By RitaLPGarcia . JP Morgan will Analyze Strategic Alternatives for its Physical Commodity Business
JP Morgan Chase & Co announced that it has concluded an internal review and is pursuing strategic alternatives for its physical commodities business, including its remaining holdings of commodities assets and its physical trading operations.
To maximize value, the firm will explore a full range of options over time including, but not limited to: a sale, spin off or strategic partnership of its physical commodities business. During the process, the firm will continue to run its physical commodities business as a going concern and fully support ongoing client activities.
J.P. Morgan has built a leading commodities franchise in recent years, achieving a top-ranked revenue position. The business has been consistently named as a top client business in Greenwich Associates’ annual client surveys and was recently named Derivatives House of the Year by Energy Risk magazine.
Following the internal review, J.P. Morgan has also reaffirmed that it will remain fully committed to its traditional banking activities in the commodity markets, including financial derivatives and the vaulting and trading of precious metals. The firm will continue to make markets, provide liquidity and offer advice to global companies and institutions that have, for years, relied on J.P. Morgan’s global risk management expertise.
Wikimedia CommonsBy Jikatu. The Raid and Search on Royal Bank of Canada in Uruguay has already led to the outflow of funds to other centers
The raid and search proceeding conducted a few weeks ago at the offices of the Royal Bank of Canada in Uruguay by Argentine judge Norberto Oyarbide, has caused a chain reaction and a lot of fear among the more than 10,000 Argentine clients with offshore private banking accounts in the neighboring country possessing an average of $600,000, and also amongst customers in other countries, as reported by the Uruguayan newspaper El Pais.
Some of these clients, Argentineans as well as clients from other nationalities, whose accounts are found in offshore institutions operating in Zonamerica, have already requested for their funds to be transferred to accounts abroad for fear of the recurrence of raids like the one requested by the Argentine judge on 13th June.
Judge Oyarbide requested authorization from Uruguayan authorities to conduct the operation. It so happens that the Argentine judge is in charge of a mega cause in which he is investigating millionaire money laundering maneuvers through the transfer of dozens of footballers.
As for the chain reaction and fear experienced by Argentine and foreign clients with capital in institutions operating within Zonamerica, El Pais newspaper says that according to a source who asked not to be identified, that after the raid “Argentine clients as well as clients from other countries are calling with much concern and some have specifically asked for their accounts to be withdrawn from Uruguay and taken them somewhere else …. It is not easy to be able to tell the customer that he shall not experience any problems because they have all the documentation.
“Putting myself in the shoes of a bank customer in Zonamerica, I understand how this has created suspicion and uncertainty about whether the bank is making available to third parties any information regarding their account, their name and their movements, and people do not want anything to do with that”, said the same source.
In Zonamerica, Uruguay’s most extensive free trade zone, there are currently about 60 banks and investment advisory firms in operation, including local and foreign banks which can only serve foreign clients and bank representations operating as a link between potential investors and the central office of institutions located outside the country.
We must bear in mind that customer funds in Zonamerica are not actually in Uruguay, since they use the country as “booking”, as the money is actually in bonds, stocks or funds in Switzerland, USA, Germany, Austria and Singapore.
The advantage of establishing within this zone is that it is a territory which is exempt from any taxes, and where companies do not have to give the Uruguayan state explanations of any kind, neither about invoicing nor about their customers, whilst it benefits the country as an employment generator.
Argentineans have deposits totaling 2,663 million dollars which are currently in Uruguayan accounts, as 71% of the 3,751 million dollars of non-resident accounts are Argentinean. The paper highlights that 90% of that money has been declared in Argentina and that only 10% would not be, according to financial market estimates.
Wikimedia CommonsManuel García Ospina. Are Emerging Markets Vulnerable?
It sounds harsh to say that emerging markets can be highly vulnerable. Especially since they have experienced a big boom in recent years, which has led to the suggestion that we are in a world in which emerging markets are of a different kind to those we knew years ago. Such terms such as BRIC, CIVETS, etc., allowed the “developed world” to look at them with different eyes. But today, at the prospect of a reduction of monetary stimulus, some weaknesses have been laid bare.
During the past 10 years, the total government debt in local currency of all the emerging markets combined, went from about 1.5 trillion dollars to almost $ 6 trillion, representing an average growth of 30% per annum which, compared with the economic growth over the same period which averaged 5% annually, shows a marked imbalance between how emerging markets got into debt, and the positive impact such indebtedness may have generated.
We might think that this increase in local government debt went hand in hand with an effective reduction of other forms of indebtedness, which, unfortunately, did not. Both public and private debt, boomed during the last 10 years, fueled by low global interest rates and excess liquidity. Proof of this is that between the period 2008-2013, the emerging markets have received about USD 300 billion, while the debt issued, has been of USD $ 292 billion.
