Foto: Miguel Contreras (US Navy). ¿Qué esperar de un proceso de coaching?
JPMorgan Chase & Co. announced that it has reached a definitive agreement to sell its physical commodities business to Mercuria Energy Group Limited, a global energy and commodities trading company, for $3.5 billion. The all cash transaction is expected to close in the third quarter of 2014, subject to regulatory approvals.
J.P. Morgan will work closely with Mercuria to ensure a smooth transition of commodities assets, transactions, physical trading operations and employees to Mercuria at the close of the transaction.
“Our goal from the outset was to find a buyer that was interested in preserving the value of J.P. Morgan’s physical business,” said Blythe Masters, head of J.P. Morgan’s global commodities business. “Mercuria is a global leader in the commodities markets and an excellent long-term home for these businesses.”
Following the sale, J.P. Morgan will continue to provide traditional banking activities in the commodities markets, including financial products and the vaulting and trading of precious metals – businesses that the firm has been a leader in for years. The firm will also continue to make markets, provide liquidity and risk management, and offer advice to global companies and institutions around the world.
The transaction is not expected to have a material impact on JPMorgan Chase’s earnings.
Foto: Abrget47j. “Las economías emergentes se enfrentan a ajustes cíclicos, no a problemas estructurales”
Devan Kaloo, Head of Global Emerging Markets at Aberdeen, answers key questions about the outlook, valuation and growth prospects for the emerging markets.
Will this be a better year for emerging market equities?
We would expect so – certainly in relative terms. Last year the MSCI Emerging Markets index was down -4.97%, trailing the MSCI World index by 29%. Emerging market fund flows suffered as a result, with some US$29 billion in outflows from dedicated Emerging Markets (EM) funds in 2013. The sell-off has led to valuation disparities and, in our opinion emerging markets are looking cheap on a comparative and absolute basis. Admittedly, investor concerns over Quantitative Easing (QE) ‘tapering’ and slowing Chinese growth will continue to linger in the next three to six months and markets could come under renewed pressure. Elections this year in Indonesia, India, South Africa, Turkey and Brazil may similarly make investors nervous. Emerging markets face near term headwinds but overall, we’re positive on emerging market equities.
Why are you optimistic on Emerging Markets growth?
EM economies are undergoing a cyclical adjustment, albeit the secular growth story remains intact. Imports rose across emerging markets amid accelerating domestic growth post-2008, but exports were constrained by weak demand from developed economies. Current accounts deteriorated as a result, with economies increasingly reliant on foreign capital to fund these positions. With potentially less foreign capital available now that ‘tapering’ has started, the result is many emerging countries now face weaker currencies, inflationary pressures and higher domestic interest rates. But as exports start to outpace imports, driven by the weaker currency and slower domestic demand, current account positions could start to improve. In turn, currency stability may reduce inflation, leading to lower interest rates. Unlike before, foreign exchange liabilities are modest at both the corporate and national levels, in our opinion. With policymakers increasingly aware that they must now compete for more expensive global capital, this should prompt progress on domestic reforms which have stalled over the past three years. Governments will draw on their experiences from past crises. Competitive devaluations, moves to build domestic capital and efforts to attract fund flows from abroad are pluses. While the long term story remains intact, we believe EM corporates are in good shape, and are well positioned to benefit from favorable demographics and rising consumer wealth.
So, why has corporate profitability declined?
Across emerging markets, we’ve observed that companies have been slow to react to weaker market conditions. Corporate profits peaked in 2010 and have been coming down, due to slower revenue growth and rising costs. This is partly a result of the pressure faced by exporters that are highly geared to global demand. But equally, domestic companies were slow to react to these issues. That said, we believe EM companies are adjusting to the new operating environment, as they have been refocusing on profitability and increasing balance sheet strength. When the recovery happens, companies should report better growth as well as improving margins, which will drive a strong earnings recovery and a potential re-rating of shares.
How are China’s relations with other emerging markets changing?
Beijing is pursuing reforms designed to shift the economy away from fixed-asset investment towards consumption-led growth. Weaker Chinese appetite for raw materials could in turn affect emerging markets that have profited from selling commodities to China. Relations are also changing in other ways. China used to be the world’s low cost factory but that’s no longer the case. As labor costs there become more expensive, other EM countries such as Mexico and emerging Asia are looking increasingly attractive. The Chinese themselves are becoming investors in other emerging countries.
What are your views about Brazil?
