Senior executive recruiter Laura Pollock announced the launch of Third Street Partners, a boutique executive search firm specializing in the investment management sector. The new company is located at 424 Madison Avenue, 7th floor, New York, NY, 10017. David Schumer has joined the firm as principal.
“Third Street is about leveraging best practices gleaned from more than a decade and a half of experience in investment management recruiting at both large and boutique executive search firms,” said Ms. Pollock. “David and I share the belief that focus, transparency and access enable Third Street Partners to optimally serve clients and candidates.”
Third Street Partners conducts retained searches and partnership consulting projects with a broad range of traditional and alternative investment organizations. Its core clients span institutional and intermediary distribution, insurance companies, investment subsidiaries, banks, high-net-worth firms, RIA’s, OCIOs, plan sponsors, endowment, foundations and family offices. The functional areas where the firm has expertise include senior business management, investments and distribution positions. Third Street Partners represents both global and regional investment management firms.
“It’s absolutely essential to me and to the members of my team that Third Street is a true partnership between our search firm, our clients and the candidate universe,” Ms. Pollock said. “That is why I named the firm Third Street – to encapsulate the urgency that all three constituents in a search be served by the highest standards. Only through a consistently hands-on, transparent process can a search be successfully executed.”
Weak economic conditions are expected to spur more downgrades than upgrades for Brazilian corporates through the first six months of 2014, according to a new Fitch Ratings report.
Since the beginning of 2013, downgrades have outpaced upgrades by a ratio of 1.2x. Sixteen percent of the 108 Brazilian corporates rated by Fitch have a Rating Outlook of Negative, as opposed to six percent with a Rating Outlook of Positive.
“With Brazilian GDP at 1.5 percent during the second quarter, uncertainties abound about the ability of the Brazilian economy to grow faster after the Central Bank of Brazil’s four rates hikes,” said Debora Jalles, Director in Fitch’s Latin America Group. “While these measures may tame high inflation and bolster the battered Brazilian real, they are likely to further erode consumer demand and put additional pressure on operating margins and profitability.”
Leverage has risen since the start of the global economic crisis. As of Dec. 31, 2012, the median total adjusted leverage ratio for Brazilian corporates was 4.2x, while the median net leverage ratio was 2.9x. These measures compare unfavorably with 2008 when they were 2.9x and 2.2x, respectively.
Negative free cash flow has grown significantly in the last two years due to high capex levels, which are not expected to decline in the future. With dividend payouts minimal for most, only a few corporates can boost liquidity by lowering dividend outflows.
Robust liquidity is a bright spot with the median cash/short-term debt ratio 1.4x as of Dec. 31, 2012.
Default risk is low despite weak capital markets. Fitch does not foresee defaults approaching 2008 levels in the next 12 months due to low exposure to toxic derivative instruments, and relatively high cash balances in the riskiest sectors. The airlines, sugar and ethanol, and protein industries are among the riskiest.
Foto: Tuxyso. Las visitas a compañías de EE.UU. confirman el buen momento de su economía
Deutsche Asset & Wealth Management (DeAWM) announced four hires to its real estate investment business (formerly RREEF Real Estate) in the Americas.
Matthew Jaffe joined as a Director and Alternative Investment Specialist in the Global Client Group, focusing on real estate. Based in New York, he reports to Laura Gaylord, Co-Head of Alternatives Investment Specialists for the Americas. Jaffe was most recently with Societe Generale, where he was a director in global markets, with responsibility for marketing across the Eastern U.S. Previously, Jaffe served as senior vice president of marketing and client services at Torchlight Investors (formerly ING Clarion Capital).
Peter Mette joined as a Director in the Real Estate Transactions team to focus on acquisitions in Southern California. Based in San Francisco, he reports to Tim Ellsworth, Head of Real Estate Transactions for the Americas. Mette brings more than 20 years of industry experience, most recently as a senior vice president and director of acquisitions and dispositions at KBS Realty Advisors. Prior to that, he held several senior transactions roles with Metropolitan Life Insurance Company, JPMorgan Mortgage Capital, Inc. and Meridian Industrial Trust.
Cheryl Charnas joined as a Vice President in the Real Estate Asset Management team as a Residential Asset Manager. Based in Chicago, she reports to Joe Senko, National Head of Residential Asset Management. Charnas brings more than 20 years of experience in commercial real estate, most recently as a project director of transitional assets and a vice president of asset management at Inland American Business Manager & Advisor, Inc.
Emily Zagorski joined as a Vice President to lead Product Development across the real estate investment platform in the Americas. Based in New York, she reports to Marlena Casellini, Deputy COO for the Americas, Alternatives and Real Assets. Previously, Zagorski was with JPMorgan Global Wealth Management where she led several initiatives, including global funds management and product development for the private bank and alternative investment investor relations.
