Mirae Asset Global Investments Grows Equity Analyst Team in U.S.

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Mirae Asset Global Investments refuerza su equipo de análisis de renta variable global con cuatro incorporaciones
Photo: Matthias Rhomberg . Mirae Asset Global Investments Grows Equity Analyst Team in U.S.

Mirae Asset Global Investments has announced the hiring of four analysts to expand its global equity research team in the United States.The new investment analysts are based in New York and report to Jose Gerardo Morales, Chief Investment Officer. They are responsible for providing research and analysis in support of Mirae Asset USA’s mutual funds and international sub-advisory portfolios. The additions bring the total number of equity investment professionals with Mirae Asset USA to eight.

The additions to the investment team include:

Tatiana Feldman is a senior investment analyst focusing on global emerging markets ex-Asia. Prior to joining Mirae Asset USA, Mrs. Feldman served as an investment analyst with INCA Investments, an equity research analyst at Brasil Plural and a senior analyst at Morgan Stanley covering Latin America. Mrs. Feldman holds a bachelor of journalism and mass communications degree from New York University.

SungWon Song, Ph.D. is an investment analyst focusing on the global healthcare sector. Prior to joining Mirae Asset USA, Dr. Song worked at Nationwide Children’s Hospital, where he served as a postdoctoral research fellow, and The Ohio State University, where he worked as a Graduate Research Associate. Dr. Song holds a Ph.D. in Molecular Cellular Developmental Biology from The Ohio State University, a master’s in biotechnology of biological sciences from Columbia University and a bachelor of biotechnology and genetic engineering from Korea University.

Malcolm Dorson is an investment analyst focusing on global emerging markets ex-Asia. Prior to joining Mirae Asset USA, Mr. Dorson worked as an investment analyst at Ashmore Group covering Latin America and at Citigroup, as an assistant vice president focusing on asset management for ultra-high net worth clients. Mr. Dorson holds an M.B.A. from the Wharton School, an M.A. in international studies from the Lauder Institute and a bachelor of arts degree from the University of Pennsylvania.

Michael Dolacky is an investment analyst focusing on the global healthcare sector. Prior to joining Mirae Asset USA, Mr. Dolacky was an investment analyst with Senzar Asset Management and a fixed income analyst at Nomura Securities. Mr. Dolacky holds a bachelor of economics degree from Tufts University.

“We are committed to growing our investment infrastructure in the U.S. and building upon Mirae Asset’s reputation as a leading source of global investment expertise,” said Peter Graham, CEO of Mirae Asset USA. “Each of these new analysts brings a wealth of experience, diverse expertise and deep understanding of the markets or sectors they cover.”

Eurozone Growth Disappoints but Remains Steady

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Although economic growth in the eurozone slowed in the second quarter, we continue to expect an acceleration in the second half of the year as ongoing oil price weakness boosts households’ spending power.

Eurozone economic growth slowed to 0.3% in the second quarter compared to 0.4% at the start of the year. The slowdown in growth comes as a slight disappointment for markets where consensus expectations were for 0.4% growth, but given the concerns over Greece during the period, the latest figures show robust and steady recovery.

For Germany, consensus expectations were for 0.5% GDP growth, so an actual growth rate of 0.4% only represents a slight miss. Industrial production had indicated much weaker growth, but it appears that the services sector, boosted by a surge in retail sales of late, helped to maintain steady growth in aggregate.

The biggest disappointment came from France, where the pick up in activity seen in the first quarter turned out to be too good to last. The French economy was stagnant in the three months to June, compared to 0.7% growth in the first quarter (revised up from 0.6%). Much weaker domestic demand was rescued by an acceleration in exports growth. Household consumption continued to grow in the latest figures, albeit much slower than the past year. However, the most disappointing aspect of the French data is that the recession in investment has continued. Investment in France has failed to grow for six quarters.

Italy also disappointed, missing consensus expectations of 0.3% by managing just 0.2% growth, and compared to 0.3% growth in the first quarter. Industrial production held up reasonably well in the second quarter, along with retail sales. However, the Italian economy continues to struggle with domestic rigidities against an increasingly competitive international backdrop.

Elsewhere, Spain had released its preliminary estimate for growth earlier, showing another strong quarter of 1% growth (now up to 3.1% year-on-year). In addition to Spain, Greece also beat expectations with the crisis-struck state having achieved a miraculous 0.8% growth rate. Expectations were for a sharp fall in activity given the introduction of capital controls. The negative impact may yet hit in the third quarter.  Elsewhere, Portugal delivered another solid quarter of 0.4% growth – unchanged for the third quarter.