The country faces slower growth, rising consumer prices and a weaker currency. Unemployment, however, remains near record lows and the nation continues to attract strong foreign direct investment inflows, which go some way towards financing its current account deficit. Although the economy has slowed considerably, the country offers a deep pool of what we see as quality companies at attractive valuations.
Then, what about the rest of Latin America?
We believe Mexico is well placed to benefit from a recovery in the U.S., given their trade linkages. Its recently-passed energy reform should also boost productivity and economic growth, but higher taxes could hinder spending in the short term. Chile continues to be in our view, the most well-managed economy in Latin America, with low unemployment and wage growth outstripping inflation. Overall, the continent’s longer term growth prospects are favorable, underpinned by good demographics, an expanding middle class and continued urbanization.
Are EM valuations attractive?
We believe so. Emerging market equities, which are trading at about 11 times current year earnings, are not only cheap by historical standards but also relative to developed markets, since much of the concerns have already been priced in. The dividend yield, which is around 2.8%, is higher than major developed markets such as the U.S. (1.9%) and Japan (1.8%).
Will a country or sector’s potential influence your stock-picking decisions?
It’s the other way around. Our country and sector weightings are the result of our stock- picking approach. Over the years, what we’ve noticed is that markets reward companies, not economies. And there is little evidence linking equity returns to economic growth. For example, we’re finding what we see as well run companies in countries such as Thailand, Indonesia, and also Brazil, where growth has been slowing.
What importance do you attach to your active stock picking approach?
Stock selection is what sets us apart. We do our own company research and if a stock fails our screens we won’t own it. Furthermore, no company is bought before our equity teams meet the management. Unlike many fund managers we’re long term in our focus. That means our investment teams go back and visit companies again and again. The benefit of this is to identify only the well-managed companies that have attractive long-term prospects and which represent good value. It’s important for us to focus on price as well as quality – in our view, there’s no point in overpaying however attractive a company might be.
What do you see as your key competitive advantage?
Our track record of investing in emerging markets since 1987 is an important competitive advantage. Given the diverse nature of the markets we invest in, it takes time to develop a deep understanding of where the best opportunities are. We believe it also takes a stock-picking approach to leverage that knowledge effectively. Our investment process is thus our second competitive advantage. Finally, it needs a stable investment team who has worked closely together over many years to exploit fully the opportunities as and when they arise. When taken together, we believe these factors give us the potential to deliver attractive returns to our investors over the long run.
Foto: Moonik. Reivindicando la profesión de economista: Turquía
Azimut, Italy’s leading independent asset manager, and Notus Portfoy Yonetimi (“Notus”), a Turkish independent asset management company, have signed an investment and shareholders agreement to start a partnership in Turkey. Notus is an asset management company with TL 168mn under management (equivalent to $76 mn) as at 28th February 2014.
Notus was established in 2011 by 3 partners each with over 25 years of experience in the Turkish and European financial industry. Notus mission is to provide a new breadth of discretionary portfolio management services driven by independence, investment discipline and risk management. The company manages discretionary portfolio mandates for 45 individuals and corporate clients ensuring diversified and efficient asset allocation plans across local and international markets. In addition, Notus is the manager of 2 local mutual funds with balanced strategies focusing on local fixed income and equities.
The Turkish asset management industry has $28bn in AuM as of January 2014 (of which more than 90% is invested in short term fixed income strategies) with around 41 asset management companies (of which 29 are independent) registered with the Turkish Capital Market Board. The industry AuM accounts for only 5% of the country’s GDP making it one of the less penetrated markets in the world. In addition, the dominance of banks time deposits absorbing more than 90% of the country’s savings offers a great potential for the success of independent wealth managers aiming to serve the evolving financial goals of Turkish clients.
Since 2012 Azimut, through AZ Global Portfoy (“AZ Global”), has pioneered the rise of the independent asset management industry in Turkey with the introduction of a unique model of integrated financial advisory leveraging on a new generation of 8 local funds. AZ Global is also (i) the fund manager of AZ Fund Lira Plus, aiming to convert in Euro the level of local interest rates and (ii) the advisor of AZ Fund Global Sukuk, the first European UCITS and Shariah compliant fund investing in Islamic bonds.
Subject to the regulatory approval by the competent authorities, Azimut, through AZ International Holdings S.A., will purchase 70% of Notus equity capital.
Global investors are moving toward a “risk-off” stance, taking on greater protection as the prospect of geopolitical instability grows, according to the BofA Merrill Lynch Fund Manager Survey for March.