“We are pleased to welcome Matt, Peter, Cheryl and Emily to the team. The addition of these experienced professionals reflect our commitment to further enhance DeAWM’s real estate investment offering as we continue to build out our alternative investment capabilities across products, functions and regions,” said Pierre Cherki, Head of Alternatives and Real Assets, which includes the real estate business at DeAWM.
Wikimedia CommonsMichael O´Sullivan, CIO . Los emergentes contribuyen a aumentar la riqueza mundial, que alcanza un nuevo máximo
Despite a decade of negative real returns on equities, several equity bear markets and the collapse of housing bubbles, the 2013 Credit Suisse Wealth Report finds that global wealth has more than doubled since 2000, reaching a new all-time high of 241 trillion US dollars. Strong economic growth and rising population levels in emerging nations are important drivers of this trend. Average wealth per adult has also hit a new peak of 51,600 US dollars, but inequality remains high.
Despite the continuing challenges posed by the economic environment, the underlying factors this year have been broadly positive for global household wealth. For the world as a whole, we estimate that personal wealth increased by 4.9 percent during the year to mid-2013 and now totals 241 trillion US dollars. Aggregate total wealth passed the pre-crisis peak in 2010, and since then has set new highs every year. Average wealth also established a new high at 51,600 US dollars per adult, the first time that average global wealth has passed the 50,000 US dollar threshold since 2007.
A Tale of Two Countries: The United States and Japan
Looking in more detail at the global pattern, the story this year is a tale of two countries. The United States posted a fifth successive year of rises in personal wealth. Fuelled by a recovery in house prices and a bull equity market which drove the Dow Jones to new highs, the United States added 8.1 trillion US dollars to the global wealth stock, increasing wealth ownership by 12.7 percent to 72.1 trillion US dollars. This is 20 percent more than the pre-crisis high in 2006 and 54 percent above the recent low in 2008.
Aggressive monetary policy by the Bank of Japan (BOJ) spurred an even greater rise in equity prices – up 52 percent in the year to mid-2013. But equities in Japan are very low by international standards, accounting for less than 10 percent of household financial wealth, and the same aggressive BOJ policies drove the yen-USD exchange rate down by 22 percent. As a consequence, total household wealth in Japan has fallen by 5.8 trillion US dollars this year, equivalent to 20 percent of Japanese net worth. Japan suffered very little during the global financial crisis – in fact personal wealth grew by 21 percent between 2007 and 2008. However, in marked contrast to recent performance by the United States, total wealth is now just 1 percent above the 2008 level. In most other parts of the world, the economic environment has been generally favorable to wealth acquisition.
The extent to which the United States and Japan dominate the world picture this year is illustrated by the figure, which shows the countries with the largest total wealth gains and losses. China (1.4 trillion US dollars), Germany (1.2 trillion US dollars) and France (1.1 trillion US dollars) are the only other countries where the change in wealth exceeded 1 trillion US dollars. Total wealth changed in a further eight countries by more than 200 billion US dollars (all gains): Italy, the United Kingdom, Spain, Mexico, Sweden, India, Korea and Canada. The equity price increase and the slightly favorable euro-dollar movement enabled the Eurozone countries to recover more than half of the very large wealth loss experienced 12 months earlier. The United Kingdom, India and Switzerland also managed to recover a significant portion of recent losses.
Wealth Per Adult Across Countries: Switzerland Remains On Top
As already noted, global household wealth equates to 51,600 US dollars per adult, a new all-time high for average net worth. This average global value masks considerable variation across countries and regions, as is evident in the figure. The richest nations, with wealth per adult over 100,000 US dollars, are found in North America, Western Europe, and among the rich Asia-Pacific and Middle Eastern countries. They are headed by Switzerland, which in 2011 became the first country in which average wealth exceeded 500,000 US dollars. It dropped below this mark in 2012, but this year equity price rises resulted in a new peak value of 513,000 US dollars per adult. Australia (403,000 US dollars), Norway (380,000 US dollars) and Luxembourg (315,000 US dollars) all experienced an increase in wealth per adult and retain their respective second, third and fourth places from 2012. The United States, Sweden, France, Singapore, Belgium and Denmark are close behind, with average wealth per adult in the 250,000 to 300,000 US dollar range. A year ago, Japan moved up to fourth place in the table, but it has now been demoted and no longer ranks among the top ten countries.