Looking ahead, we forecast a slight acceleration going into the second half of the year as further falls in global energy prices should boost the purchasing power of households. Concerns over growth in emerging markets, China in particular, may hit investment in Germany, the Netherlands and Austria, which all disappointed in the second quarter. However, our expectations for stronger growth in the US over the rest of this year should offset emerging market weakness.

QuickView by Azad Zangana, Senior European Economist & Strategist at Schroders

Neuberger Berman Appoints Javier Nuñez de Villavicencio to Lead Business Development across Iberia

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Neuberger Berman abre oficina en España y nombra a Javier Núñez de Villavicencio para dirigir la expansión del negocio en Iberia
Javier Núñez de Villavicencio / Courtesy photo. Neuberger Berman Appoints Javier Nuñez de Villavicencio to Lead Business Development across Iberia

Neuberger Berman, one of the world’s leading private, employee-owned investment managers, announces the appointment of Javier Nunez de Villavicencio to lead its client relationship management and business development activities in Spain and Portugal, effective immediately. Based in Madrid, Javier reports to Dik van Lomwel, Head of EMEA and LatAm at Neuberger Berman.

Dik van Lomwel comments, “As we deepen and strengthen our client base in these key markets it is important to have experienced professionals with local expertise.Javier has been representing us for two years in an external capacity and we look forward to bringing him in-house.”

Javier has over 30 years’ experience including more than a decade spent at BNP Paribas Investment Partners in Madrid, where he was Head of Spain and Portugal. Previously Javier was at JP Morgan as Head of Equity Sales in Madrid and subsequently Head of International Equity Sales in New York.

On his appointment, Javier commented, “Being familiar with Neuberger Berman, I believe it offers a compelling proposition for the Iberian client-base who, like many at this time, seek higher yielding investment solutions whilst also preserving capital. Neuberger Berman’s broad platform across all asset classes puts the firm in a strong position to help clients achieve their investment objectives. I look forward to building on the momentum we have already achieved in the region.”

Highland Capital Management & Credicorp Capital Announce Exclusive Distribution Agreement for Chile, Peru and Colombia

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Highland Capital Management, the US$ 22billion asset management firm headquartered in Dallas, TX, and Credicorp Capital, the leading investment banking platform in the Andean region, announced today to have entered into an exclusive distribution agreement that will allow the distribution of Highland Capital’s funds throughout institutional investors in the Andean region, specifically in Chile, Peru and Colombia.

“We have built a great working relationship with Credicorp and are happy to see this partnership come to fruition,” said James Dondero, president and co-founder of Highland Capital Management. “The Andean region invests much of its institutional and pension assets in the international markets and we believe our funds provide attractive investment options to meet their objectives.”

Alejandro Perez Reyes, head of asset management at Credicorp Capital, stated “the agreement will allow us to offer our clients Highland Capital Management’s long track record and strong product offering that will allow investors across the region to diversify their international investment portfolios”

The collaboration between both firms will offer new solutions in the Andean region by combining Credicorp’s distribution expertise and network in the area with Highland Capital Management’s extensive experience and best in class fund management offerings. 

Japan: Goodbye Deflation?

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Japón: ¿Adiós a la deflación?
CC-BY-SA-2.0, FlickrPhoto: OTA fotos. Japan: Goodbye Deflation?

Shinzō Abe had ambitious plans following his re-election as Prime Minister of Japan in 2012. He was prepared to pull all the levers available to him, in the form of radical economic and reformist polices, to end Japan’s ‘lost decades’ of crippling deflation. While the success of his reformist policies might be up for debate, his monetary and fiscal stimulus plans have finally seen both inflation and the stock market moving in the right direction – upwards (see chart below). “Abe ‘gets it’: everything that can be done to end deflation and return to growth must be done. And the only way to dig yourself out of deflation is to aggressively inflate your way out of it”, writes the Japanese Equity Team at Henderson.

Land of rising inflation (just)

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Banks bounce back

These policies have helped Japanese equities to become one of the best performing asset classes so far this year, albeit at the expense of a significantly weakened yen. One particular beneficiary has been financials, point out Henderson. In recent years the sector has been buoyed by banks finally writing-off legacy bad loans, leaving their balance sheets stronger than most of their developed world counterparts. In addition, the banks’ Tier 1 capital ratios have been buoyed by the surge in the equity market.

For most western banks, this capital tends to be held in low-risk fixed income assets, with a low percentage held in equities. However, in Japan a significant proportion is held in non-financial domestic equities. In a reflationary environment, this surge in equity shareholdings has bolstered the capital of banks, leaving them far more sufficiently capitalised to withstand any unforeseen shocks, while also being well positioned to benefit from any recovery in the domestic economy.