Responding at a point of growing tension in Ukraine, 81 percent of investors said they see geopolitical risk posing a threat to financial markets stability – more than four times the reading one month ago. Twenty-seven percent of investors say that a geopolitical crisis is the biggest tail risk – up from 12 percent in February. At the same time, investors continue to express concern about the prospects for emerging markets – with sentiment towards China’s economy falling further.
Investors have reacted by showing reduced optimism about the prospect for corporate profits globally and by reining in risk. They have increased cash allocations, reduced equity holdings and taken on greater protection.
The proportion of investors taking lower than average risk in their portfolio has increased to a net 14 percent from a net 2 percent in February. A net 16 percent of global asset allocators say that they are overweight cash, up from a net 12 percent last month. Average cash balances remain high at 4.8 percent of portfolios. The proportion of asset allocators overweight equities has dropped by nine percentage points month-on-month to a net 36 percent. Demand for protection against sharp falls in equity markets has increased to its highest level in 22 months.
“With neither inflation nor recession posing a threat, we believe the equity bull market is far from over and investors should be putting excess cash into risk assets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
“We see signs that recent exuberance in sentiment and positioning in Europe is waning. While Europe’s recovery remains in play, markets likely need to consolidate further before resuming their upward trend,” said John Bilton, European investment strategist.
Corporate optimism off highs
Investors have scaled back their belief in a vibrant recovery in corporate profit growth – but remain positive. A net 40 percent of global investors believe that global profits will improve in the coming 12 months, down from a net 45 percent in February.
At the same time, investor demand for companies to borrow and invest has eased. A net 34 percent of respondents say that corporate balance sheets are underleveraged, down from a net 40 percent last month.
Sectorial allocations this month reinforce a defensive mindset with a sharp fall in allocations towards banks and a rise in allocations to energy companies and utilities.
Hedge funds take risk-off stance
Hedge fund managers provide an illustration of the risk-off mentality taking shape in this month’s survey, having reduced both leverage and exposure to equities. The weighted average ratio of gross assets to capital has fallen to 1.34 times from 1.49 times, the lowest in 20 months. Thirty-one percent of hedge funds have a leverage ratio of less than one time – compared with 19 percent in January.
Weighted net exposure to equities has fallen to 29 percent, down three percentage points month-on-month from 38 percent in January and the lowest since June 2012.
Emerging market sentiment close to lows?
The investor panel has indicated that sentiment towards global emerging markets is close to reaching a low and that improvement is in sight. While the view towards China has deteriorated further, investors see scope to return to the region.
A net 47 percent of regional fund managers in Japan, Asia Pacific and global emerging markets expect China’s economy to weaken in the coming year, up from a net 41 percent a month ago. The proportion of global asset allocators underweight emerging market equities has risen two percentage points month-on-month to a net 31 percent – a new record low.
On the brighter side, investors have indicated that they see value in the region. A record net 49 percent of the global panel believes that emerging markets is the most undervalued of the regions, compared with a net 36 percent in January.
PineBridge Investments announced today that its Mexican private funds vehicle, Mexican Certificados de Capital de Desarrollo, or “CKD I” PBFF1CK 12, which is listed on the Bolsa Mexicana de Valores, has committed capital to five private market funds. The initial investments represent approximately half of the US $209 million (MX $2,681,250,000) capital commitments in CKD I. The selected funds provide access to investment opportunities in Mexico across growth equity, private infrastructure and private credit strategies.
During the third quarter of 2012, PineBridge launched the first pure private market funds portfolio through a CKD vehicle. PineBridge’s CKD I offering provides Mexican institutional investors with the opportunity to access a diversified portfolio of institutional quality private market funds, most of which would otherwise not be available to its investors, through a publically listed vehicle.
After the first round of selective investments, PineBridge’s CKD I portfolio is positioned to meet its investment objectives. Through its fund investments, CKD I has already provided investors with access to 10 underlying Mexican companies and projects in multiple sectors including telecommunications, logistics, e-commerce, fast food, housing and animation. CKD I investments will be focused solely in Mexico.
“We are enthusiastic about the opportunities in the Mexican private markets and the investments we are providing to our limited partners,” stated Steven Costabile, Global Head of the Private Funds Group at PineBridge. “The pipeline of institutional quality private market funds in Mexico continues to grow and we expect to fund significant investments in 2014.”