Distribution of Wealth Across Individuals: Inequality Remains High
To determine how global wealth is distributed across households and individuals – rather than regions or countries – we combine our data on the level of household wealth across countries with information on the pattern of wealth distribution within countries. Our estimates for mid-2013 indicate that once debts have been subtracted, an adult requires just 4,000 US dollars in assets to be in the wealthiest half of world citizens. However, a person needs at least 75,000 US dollars to be a member of the top 10 percent of global wealth holders, and 753,000 US dollars to belong to the top 1 percent. Taken together, the bottom half of the global population own less than 1 percent of total wealth. In sharp contrast, the richest 10 percent hold 86 percent of the world’s wealth, and the top 1 percent alone account for 46 percent of global assets.
Further information on the pattern of total wealth ownership across regions and countries during the year to mid-2013 can be found in the full publication: Credit Suisse Global Wealth Report 2013.
Morningstar announced the winners of its second annual Morningstar Awards for U.S. exchange-traded funds and ETF providers at its annual ETF Invest Conference in Chicago. The Morningstar Awards recognize the best ETF firms as well as Morningstar ETF Category Winners for two classes of investing objectives, Investor and Trader, based on total cost of ownership and performance.
Morningstar identified Investor and Trader class winners across 40 ETF categories; the category winner is the highest ranked in the category versus its peers, in terms of total cost of ownership and risk-adjusted returns. The ETF providers with the most Morningstar ETF Category Winners in both the Investor and Trader classes within each U.S. category group receive the Morningstar Best ETF Provider award. In this year’s awards, iShares had 31 Category Winners and Vanguard received 23.
The 2013 Morningstar Best ETF Providers in four U.S. category groups are:
International Stock: iShares
Sector Stock: Vanguard
Taxable Bond: iShares
U.S. Stock: iShares
Morningstar distinguishes the investing objectives of retail investors, who tend to invest a smaller dollar amount over a longer time period, and traders, who may invest a larger dollar amount with a greater need for liquidity, and names two ETF winners in each category. A full list of the Morningstar ETF Category Winners in the Investor and Trader classes is available through this link.
“The most notable move we saw this year was iShares replacing Vanguard as the best ETF provider in the U.S. stock category group, though the change had nothing to do with performance or cost. Vanguard’s benchmark index changes, announced late in 2012, disqualified many of the firm’s U.S. stock ETFs from consideration under our methodology. That said, over the long term, Vanguard’s index changes will result in lower index licensing fees that we expect will translate to lower fees for shareholders and enhanced tracking performance,” Ben Johnson, Morningstar’s director of global passive funds research, said. “We also saw two newcomers among our Investor class category winners. Schwab U.S. Broad Market ETF and Schwab U.S. Large-Cap Growth ETF topped the U.S. ETF Large Blend and U.S. ETF Large Growth categories, respectively. The WisdomTree SmallCap Dividend ETF was the Investor class category winner for the U.S. ETF Small Value category.”
Wikimedia CommonsFoto: Ricky Qi . Nuevo experimento en Shanghái
In an attempt to further liberalize China’s economy, central government officials have created an experimental new free trade zone, which officially opened for business this week. The zone combines four existing but smaller development areas within Shanghai that are already exempt from import and export tariffs. Although the entire zone spans only about 29 square kilometers, many people believe its creation is just as important as the special economic zone that first opened the door for foreign investors to China’s economy, created in Shenzhen about 30 years ago. Given the excitement, some companies headquartered in Shanghai, especially those listed on the domestic A-share market, have seen their stock prices soar on the news.
I had an opportunity to visit several Shanghai-based companies during my recent research trip there. While many people (myself included) remain unclear as to all the details of the plan, most are quite encouraged by the move. Through my conversations with local businessmen, it seemed clear that two things really set the Shanghai Free Trade Zone (FTZ) apart from recent economic experiments elsewhere in China, such as in Wenzhou and Shenzhen.
First is the ease of doing business. The Shanghai FTZ will introduce the concept of a “negative” or restricted list of business areas. Thus, companies, especially foreign companies, can choose to engage in a variety of business activities as long as they are not on the government-restricted list. Currently, companies can only do what the government explicitly allows them. The freedom to explore is one of the key elements needed for innovation in business, and the Chinese government itself may perhaps also learn how to adapt to a role with limited power in business through the zone. Second is financial liberalization. It is widely expected that banks operating in the new trade zone will have the freedom to set interest rates freely, and may not be subject to the current interest rate cap imposed by China’s central bank. In addition, there is also discussion over some degree of capital account convertibility of China’s currency, the renminbi.