The road ahead

Longer term, financials are set to benefit from any rise in interest rates, which have remained ultra-low in Japan for decades. A rise – albeit likely a very small and gradual one – would allow banks to earn a higher net interest margin. That is, the margin on what can be earned from the lending activities of banks, versus what is paid to depositors, increases. However, this currently feels like a distant prospect, with markets not forecasting a rise in rates until the second half of 2016.

“In the meantime, we see opportunities in those domestically-orientated companies that are likely to benefit from a recovery in the economy. Most notably the service and retail sectors should benefit, following the lull induced by the 2014 consumption tax hike, which saw the tax on goods and services rise from 5% to 8%. Stocks we hold in these sectors include Rakuten, Japan’s leading ecommerce company, and Fujitsu. The latter has new management, which we hope will focus more on its highly cash-generative core IT service business”, explains the Japanese Equity Team.

“It is too early for Abe to claim economic victory. However, should he continue with his economic and reformist policies, we could finally see a return to something approaching ‘normality’, much to the relief of the country’s ever-patient investor base”, concludes.

 

Economic Uncertainties in The U.S. Keeping CFOs Up at Night

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Los directores financieros de Estados Unidos, a la caza de talento
Photo: Deurim Poyu. Economic Uncertainties in The U.S. Keeping CFOs Up at Night

The nation’s finance chiefs are relatively optimistic about the future, but remain cautious in the face of domestic uncertainties like Congressional inaction on tax reform. This is according to the latest edition of Grant Thornton LLP’s CFO Survey, which reflects the insights of more than 900 chief financial officers and other senior financial executives across the United States.

More than half (55 percent) of CFOs say uncertainty in the U.S. economy is a major concern that could impact their businesses’ growth in the next 12 months. This is despite the fact that most CFOs expect the U.S. economy overall to remain the same (49 percent) or improve (43 percent) in the next 12 months, suggesting that factors other than the overall health of the economy are presenting a barrier to growth.

“While the U.S. economy has stabilized, our data suggest that uncertainty related to other economic factors is making strategic planning difficult for financial executives,” said Randy Robason, Grant Thornton’s national managing partner of Tax Services. “CFOs are looking to Washington, regulators and the Federal Reserve for answers and getting nothing but indecision.”

 

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Business leaders’ concern over these economic uncertainties appears to have increased significantly since earlier this year. In May 2015, only net 22 percent of U.S. business leaders saw economic uncertainty as a major constraint on their ability to grow in the coming year, according to the Grant Thornton International Business Report.

Particularly frustrating for CFOs is the dysfunction in Congress over a bill to extend more than 50 popular tax provisions that expired at the end of 2014.

Meanwhile, good news for finance professionals: CFOs are aggressively looking to develop and hire new talent. The vast majority (70 percent) of CFOs say finding and retaining the right talent is a critical need for supporting growth. Forty percent expect their business’s new hiring to increase in the next six months; 52 percent expect hiring to remain the same. A majority of CFOs (67 percent) plan to increase salaries in the coming year, holding steady since 2014.

 

Put Your Bond Manager to the Liquidity Test

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Las tres preguntas clave sobre liquidez que hay que hacerle a los gestores de deuda
CC-BY-SA-2.0, Flickr. Put Your Bond Manager to the Liquidity Test

Bond market liquidity is drying up—something every investor and financial advisor should take seriously. But liquidity risk can also provide an additional source of returns. The trick is knowing how to manage it, point out AB.

This is why picking the right manager is critical. Before entrusting money to anyone, investors or their advisors should make sure prospective managers understand why liquidity is evaporating and have an investment process that can effectively manage this growing risk.

In AB’s view, settling for anything less will make it harder to protect your portfolio from the damage less liquid markets can cause—and to seize the opportunities they offer.

Here are some questions that Douglas J. Peebles, Chief Investment Officer and Head at AllianceBernstein Fixed Income, and Ashish Shah, Head of Global Credit, feel investors should be asking.

1) To what do you attribute the decline in liquidity?

For most people, an asset is liquid if it can be bought or sold quickly without significantly affecting its price—something that’s become more difficult lately.

Many market participants blame post–financial crisis banking regulations. Designed to make banks safer, the new rules have also made them less willing to take risks. Consequently, most banks are no longer big buyers and sellers of corporate bonds. In the past, banks’ involvement—particularly in high yield—helped keep price fluctuations in check and meant investors could usually count on them as buyers when others wanted to sell.