PineBridge’s CKD I has committed capital to the following funds:
Real Infrastructure Fund (Mexico)– provides growth capital to small- and mid-sized renewable energy projects in Mexico
Ventura Capital Privado Fund – provides access to larger transactions within the Mexican middle market
Alsis Mexico Housing Opportunities Fund Offshore– provides financing to private mid-sized Mexican real estate developers
Alta Growth Capital Mexico Fund II– provides growth equity capital to mid-sized companies in Mexico
Latin Idea Mexico Venture Capital Fund III– focuses on growth equity investments in the TMT sector
“Our goal is to build a diversified portfolio that provides top-tier access to the best opportunities in the middle market in Mexico. By significantly broadening the opportunity set, and focusing on growth equity, private credit and infrastructure, we are well positioned to deliver on this,” stated Alejandro Rodriguez, Director at PineBridge in Mexico City. “We are proud to be able to meet our clients’ needs, while continuing to bring attention to the investment opportunities in Latin America.”
“Our listed private funds portfolio structure has opened up a diversified opportunity set of private market investments for our clients. This innovative approach is bringing efficiency and rigor to the portfolio construction process with access to specialized opportunities,” stated Sergio Ramirez, Head of Americas Business Development at PineBridge.
The increased tensions in the Ukraine have made ING Investment Management more cautious, but are no reason to alter their risk-on stance. However, they have lowered the overweight position in equities and look for more contrarian exposure in commodities and real estate, as it seems that the balance of opportunity has shifted towards these asset classes.
For now, there is little reason to significantly adjust our general risk-on allocation stance in place as both fundamental and behavioural dynamics are still in support of risky assets. At the same time, it has to be acknowledged that the risks surrounding this base case scenario have increased.
Real estate and commodities outperform global equities
They have lowered our equity overweight…
A modest risk reduction in thier tactical allocation stance seemed prudent last week. Thinking about how to execute this, ING IM took into account where regional sensitivity was most influential, where valuation was most stretched and where positioning was most concentrated. With global equities reaching a new all-time at the end of February, attractiveness in the previously relatively cheap European equity markets having been eroded in recent weeks and generally still most risk taking amongst investors focused on equities, we decided to lower our equity overweight from medium to small.
…and shift our focus towards real estate, commodities
This also aligns well with their increased desire to look for more contrarian exposures in our asset allocation stance. As investor consensus is still heavily tilted towards equities while real estate and commodities are generally still unloved by active market players, the balance of opportunity seems to have shifted to the latter two asset classes. This has already been visible in the relative performance of these asset classes since the start of the year (see graph). It is one of the arguments to gradually relocate their allocation focus from equities towards real estate equities and commodities. Both are now overweight positions.
To view the complete story, click on the attcahed document.
Foto cedidaPatrick Summer, Head of Property Equities at Henderson Global Investors. Henderson: The attractions of property equities
After 17 years at Henderson, heading the Global Property Equities team since 2004, and after 34 years in the property industry, Patrick Sumner will be retiring from Henderson Global Investors at the end of June this year. He was instrumental in starting the European, Asian and Global strategies, which today amount to more than $2.7 billion.
Guy Barnardand Tim Gibson will take over as co-heads of Global Property Equities. Guy is based in London and has been co-manager of the $1.2 billion Henderson Horizon Global Property Equities Fund since November 2008 and manager of the $600 million Henderson Horizon Pan European Property Equities Fund since September 2010. Tim is based in Singapore and manages the $350 million Henderson Horizon Asia Pacific Property Equities Fund. Tim will join Guy as co-manager of the Henderson Horizon Global Property Equities Fund. In addition, Guy and Tim will continue to manage other regional and global funds.
At the same time the team has been strengthened with the two appointments, one to be based in London and one in Singapore. Nicolas Scherf will join in London as portfolio manager, where he will take on responsibility for certain European portfolios and will assist in the running of the Henderson Horizon Pan European Property Equities Fund. Nicolas joins from Cohen & Steers Capital Management where he spent over 6 years as a property securities investment analyst.
Xin Yan Low will join as an analyst on the property equities team in Singapore. She spent the last six years at Bank of America Merrill Lynch as an equity research analyst covering Asia property equities. She will work with Tim Gibson and alongside existing analyst Yan Ling Wong on the Henderson Horizon Asia Pacific Property Equities Fund and on the Asian portions of other property equity portfolios. Both will start in the 2nd quarter of this yea
Tim Gibson adds, “With investors increasingly looking for alternatives to fixed income, we feel the listed property sector, with an attractive and growing income stream, is well placed for the years ahead. Guy and I look forward to building on Patrick’s success and working with our clients to develop the team and franchise further in the years ahead”.