Some critics have questioned whether the new trade zone is just another method for the local government to raise more land sale revenue. However, I see more positive signs this time. First of all, the decision to set up the zone comes directly from the central government, and is exempt from certain laws implemented everywhere else in China, giving more freedom to businesses. Even Asia’s richest man, billionaire Li Ka-Shing, recently commented that with the development of the free trade zone, Shanghai could pose serious competition to Hong Kong’s current status as the free business gateway to China.
Why might China’s government take this experiment so seriously this time? There are two compelling pressures. Internally, economically developed areas like Shanghai have faced significant growth bottlenecks in recent years, and seek further reform in order to liberalize the economy, especially the services sector. Internationally, Chinese officials in late May expressed China’s interest in joining Trans Pacific Partnership (TPP) negotiations. Being able to join the TPP means further opening its economy, especially financial services to international competition for China. Thus, the government needs a test case like the FTZ to access its readiness for greater competition in these sectors.
Shanghai’s talent base, legal system and administrative efficiency still need to catch up with international service centers in Asia like Hong Kong and Singapore. However, if Shanghai’s experiment is considered a success, liberalization policies may be rolled out to the rest of the country. This is how reform happens in China: taking thoughtful steps with measured risks. We saw how experiments in its special economic zones transformed China into the world’s factory decades ago. This time, the expectations seem equally high for Shanghai’s new experiment.
Sherwood Zhang, CFA Research Analyst at Matthews Asia
The views and information discussed represent opinion and an assessment of market conditions at a specific point in time that are subject to change. It should not be relied upon as a recommendation to buy and sell particular securities or markets in general. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific geographic location. Investing in small- and mid-size companies is more risky than investing in large companies, as they may be more volatile and less liquid than large companies. This document has not been reviewed or approved by any regulatory body.
Charlie Awdry. Foto cedida. ¿Están las políticas de Pekín influyendo en la economía real?
Chinese equities have recently rallied and the market is beginning to outperform parts of Asia and other emerging markets. This has come at a time when investor sentiment and expectations are very low. Just as economists cut their gross domestic product (GDP) forecasts, the Chinese economy is starting to show signs of a recovery that appears to be gathering pace.
Investors who have avoided China for a while may be wise to reconsider their positioning
While China still has many structural issues to address, the Chinese authorities’ rhetoric and policy has turned more supportive of reform and growth and this is now feeding through to more robust economic activity. Since the new Communist party leaders took office in November last year, we have been encouraged by their reform agenda including putting pressure on weak financial institutions, curbing the powers of large state-owned monopolies and getting serious about economic reform. It is refreshing that the new Party leaders are content to endure short-term economic growth pain for long-term sustainability gain. However, it appears over the Summer that they have begun to stress growth over reform.
Within our portfolio, companies that have benefited from this more positive backdrop include BMW’s joint venture partner Brilliance China
Encouragingly, the latest macroeconomic indicators suggest that these initiatives are having the desired effect. In analyzing China’s economic health, among the key data we closely monitor are purchasing managers’ index (PMI) manufacturing surveys, commodities demand and power consumption. HSBC’s flash China PMI for manufacturing rose from 50.1 to 51.2 in September, adding to signs of a rebound in its economy. Meanwhile, given an apparent pick-up in global economic activity and order outlooks, it’s not too surprising that China’s export growth edged up to 7.2% year-on-year, exceeding market expectations.
Recently, China’s power production increased to an all-time high as summer temperatures soared. According to data compiled by Bloomberg, electricity generation has climbed to its highest monthly figure on record. The official Xinhua News Agency estimates that China’s power use may rise by 5 to 6 percent in 2013. Already this year we have witnessed a strong pick up in China’s power generation growth – see chart.
Chart: A strong pick up in China’s power generation growth
The half-year corporate reporting season has also been reassuring. A notable number of companies have produced strong profit growth above expectations at a time when scepticism about China has been high. Within our portfolio, companies that have benefited from this more positive backdrop include BMW’s joint venture partner Brilliance China, China’s leading SUV brand Great Wall Motor, and offshore oil service provider China Oilfield Services. We are increasingly positive on China. Many companies appear to offer good value and profit growth potential, while current valuations are cheap compared to historical price-to-earnings and price-to-book measures.
Tightness in interbank money market rates is among the risks that we are monitoring, although the likelihood of an imminent liquidity crisis appears to be minimal as the People’s Bank of China (PBoC) is unlikely to allow this to happen: one concern is that house prices are rising strongly again and the authorities may want to cool this trend. We also continue to look for any signs that the reform process is slowing. Overall, we expect the Chinese economy will experience moderate expansion this year – an ideal scenario for stock pickers like us. Investors who have avoided China for a while may be wise to reconsider their positioning.