But because they affect the supply of liquidity, regulations are only part of the story. Several other trends have drastically increased the potential demand for liquidity. These include investor crowding and the growing use of risk-management strategies that use leverage and make it hard for investors to ride out short-term volatility.

In one way or another, these trends have driven investors around the world to behave in the same way at the same time. That distorts asset prices and suggests investors may find that their asset isn’t liquid when they need it to be. If a shock hits the market and a fire starts, each of these trends may act as an accelerant.

Managers who think regulation is the only cause of the liquidity drought probably aren’t seeing the big picture. That could make your portfolio more vulnerable in a crisis.

2) Has your investment process changed as liquidity has dried up?

Since it’s risky to assume that liquidity will be there when it’s needed, a manager should be comfortable with the notion of holding the bonds in his or her portfolio for a long time—possibly to maturity (Display). Since that requires deep analysis and a selective eye, ask about a manager’s credit research process and how it has changed.

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Managers should also be reducing the risk of getting trapped in crowded trades by taking a multi-sector approach. This way, if selling spikes in one overcrowded corner of the credit market—let’s say emerging markets or high yield—investment managers can quickly and easily move into investment-grade bonds or another sector where liquidity is more plentiful.

Staying out of crowded trades also puts investors in a position to make decisions based on value, not popularity. Managers who do this—and who keep some cash on hand—will be in a better position to swoop in and buy attractive assets when others are desperate to sell.

This ability to be agile and take the other side of popular trades can be a crucial advantage when other investors have to sell. Think of those who used the 2013 “taper tantrum” to buy attractive bonds when everyone else was hitting the sell button. For providing liquidity when others needed it, they were compensated with higher yields.

3) How are you dealing with volatility?

Volatility is a fact of life in markets, and investors should expect more of it as liquidity dries up. The best thing a manager can do is to be prepared.

For instance, does the manager buy “call” or “put” options—the right to buy or sell an asset in the future at a predetermined price to protect against a big liquidity-induced market move? In our view, doing so is a lot like spending $3 on an umbrella when the sun is shining. After all, it’s going to rain eventually.

The alternative—waiting until volatility rises and prices fall before selling—is akin to buying the umbrella after the storm has started. Chances are you’ll pay $5 for it—and you’ll get soaked as you run through the rain to get it.

4) What role do traders play?

Historically, traders at asset management firms mostly executed orders. But as banks have retreated from the bond-trading business, the responsibilities of buy-side traders have grown. Managers who embrace a hands-on role for traders are more likely to turn illiquidity to their advantage.

A few questions to consider: Do traders play an active role in the entire investment process? Are they skilled enough to find sources of liquidity when it’s scarce and make the most of opportunities caused by its ebb and flow? Do traders understand the manager’s strategies?

If a manager can’t answer these questions, advisors should find someone else to oversee their clients’ assets.

Aberdeen To Acquire Parmenion To Accelerate Its Digital Ambitions and Augment Its Investment Solutions Business

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Aberdeen Asset Management has entered into an agreement to acquire Parmenion Capital Partners LLP and its sister company, Self Directed Holdings Limited (together “Parmenion”), based in Bristol. The acquisition is part of Aberdeen’s strategy to capitalise on advancements in financial technology systems and to become a leader in using technology to provide investors with portfolios appropriate to their needs, whilst also growing its Investment Solutions business.

Parmenion, a member of the Fintech 50 2015, provides risk graded portfolios to UK financial advisers that they can utilise through a unique, yet simple, digital platform. The Parmenion platform has the highest rating based on a recent survey of advisors. It has £1.9 billion assets under management and delivers services to more than 900 adviser firms.

Parmenion will retain its own identity and remain located in Bristol, but will receive additional investment from Aberdeen to develop and expand its service. Parmenion will also be able to draw on Aberdeen’s investment solutions expertise, including the ability to allocate to the Company’s quantitative investment strategies. Its multi-manager portfolios will continue to invest in funds of third-party asset managers. The transaction provides key benefits to Aberdeen:

  • Accelerates its ambitions to provide digital innovation and services across distribution channels;
  • Supports the strategic aim of growing its Investment Solutions business, and
  • Further bolsters the Group’s already extensive distribution reach in the UK

Commenting on the transaction, Martin Gilbert, Chief Executive of Aberdeen Asset Management PLC, said: “Parmenion is perfectly placed to respond to the evolving pension environment and the growing demand for investment services that are accessible online. Since being established in 2007 it has provided financial advisers with a valuable service and their clients with investment solutions to meet their individual goals. With Aberdeen’s support and investment I believe Parmenion can build on its success to meet the changing needs of financial advisers as an increasing number of people turn to them for pre and post-retirement planning. This acquisition ensures Aberdeen is at the forefront of the digital revolution within asset management and augments our strategic aim to grow our Investment Solutions business.