Foto: Wallyg. AXA IM encarga a Tim Gardener la dirección global del nuevo Grupo de Clientes Institucionales
AXA Investment Managers (AXA IM) has announced the appointment of Tim Gardener as Global Head of the firm’s new Institutional Client Group, formed to reflect AXA IM’s focus on the investment needs of distinct client groups. Lisa O’Connor, currently European Head of Consultant Relations, succeeds Tim Gardener as Global Head of Consultant Relations.
Tim Gardener will lead the development of the firm’s offering and approach to institutional clients, including insurance companies, pension funds, and sovereign wealth funds. Elodie Laugel, previously Head of Solutions Development in AXA IM’s Multi Asset Client Solutions team, has been appointed Deputy Head of the Institutional Client Group. The global consultant relations team, led by Lisa O’Connor, is an integral part of the Institutional Client Group, representing the importance of consultants in both their traditional advisory role and as leading players in fiduciary management markets across the spectrum of institutional clients.
The Institutional Client Group is one part of AXA IM’s wider Client Group of 250 professionals led by Laurent Seyer. The division is in charge of developing AXA IM’s proposition by client segment (institutional, retail and wholesale), while coordinating and monitoring marketing and client relationship activities.
Commenting on the appointments, Laurent Seyer, Head of Client Group at AXA IM, said: “The leading asset managers of tomorrow will be those that are able to develop the strongest relationships with their clients. Our relationship with the AXA Group means that we are constantly challenged to stay at the forefront of financial innovation and that we have an in depth understanding of the needs of complex clients. The Institutional Client Group will ensure that we are leveraging this competitive advantage to the benefit of all of our clients. It will also support AXA IM in being as well positioned as possible to help its clients and consultants address the investment challenges facing them.”
M&G Investments, one of Europe’s leading asset managers, has reported record net retail fund sales of €8.9 billion in its established European markets and in Asia in 2013.
This marks a 46 per cent improvement on the previous year. Retail assets under management in Europe totalled €28.5 billion at the end of 2013, a 64% increase over the 12 months. They now represent 35 per cent of total retail assets under management.
Net retail fund sales were strongest in Italy, Spain, Switzerland and France.
At a group level, M&G posted total net inflows of €11.2 billion. M&G has attracted an accumulated total of €62.4 billion in net sales over the past five years.
Total assets under management were 7 per cent higher at the end of the year at €293.3 billion. External client assets rose 13 per cent to €151.4 billion, nearly treble their level at the end of 2008. Third-party clients now account for 52 per cent of the total assets under management at M&G, with the balance of the assets belonging to Prudential Group PLC, M&G’s parent company.
M&G’s most popular products were the M&G Optimal Income Fund, an international flexible bond portfolio, and the M&G Global Dividend Fund. During the year, 10 M&G retail funds attracted net inflows of at least £100 million (€117.8 million).
Ignacio Rodríguez, sales manager of M&G Investments for Spain, Portugal and Latin America says: “M&G enjoyed its most successful year yet in Europe. Measured by funds under management, our international business has grown at an annual compound rate of 79 per cent over the past ten years.”
Photo: Altavista 147. Thor Urbana Acquires Luxury Mall in Mexico City
Thor Urbana Capital, a real estate investment and development company based in Mexico City, recently acquired the luxury shopping center Altavista 147 which hosts several internationally renowned brands such as Louis Vuitton, Salvatore Ferragamo, Tiffany & Co., MaxMara, Carolina Herrera, among others.
“We are very happy to have acquired this gem in Altavista, situated in the southern part of Mexico City, an area in which culture, art, fashion and elegance are very present”, said Jaime Fasja and Jimmy Arakanji, Managing Partners at Thor Urbana. “This purchase reinforces our strategy of acquiring and developing fashion and lifestyle shopping centers with the best tenant mix, designs and in the absolute best locations in the country”.
Thor Urbana Capital is a real estate development firm formed by Thor Equities CEO Joseph J. Sitt and Mexican developers Jaime Fasja and Jimmy Arakanji. Based in Mexico City, Thor Urbana is a vertically integrated platform that specializes in sourcing, acquiring, developing, repositioning, leasing, managing, and disposing uniquely located retail, office, hotel and mixed-use assets in Mexico’s principal urban markets and main avenues.
With a management team that has over 120 years of experience developing triple-A real estate properties in Mexico, the United States, Europe and South America, Thor Urbana is uniquely positioned to capitalize on Mexico’s growing real estate market.
