the United Kingdom, so it is necessary to improve the system” But we’re also seeing actions that will change the sector, such as that regulation in Italy is shifting from favoring property owners to favoring tenants, and the emergence of REITS in Europe, which are facilitating the inflow of capital to carry out these improvements in the sector.
These are just some examples showing recovery, says the fund manager, who admits to having mixed feelings, because, while he wishes improvement for that environment, which in turn favors the whole world, he believes that it’s best for investors if recovery doesn’t come too fast because “when economic growth is very strong there is more competition.”
Balance sheets are growing.
Corporate balance sheets are in recovery and much healthier than in 2008-2009, thanks to improved operating cash flows that the gradual growth of the economy and strengthening demand have brought about, as well as the fact that some companies no longer rely on high future economic growth and are streamlining their costs and cleaning up their balance sheets, which will also create more value. Should we expect more mass layoffs? Not necessarily, says the strategist, cost rationalization can also be achieved by an improvement in the production process, acquisitions, etc. We think that unemployment should fall.
Valuations remain attractive
With a cyclically adjusted P/E ratio 15x earnings and a historical average of between 20 and 21, the opportunity seems clear, and the strategist is confident that it will return to maximum levels. Another favorable factor is the lack of issuance of sovereign bonds by the ECB, which will cause the flow of investment into other types of assets, such as equities.
“In short, there are signs of growth, sometimes frustratingly slow, but that is what increases the difference between winners and losers.”
“In an environment such as this, we see that there are sectors whose indicators improve, such as the industrial, although in our portfolio it remains underweight in relation to the benchmark; in this, we have included Siemens, which is shifting from obsolete businesses to creating a new supply line more tailored to current consumer requirements. Other sectors we like are information technology, the most overweight in our portfolio, and consumer discretionary. Not so with consumer staples, where we don’t see any value, or healthcare.”
Regarding the financial sector, adds Hsia, in which we are overweight by 2% in relation to the benchmark, we are pragmatic about its enormous volatility, but we like FinTech, banks focused on retail business in countries where consolidation has already occurred, such as France, Benelux and the United Kingdom, and not so much in those in which there is still much fragmentation− Germany, Italy and Spain−, because, although we see some consolidation, we can’t see any creation of shareholder value. Nor do we like investment banks in Europe and we are underweight in insurance and real estate.
By country, the UK, which although accounting for 24.7% of its assets− with much diversification−, is 5% underweight; France is 6% overweight, and Germany, by slightly higher than 6%, is the one he likes best. “When we saw the first ECB rate cut, we believed that there would be opportunity in Germany, but then Japan, its largest competitor, lowered rates and this was circumvented. However, we do find good ideas now.
Seizing the opportunity that Hsia lives in London, we asked about the sectors which could be most affected if the referendum to be held in June in UK propels a “disengagement” from the EU. He doesn’t seem worried about this and points out that, large corporations have a “B” plan and perhaps one of the most affected would be agriculture, but neither banks nor other big companies worry him because “they hopefully will have enough time, and have the resources to prepare their structure for an environment which could change.”
Once again, he summarizes: “The biggest driver of European equities will be corporate earnings, as the headwind has turned to become a tailwind”.
Pro-invest Group, a Private Equity Real Estate investment firm, announced on Monday the signing of a fund administration agreement with global independent fund administrator, Apex Fund Services. The partnership will deliver Pro-invest Group with the specialist private equity real estate fund accounting, regulatory reporting and middle office support services required to provide the required infrastructure and support investments.
Apex’s global presence and breath of service capabilities spanning the full value chain of a fund will ensure Pro-invest is supported by administrative resources that enable them to deliver cross-border services to their clients. With $300m (AUD) in committed capital, Pro-invest’s vision to provide tailored products to clients from Europe, the Middle East, Asia and North America will be reinforced by Apex’s local office presence and expertise in these regions.
Ronald Barrott, Chief Executive Officer, Pro-invest Group said, “Pro-invest Group recently reached a significant milestone through the opening of Australia’s first Holiday Inn Express hotel in March this year. At this important stage in our growth and success, it is essential that we work with an administrator who understands our business model but also more importantly our guiding principles of trust, integrity and commitment. Apex and Pro-invest have a shared vision in this area and Apex’s approach to service provision echoes our core values. As we look to capitalise on unique investment opportunities for our clients, we need flexible service providers who can evolve along with us. This partnership will allow us to confidently focus on our investment mission, whilst being operationally supported by qualified experts to achieve our growth goals.”