Opinion column by Charles Awdry, investment manager of the Chinese Opportunities Fund at Henderson Global Investors
Wikimedia Commons. Fink and Gross, Convinced That the U.S. will not Fail to Fulfill its Debt Duties
The world’s largest bond mutual fund manager and the world’s largest asset manager – PIMCO’s Bill Gross, founder and co-chief investment officer, and Larry Fink, chairman and chief executive of BlackRock Inc. – were reunited for an evening of discussion on national, international and governmental issues at the Beverly Hilton Hotel in Beverly Hills, CA, on Thursday, Oct. 3, 2013. In addition to sharing their perspectives on global economic and financial markets, the two UCLA Anderson School of Management alumni focused their conversation on an emerging concern: a new workforce that may be ill prepared to respond to the needs of advancing technology and the demands of future economies.
The exclusive hour-long event, sponsored by UCLA Anderson, was moderated by CNBC’s Brian Sullivan and streamed online by the network last Thursday.
The conversation covered a wide range of topics, including the pair’s bullish enthusiasm for investment in Mexico and the nation’s education crisis. Fink discussed the “death of long-termism,” a phenomena that sees corporate CEOs focused predominantly on short-term gains rather than long-term growth. Gross concurred, also commenting on the impact of low interest rates.
“We live in a world with artificially depressed interest rates that lead to artificially depressed returns [on investment],” Gross said.
“We heard from two industry icons who expressed confidence in the U.S.’s resource-rich economy, as well as in the financial resilience of large banks today,” says Judy Olian, dean of UCLA Anderson School of Management. “It’s obvious why Bill and Larry, who are a source of pride to the Anderson school, continue to shape financial markets around the world.”
Bill Gross, who manages the world’s largest bond fund at Pacific Investment Management Co, (PIMCO) has been called “the nation’s most prominent bond investor” by The New York Times and “the consigliore to the world’s financial elite” by Forbes, (who counted him among “the world’s most powerful people” in 2009 and 2010). Gross co-founded PIMCO and currently manages its Total Return fund, the world’s largest mutual fund and is responsible for nearly $2 trillion worldwide. A former blackjack pro, Gross has said he still applies many of the principles learned then for spreading risk and calculating odds to his investment decisions. He is the author of two popular books on investing, “Bill Gross on Investing” and “Everything You’ve Heard About Investing Is Wrong.” Gross has been a keynote at UCLA Anderson events and a commencement speaker. He is a noted philanthropist and a generous donor to our school.
Larry Fink, chairman and CEO of BlackRock, has been named one of the “World’s Best CEOs” by Barron’s each year since 2005, and distinguished as one of the most respected people in finance by the Financial Times, Forbes, Fortune and SmartMoney. He received UCLA Anderson’s 2007 Distinguished Alumni Award and has been a major player in the financial industry since earning his MBA in 1976. Since BlackRock’s inception in 1988, Mr. Fink has kept client centric solutions and innovation at the forefront of his leadership, building a once small fixed income boutique into a global asset manager with more than 9,000 employees in 27 countries. A renowned philanthropist, Mr. Fink’s generous leadership and financial contributions led to the school naming the Laurence and Lori Fink Center for Finance and Investment in his honor.
JP Morgan Chase & Co. announced it has appointed DanaDeasy as the company’s new Chief Information Officer (CIO), effective in December. In this role, Mr. Deasy will be responsible for the firm’s technology systems and infrastructure across all of its business globally.
Mr. Deasy will be joining JPMorgan Chase from BP, the $400 billion global energy company, where he was Chief Information Officer and Group Vice President responsible for global information technology, procurement and global real estate. Earlier in his career, Mr. Deasy served as CIO for General Motors North America, Tyco International and Siemens Corporation Americas.
Mike Ashworth, who served as interim CIO over the past several months, has been named Deputy CIO for the company and Chief Information Officer for the firm’s leading Consumer & Community Banking business. Mr. Ashworth is a recognized leader who has held a number of senior leadership positions at the firm over his 27-year career there, including as head of Global Technology Infrastructure and as CIO for the Investment Bank.
“Technology fuels almost every aspect of our company and is core to the value proposition we offer our customers, clients and communities,” said Paul Compton, Chief Administrative Officer for JPMorgan Chase. “Dana Deasy is an extraordinarily talented executive with outstanding experience, and we are pleased he’ll be leading this critically important role for our company.”
Gordon Smith, CEO of the company’s consumer businesses, added, “We’re also very fortunate that someone with Mike Ashworth’s deep experience across our company will be responsible for delivering technology solutions to our 52 million consumer and small business customers across the United States. Our customers have come to expect the best solutions from Chase, and Mike will help ensure we deliver on that promise.”