Commenting on the transaction, Richard Mein, Chief Executive of Parmenion Capital Partners LLP, said: “Aberdeen’s strategic interest in Parmenion derives from their recognition that the business of investment management is moving online. Parmenion is at the very cutting edge in developing online capabilities for advisers and their clients, and the integrated investment, operational and technology services we have created in recent years, makes us an attractive partner for Aberdeen and the backing of one of Europe’s largest fund management businesses will enable us to continue to develop our investment and technology solutions for our clients.”

The acquisition is subject to regulatory approval from the UK Financial Conduct Authority.

BofA Merrill Lynch Fund Manager Survey Reveals Cash Balances at 2008 Crisis Levels

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Global investors’ confidence in the world’s economic outlook has fallen significantly due to concerns over China and emerging markets, according to the BofA Merrill Lynch Fund Manager Survey for September. Asset allocators have adopted a “risk-off” stance in response.

  • Threat of recession in China increases as biggest tail risk; concern over a potential emerging markets debt crisis also rises sharply.
  • Investors’ risk appetite evaporates: equity overweights are down a net 24 percentage points in a month, while commodity shorts are extended.
  • Sentiment towards Global Emerging Markets sours further, with underweights at a record net 34 percent and aggressive UWs are at an all-time high.
  • Cash balances are back up to 2008 crisis level of 5.5 percent.
  • Hedge fund net exposure and perception of market liquidity conditions are both at the lowest level in three years.
  • Investors’ expectation of U.S. Fed rate rise has been postponed to Q4.

“Investors were already positioned for lower growth in China and emerging markets, but their risk-off stance has intensified. Contrarians will be noting the aggressive underweight positioning in emerging markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.

“European equities have been hurt by the risk-off trade, but they remain a favored market,” said James Barty, head of European equity strategy.

Societe Generale Appoints Slawomir Krupa as CEO for Americas

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Societe Generale Group announces the appointment of Slawomir Krupa as Chief Executive Officer for Societe Generale Americas, effective January 1st 2016.

Slawomir Krupa will replace Craig Overlander who, after 33 years in the finance industry and over five years spent with Societe Generale, has decided to give his professional path a different turn for personal reasons. Slawomir Krupa will report to Didier Valet, Head of Societe Generale Global Banking & Investor Solutions, and is a member of the Group’s Management Committee.

“I would like to warmly thank Craig for his outstanding achievements throughout these past years. Craig has been instrumental in the transformation and the sound management of the U.S. platform, especially at a time when Societe Generale has significantly expanded its footprint in the Americas, notably with the recent integration of Newedge,” Didier Valet commented.

As Chief Executive for Societe Generale Americas, Slawomir Krupa will continue to drive the growth of Societe Generale’s U.S. platform in its areas of strength, in an evolving U.S. regulatory context.

“Slawomir’s in-depth knowledge of the Group, his understanding of the corporate and investment banking business as well as his strong client experience position him well to lead Societe Generale though the next stage of its transformation in the Americas,” Didier Valet said.

Craig Overlander will work alongside Slawomir Krupa to ensure a smooth transition starting November 1st.

Séverin Cabannes, Deputy CEO of Societe Generale Group, commented:”I would like to thank Craig for his contribution to the development of our U.S. platform over the last years and wish him the best for the future. America is a strategic region for Societe Generale. I am confident that, under the leadership of Slawomir, our teams in the U.S. will continue to strengthen our set-up and to develop our franchise and client satisfaction, building on their recent achievements and leveraging on synergies with all the Group businesses.”

Slawomir Krupa began his career in 1996 as an Inspector within Societe Generale’s Inspection department. He left the Group in 1999 to found and run an internet start-up in the field of e-finance in Eastern Europe. He rejoined the Group in 2002 and continued his work within Societe Generale’s Inspection department. He was appointed to the Management Committee of the department in 2005 and in 2007 he was appointed Chief of Staff for Societe Generale Corporate & Investment Banking. In 2009, he became Head of Strategy & Corporate Development and CEO of Central & Eastern Europe, Middle East & Africa for Societe Generale Corporate & Investment Banking.

Slawomir Krupa was appointed CEO of Central and Eastern Europe, Middle East and Africa for Corporate & Investment Banking, Private Banking, Asset Management and Securities Services in 2013. He is also Deputy Head of Global Finance since January 2012. Slawomir Krupa is a graduate of Institut d’Etudes Politiques de Paris.