Srikumar TE, Managing Director at Apex Fund Services APAC, said: “We are delighted to be working with Pro-invest Group at this time. The flexible nature of Apex’s approach to service provision makes us ideally suited to administer a private equity and real estate fund of this nature. We are fully invested in supporting Pro-invest’s mandate to deliver tailor-made services and investment opportunities to clients. As an independent provider we have the ability to align our solutions and support services to robustly support real estate investments. Apex has experienced 35% growth in private equity and real estate clients over the past year, and we now host eight private equity and real estate centres of excellence across the group. We have built a focused and flexible solution to support Pro-invest with strong internal controls and experienced staff to ensure their commitment to achieving success is continually realised.”
Foto: Windell Oskay
. UBS toma una participación en SigFig, con quien sella una alianza estratégica para desarrollar tecnología
UBS Wealth Management Americas (WMA) has made an equity investment in SigFig, an independent San-Francisco-based firm wealth management technology company. Also, they have agreed to form a strategic allianceto develop financial technology for UBS WMA, its financial advisors and their clients. Additionally, both companies will create a jointAdvisor Technology Research and Innovation Lab, where the companies will continually collaborate on new wealth management technology tools. The companies envision the lab as a forum where financial advisors, product experts and technologists can join with SigFig’s experts in digital technologies and design to develop leading technology capabilities for UBS WMA and its clients.
As part of this strategic alliance, the WM technology company will create and customize digital tools and services for the America´s division of the swiss bank´s 7,000 advisors that will complement their expertise and enhance their clients’ digital experience. This platform will improve the ability of the advisors to efficiently provide advice on assets held at the bank and other institutions, a critical factor in providing truly personalized financial advice across the complete range of client needs.
CC-BY-SA-2.0, FlickrPhoto: GIO IAB. Why Are Markets in Denial About Inflation?
As the US labor market continues to improve, investors are still waiting for signs that inflation will pick up. And with US consumer prices posting only a slight uptick in March, the Federal Reserve continues to assure markets that it will “proceed cautiously” in normalizing its policy rate.
Amit Agrawal, senior portfolio manager of developed markets investment grade credit at PineBridge Investments, discusses what’s going on with the Fed’s hawk-dove game and how investors can position portfolios for rising inflation.
Inflation has been benign for years in the US. Why are markets suddenly talking about it again?
Inflation has become a hot topic over the past two to three months because core inflation – which excludes the volatile food and energy components – has risen over 2% for the first time in four years. What many people haven’t noticed is that core inflation has been brewing for a while; 14 months ago it was at 1.6%. If you strip out goods, inflation has been trending over 3% over the past few months.
Why has the core trend flown under the radar?
Because low oil prices have dragged down the headline inflation rate, presenting a mixed picture.
The interesting thing is that despite these moves, the market is still sanguine about inflation. Investors are not convinced that it’s real, and neither is the Federal Reserve. In fact, the Fed is forecasting lower inflation for 2016 than we’re seeing right now. But if you look at past 50 years, US inflation has averaged around 4%; with core inflation at 2% currently, the risk of rising inflation is certainly there. For now, oil has stabilized, the Fed’s messaging is more dovish, and the dollar is trending sideways. These are all positive tailwinds for inflation in the near term.
Why are so many market participants unconvinced? And when do you think they’ll embrace the rising inflation trend?
The reason has to do with wages. The labor market has been improving for five or six years, while wages have been stuck around 2% over that time. Only over the past six months have we seen wages tick up around 2%-3% year over year. In past recoveries, wages have risen 3%-4%. Historically, when labor market slack disappears, inflation tends to show up in higher wages.
As far as when investors will come around, right now, we’re in what I call a “show-me” market. Inflation will have to run higher to convince people it has really arrived.
Several disinflationary trends have made people complacent about inflation: technological advances, demographics, the end of the commodity “supercycle,” and the China slowdown. These do seem like fair reasons for markets to expect inflation to remain low for a long time. (Although I’d argue that demographics may actually be inflationary as baby boomers enter retirement and require more in terms of health care and other services.) In fact, a recent survey by OppenheimerFunds found that, among the top 10 concerns among institutional investors for the next decade, inflation is nowhere to be found.
