- CFA Institute held the second edition of its "Latin America Investment Conference" in Rio de Janeiro, bringing together more than 240 professionals
- CFA Society Brazil has more than 1,000 members and expects to have an annual growth of 15% percent in the next four years
- "Brazilians like the challenge of preparing the CFA Program, of seeking excellence. It is very hard, but it offers a high reward for our members "
- "Our voice is even more heard in the markets in terms of influencing the new regulations, but always having the investor's interest in mind, always from an ethical and transparent perspective"
CFA Institute and CFA Society Brazil jointly hosted the second edition of its “Latin America Investment Conference” on March 1st and 2nd. After having held its first edition in Cancun, Mexico, this time the city of Rio de Janeiro, Brazil, was chosen to bring together more than 240 investment professionals.
CFA Society Brazil, the local society of the CFA Institute in Brazil, was founded in 2004, has more than 1,000 members and expects to have an annual growth of 15% percent in the next four years, contributing to exceeding the figure of the 2,000 members in Latin America.
Mauro Miranda, CFA, an investment professional specialized in fixed income, including structured debt and private credit areas, is also the president of the CFA Society Brazil since 2016. During his two years in office he has managed to open an office in Sao Paulo for hosting the society’s activities, to make once again Rio a test center and to hold the annual investment conference in Latin America was held in this city.
In the last 14 years since the CFA Society Brazil was founded, with some 50 members, much has changed, both economically, in the political arena and in the development of markets.
“In 2004, the global economy was going through a period of growth and attractive prices for commodities, Brazil benefited from these circumstances and went through a promising period until 2007. Meanwhile, in the 2002 elections Lula won the presidency. During his mandates, there were no major changes in terms of economic policy. There were certain ups and downs, but these were the usual ones in any normal business cycle. Brazil was then affected by the crisis of 2008, obtaining a very negative GDP in that year, recovering later like many other economies. Later, we began the period in which Dilma Rousseff took the presidency, implementing very unorthodox economic measures. The GDP fell quarter after quarter, not recovering the path of growth until after its deposition.
In terms of capital markets, a much more robust regulation has been achieved. The Securities and Exchange Commission of Brazil (CVM) has issued several instructions that were very important to facilitate the establishment of banks and asset management institutions in Brazil at that time. As an emerging economy, Brazil is a country in progress. In July 1994, the Real Plan was implemented, the plan that introduced the current Brazilian currency and ended with a period of hyperinflation of 80% per month. Then, the regulatory agencies and certain economic policy measures were created that included greater fiscal austerity, such as the Fiscal Responsibility Law, signed in 2000, forcing municipalities, states and the federal government to comply with it. We have also seen a progression in the creation of elements that allow the development of capital markets in Brazil ".
According to Mauro, in Brazil there was a clear crowding out effect in the economy when the government was paying a 15% annually. Investors stopped investing in the private sector because they incurred in greater risk for a not-so-great spread. "Thanks to the fact that inflation levels were controlled, the Central Bank of Brazil was able to lower its Selic rate. This was the prerequisite for many investors to begun to see other opportunities. The data from the National Superintendency of Complementary Social Security (PREVIC) indicates that only a 0.2% of the assets in the pension plans are invested in foreign assets and the reason is precisely the high interest rates that the government was paying up to a couple of years. Now the pension funds should start looking for new opportunities, which can be in foreign investment in stocks or bonds or investment in local shares and corporate bonds, subject to credit risk, creating the need for more investment instruments to be available to investors. Companies can now seek financing in a range slightly above 6.75% of the Selic rate for those projects that were forgotten in the drawer and can now be profitable. While investors can now look for opportunities in the private corporate sector "
Having taken control of inflation and lowered the level of interest rates, there is a need for the government to implement the pension reform to reduce the current fiscal deficit. "The current pension system causes a fiscal deficit that is not sustainable over time. Either the next Brazilian government becomes aware of this reality or the rating agencies will not revise upwards their forecasts on Brazil. The international investors will choose other countries in the region to invest, such as Peru, Colombia, Mexico or Argentina."
The presence of the CFA Institute in Brazil
One of the issues on which the CFA Institute focuses is on increasing the qualification standards of investment professionals. This is accomplished through university associations, scholarships, global competitions in the field of economic research -CFA Research Challenge- and of course, through the CFA Program, a rigorous program of three annual exams, for which the CFA Society of Brazil has launched the first edition of a preparation course in Sao Paulo.
"We still have many professionals to be trained in the market and the CFA Program is very well recognized worldwide. Brazilians like the challenge of preparing it, of seeking excellence. It is very hard, but it offers a high reward for our members, who can opt for better job opportunities when they are CFA Charterholders. In addition, it is a global passport that is recognized throughout the world."
To contribute to the advancement of professional excellence, there are services that promote activities that help members find opportunities in the workplace, with a job board both locally and globally with the CFA Institute. "Many companies seek CFA Charterholders when they are looking to hire someone, it is a guarantee that that person is well qualified and completed a rigorous financial curriculum and also gained experience before joining their firms."
Also, the establishment of standards and ethics in the profession is probably one of the most important areas for the CFA Institute and local societies. "Especially in Brazil and in the Latin American region, after everything that has happened in recent years, we believe it is very important. As well as having integrity in the markets, an area that we will continue to defend from now on, we have certain goals and standards that we would like asset managers and banks to take as theirs to increase their commitment to the industry."
Another important area they focus on is the development of financial markets. To this end, they encourage debate among industry members, publishing recommendations on policies and procedures, as well as research studies on equity markets, fixed income and pension plans. "Last year we launched the first monograph contest on financial innovation. We had a total of 21 participants who managed to publish their research papers, with a similar approach to the monograph awards made by the Central Bank of Brazil. Considering the success obtained, we repeat again this year, "said Mauro Miranda.
Relations with regulatory bodies are too an important point for the CFA Society Brazil, which has strengthened its advocacy area, expanding the dialogue with the Securities Commission of Brazil (CVM) and the National Superintendence of Complementary Social Security (PREVIC) to obtain the recognition of the CFA Charter as necessary accreditation for the performance of certain functions in the financial markets. "Our voice has a greater relevance in the markets in terms of influencing the new regulations, but always having the investor's interest in mind, always from an ethical and transparent perspective. We have sent our comments to the CVM, basically when there has been a public consultation, about 4 or 5 per year, and that is how we maintain the course of our relationship and communicate the opinions of our members and participants in our working groups."
Finally, Mauro Miranda stressed that the CFA Institute's commitment to Brazil is unwavering, its investment in the country has been very strong and will continue to be in the future. "This affects the members and our work with regulators in improving capital markets. We sell ideas and ideals and talk about best practices in the markets. CFA Institute is present in Brazil to add resources."