Unemployment is at 4.9% right now. As slack reduces further, wages will pick up on a broad-based measure. Indeed, the Fed recently reported an increase in wages in nearly all regions of the country in the “beige book,” its survey of economic conditions.
How does the US dollar fit in?
Fed research has shown some impact of the dollar on core inflation, but not a significant one. It’s more about sentiment; inflation expectations can be self-fulfilling.
The impact of the dollar is stronger on headline inflation through oil prices and lower import prices from China. This is why the Fed has been more dovish in recent commentary; the Fed is undermining the dollar because it doesn’t want the dollar to strengthen. (This “ultra-gradualism” is one of the Fed’s unspoken objectives.) By doing that, the Fed will have more conviction in its inflation and growth outlook – growth because of healthy exports, and inflation because it will help keep oil prices from deteriorating further.
We expect core inflation to remain in the 2%-2.5% range over the next couple of years. I don’t expect to see a major pickup, but if wage inflation continues to rise, we expect core inflation could grow as high as 3% over that period.
The important thing is that the market is pricing in an average of 1% core inflation over the next five years. That’s a low bar, and it means inflation assets are very attractive; mispricing means opportunity.
Can you describe the opportunity set in inflation assets?
The opportunity set runs the gamut: Treasury Inflation-Protected Securities (TIPS), overseas markets, European inflation-linked bonds, commodity bonds, gold, real estate, and real estate investment trusts (REITs).
In the US, 30-year Treasury bond yields are about 2.5%, while 30-year TIPS are trading around 0.8%. TIPS are a much better investment than nominal Treasuries from a risk/reward perspective. The 30-year TIPS breakeven rate, which is the inflation component in the TIPS market, currently is below 1.8%. In the last 17 years, we have seen only four instances where TIPS traded below 1.8%.
The opportunity is even more robust in Europe, where the market is pricing in only 0.5% inflation over the next five years – much lower than in the US. Europe is in the midst of a huge push from the European Central Bank to create inflation through quantitative easing (QE). We think they will be successful in raising inflation much more than in the US. The market is way too pessimistic in Europe.
An indirect way to get exposure to the inflation opportunity is commodity bonds associated with energy and metals and mining companies. Many investors are shying away from these due to the broad slide in commodities prices. What they may not realize is that a lot of bonds from strong companies are trading at yields between 5% and 9%. These are companies we believe will survive the industry downturn. So while many investors have given up on commodities because of high volatility, we think select commodities bonds offer lower volatility with attractive upside.
Gold is a particularly interesting investment because it’s not only a commodity but a currency. With the Fed and the G3 undermining their currencies, many investors are turning to gold because it’s the only currency that governments don’t control. Gold was the best performing asset class in first quarter of this year; we expect prices from here will be range-bound, possibly moving up if we see a stronger rise in inflation or if central banks continue to undermine their currencies.
Real estate is another way to gain exposure to inflation. We think there is still some value left in REITs if you believe the US housing market will continue to recover. A big component of inflation in the US is shelter, which includes buying and renting. Home prices are growing at an annual rate of 3%-3.5%, and we expect this momentum to continue. The US has also seen a shift toward more renting, especially in metro areas, with an annual growth rate of 3%-5%.
Finally, investors can also buy direct exposure to real estate, though it’s important to realize that, unlike the other opportunities I’ve discussed, real estate is an illiquid investment.
How do you recommend investors position their portfolios for rising inflation?
If you expect inflation to rear its ugly head in the next couple years, and you own a high-quality portfolio with nominal Treasury bonds, you may want to consider selling those Treasuries in exchange for TIPS. Reallocating this way would allow you to gain exposure to inflation while maintaining the same credit quality.
We think gold is a good asset to own as part of a larger portfolio, not only for inflation down the road but as a safe haven as global central banks cut rates to negative. Equities and REITs are also good hedges against rising inflation.
Overall, you don’t need to make wholesale changes to your portfolios; we would recommend allocating about 10%-15% of a portfolio to instruments that are linked directly or indirectly to inflation.
This information is for educational purposes only and is not intended to serve as investment advice. This is not an offer to sell or solicitation of an offer to purchase any investment product or security. Any opinions provided should not be relied upon for investment decisions. Any opinions, projections, forecasts and forward-looking statements are speculative in nature; valid only as of the date hereof and are subject to change. PineBridge Investments is not soliciting or recommending any action based on this information.
CC-BY-SA-2.0, FlickrPhoto: Christian Theulot . Christian Theulot, New Chief Retail and Digital Officer at Lyxor AM
Lyxor AM announces the appointment of Christian Theulot as Chief Retail and Digital Officer. The appointment took effect on 15 March 2016.
In this newly created position, Christian Theulot will be responsible for accelerating Lyxor’s digital transformation, supporting its commercial development and fostering excellence in its business processes. He is also tasked with strengthening Lyxor’s presence in distribution, where it is already well established, especially among private banks.
Lionel Paquin, Lyxor AM CEO, said: “The digital transformation presents many opportunities for asset management, whether for enhancing investor experience or for developing digital tools to optimise management processes. Christian Theulot’s appointment will allow us to fully seize them, while enhancing our ties to distribution and delivering Lyxor’s proven expertise and innovation capabilities to this segment.”
Based in Paris, Christian Theulot will report to Guilhem Tosi, Head of Products, Solutions and Legal and a member of Lyxor’s executive board.
Before joining Lyxor, Christian Theulot was Head of Marketing and Development for the Retail Partners & Investment Solutions business line at the Amundi Group for four years. Christian began his career at the Paribas Group, where he spent some ten years in various Marketing/Partnerships managerial roles (Cardif, Cortal-Consors, Compagnie Bancaire). At the beginning of the 2000s, Christian joined AXA’s holding as Senior Vice-President e-business. In 2004 Christian was recruited by the Société Générale group, where he spent seven years as Head of Savings Products for the French network.
Christian Theulot is a graduate of Kedge Business School and holds an MBA in Marketing from HEC.
CC-BY-SA-2.0, FlickrPhoto: Carlos ZGZ. Surviving Chinese Volatility
Despite strong concerns at the start of the year, at Pioneer Investments, they believe that overall economic conditions are stabilizing, backed by a more aggressive policy stance, better fiscal supports, recovery of the real estate sector and credit growth, while consumers and the private sector have remained relatively resilient. Tail risks of a hard-landing in the near term are easing meaningfully.
Policy stance: 6.5% GDP Growth is the Floor
Following China’s annual National People’s Congress meeting (NPC) in March, policymakers sent relatively strong messages regarding their stance this year, which is likely biased towards the easing side.
The GDP growth target for the year was announced as the 6.5-7.0% range. According to Monica Defend, Head of Global Asset Allocation Research with Pioneer, the floor of 6.5% is probably a harder target than others. In other words, if growth risked breaching the 6.5% floor, policy support would turn stronger than planned, while support could ease if growth reached 7.0%.
Better Fiscal Support
“China’s overall fiscal and quasi-fiscal position is complicated, including the budget deficit, out-of-budget funds to local governments, net revenues from land sales, and changes of fiscal deposits in PBOC accounts,” says Defend.
The latest information allows us to have a more complete picture of the underlying fiscal & quasi-fiscal position, and suggests that fiscal policy is becoming more supportive and perhaps more effective.
The overall fiscal stance, including all budgetary and quasi-fiscal measures, became less supportive or even tightened beginning in late 2014 and through most of 2015, largely due to strengthening of regulations on local government out-of-budget financing and weak land sales. Defend believes that the increase of central government spending was not sufficient to offset such weakness. But this seems to have changed since late 2015. And so she estimates that the overall fiscal and quasi-fiscal deficit will rise by around 1.5% of GDP in 2016 vs 2015. This is mainly due to:
The fiscal deficit has increased since late 2015 and the plan is for it to continue to rise.
Land sales are likely to at least stop acting as a drag in 2016, with further positive signs in real estate markets.
The creation of Special Construction Funds (SCFs) in late 2015, which policy banks use to inject capital into specific projects, mainly infrastructure-related. This new quasi-fiscal channel appears, relative to traditional out-of-budget local government borrowing, easier to regulate and manage, and thus more flexible and efficient.
Easing of policy over the past year or so appears to have stabilized the real estate sector, with a visible rebound early this year. Relatively strong sales have been pushing acceleration of existing projects and new starts have finally picked up.
Although property activity is still fairly weak for the country as a whole and price increases have been subdued, momentum in some large cities has been relatively strong. This has triggered a recent tightening of property purchase policy in a few large cities. But this is largely designed to prevent potential price bubbles in individual regions, rather than reflecting a reversal of a generally supportive policy stance.
“The latest data suggest that sales in Tier 1 cities have cooled somewhat, while overall sales have been relatively stable. While we expect only stabilization or a moderate recovery for the whole year, this scenario should be relatively sustainable.”
Conclusions
“Despite strong concerns about China’s economy at the start of the year, there is increasing evidence suggesting that the underlying situation has been stabilizing, with tail risks easing. This is buying more time for China to push structural reforms. We are conscious that the process is still long and not straightforward. A failure in reform implementation would add to medium-term risks. So far, we believe that the reforms are progressing nicely and that the transition of China toward a more balanced economic model is underway. For this reason, we are moderately positive on China, that is one of our favorite countries among emerging market universe,” she concludes.
To read Defend’s complete macroeconomic update, follow this link.
CC-BY-SA-2.0, FlickrPhoto: Glyn Lowe. Columbia Threadneedle Investments to Acquire Emerging Global Advisors
Columbia Threadneedle Investments announced on Wednesday an agreement for Columbia Management Investment Advisers, LLC to acquire Emerging Global Advisors, LLC (EGA), a New York-based registered investment adviser and a leading provider of smart beta portfolios focused on emerging markets. The acquisition will significantly expand the smart beta capabilities of Columbia Threadneedle Investments. Terms of the EGA acquisition were not disclosed. The transaction is expected to close later this year.
With $892 million in assets, EGA has an established presence in the smart beta marketplace. It is the investment adviser to the EGShares suite of nine emerging markets equity exchange-traded funds (ETFs) that track custom-designed indices:
Beyond BRICs (BBRC)
EM Core ex-China (XCEM)
EM Quality Dividend (HILO)
EM Strategic Opportunities (EMSO)
Emerging Markets Consumer (ECON)
Emerging Markets Core (EMCR)
India Consumer (INCO)
India Infrastructure (INXX)
India Small Cap (SCIN)
“The experience and knowledge of the EGA team and strong emerging markets ETF products will complement our existing actively managed product lineup,” said Ted Truscott, chief executive officer of Columbia Threadneedle Investments. “The EGA acquisition will allow us to reach even more investors and accelerates our efforts as we build our smart beta capabilities.”
Since launching its first ETF in 2009, EGA has had a dedicated focus on providing rules-based, smart beta strategies designed to provide investors with diversification and growth opportunities in emerging markets.
“The team is excited about joining Columbia Threadneedle Investments and building on our complementary strengths to deliver smart beta strategies across asset classes to investors,” said Marten Hoekstra, Chief Executive Officer of EGA. “Now our clients gain access to Columbia Threadneedle’s rich investment expertise, while continuing to benefit from EGA’s experience converting investment insights into rules-based, smart beta strategies.”
“Columbia Threadneedle Investment’s expansive footprint across global markets provides an opportunity to accelerate the growth of our smart beta platform,” said Robert Holderith, President and Founder of EGA.
As part of their efforts to enter the smart beta marketplace, in the first quarter of 2016 Columbia Threadneedle Investments filed with the SEC a preliminary registration statement relating to multiple equity smart beta ETFs, including Columbia Sustainable Global Equity Income ETF, Columbia Sustainable International Equity Income ETF and Columbia Sustainable U.S. Equity Income ETF (referred to as the Columbia Beta AdvantageSM ETFs).
50 year old Matthew Elderfield has been appointed Head of Group Compliance and a member of Group Executive Management at Nordea. He will join the company by November, 9th, 2016 at the latest.
“We have set an ambitious target to be best in class regarding regulatory compliance. Continuing to enforce a strong risk and compliance culture and making it an integral part of our business model is key to making these efforts succeed. I’m convinced that Matthew with his extensive international experience will bring Nordea closer to our ambition in leading our increased focus on compliance going forward, says Group CEO Casper von Koskull.
Matthew Elderfield is currently Global Head of Compliance at Lloyds Banking Group where his role covers all business areas, ie Retail, Wholesale and Wealth. The Financial Crime unit is also part of his responsibility.
Prior to Lloyds Banking Group Matthew Elderfield has held a number of senior international regulatory roles, most recently as Deputy Governor of the Central Bank of Ireland when he also served as Deputy Chairman of the European Banking Authority and as a member of the Managing Board of the European Insurance and Occupational Pensions Authority.
Johan Ekwall will stay on as acting Head of Group Compliance until Matthew Elderfield takes up his position.