The above sounds like finding oil in Arabia, which means, that wherever funding was seeked, there it was. However, the last few years may show a blurred picture of what happened in real emerging market crises. Let’s put it bluntly: after the Asian crisis, emerging markets have not had any deep crises. They may have had strong distortions, as in the period 2001-2003, which included Argentina’s default, but acute, never. So, that is why it becomes so important for financial sector analysts to start looking into a science that very few people like: economic history.
History will tell us that before July 2, 1997(the day in which the Asian crisis officially began),Thailand’s picture was very similar to the following: higher cash flows from Japan and Europe, which financed anything, including local financing institutions, real estate speculation as a whole, a stock market which had been highly dynamic in previous years, a highly overvalued currency, and the ‘allegations’ of its authorities that the capital flows which were entering were the result of direct investment , which reduced their vulnerability, because they were not portfolio flows.
At the same time, Thailand began to increase its imports, and due to external factors, its industry, especially its technology industry which was the bastion of its economic prosperity, experienced a fall in the price of the products it sold, almost overnight. Clearly, that led to a situation in which the dollars that entered Thailand ended up paying for its imports, and widening the current account deficit.
Would it sound similar if we said, that instead of a fall in the price of technology there was a fall in the price of basic goods? Actually, although market analysts prefer to talk about VIX, CDS and Ebitda multiples, they should watch the level of certain variables such as the current account deficit, which is extremely boring. And they should establish whether Thailand’s indicators in many variables, such as in the level of savings, among other things, are similar to those of some emerging countries today. They may be surprised at what they find. Hedge funds are familiar with this, as they were in 1997, but with one big difference: the leverage which may be achieved today may be much larger than that of 15 years ago.
Wikimedia CommonsFoto: Bill Ingalls. ING IM lanza un fondo crédito multi-estrategia
ING Investment Management launched the ING Renta Fund First Class Yield Opportunities with currently assets of EUR 35 million (USD 46,5 million). The fund seeks to deliver attractive returns by investing in a diversified multi-strategy credit portfolio.
The First Class Yield Opportunities strategy combines the skills of three key investment teams, the Multi-Asset, Credit and Emerging Market Debt boutiques. The strategy profits from ING IM’s proven bottom-up credit selection skills of the various specialized teams as well as the top-down asset allocation skills of the Multi-Asset boutique.
Ewout van Schaick (Head of Multi-Asset strategies) and Roel Jansen (Head of European Investment Grade Credit) act jointly as lead managers for the fund, setting the investment policy and the top down allocation over asset classes. The individual bonds are selected by ING IM specialized teams for investment grade credit, global high yield and emerging market debt. The fund volatility is monitored and can be scaled down depending upon market conditions, which makes it a risk-controlled investment.
Hans Stoter, Chief Investment Officer at ING Investment Management: “Global credit markets have proven to be an attractive investment over time and can be an attractive diversifier for a government bond oriented fixed income portfolio. Returns across global credit markets as well as returns over time deviate significantly which illustrates the importance of dynamic asset allocation. The need to fully understand the issuers and issues and to select the bonds with the most favourable estimated risk-adjusted returns requires analysis by credit specialty teams. The new First Class Yield Opportunities Fund combines our knowledge and experience in all of these fields.”
The strategy focuses on bonds that offer an attractive yield taking into account an estimate of the inherent risks. In order to be able to meet its return and risk objectives, the portfolio managers have the possibility to allocate in a flexible and dynamic manner between the various credit markets, with a strong focus on bottom-up instrument selection, top-down allocation and downside risk management.
Photo by DAVID ILIFF. Azimut Reaches an Agreement for the Acquisition of a 51% Stake in Augustum Opus
Azimut , Italy’s leading independent asset manager, reached an agreement with the partners of Augustum OPUS SIM (“A.O.”), an independent asset management company with headquarters in Milan and Perugia and AuM of just above € 800 million (USD 1.000 million)
On the basis of the agreement, Azimut will initially buy 51% of A.O. to be increased to 100% following the sixth year. The consideration paid for the 51% stake is € 10 million, and the remaining 49% will be determined on the basis of the profitability of the partnership throughout the period (ca. 10 times net profit: in between € 10-20 million).
A.O. is an asset management company specialised in individual portfolio and OICR, founded in 2009 by a group of independent portfolio managers with more than twenty years experience in the industry. With this transaction, Azimut enlarges its competencies in the individual portfolios and OICR, given the brilliant results and awards obtained by OICR products managed by A.O.
A.O. will continue to conserve within the group its autonomy in the management of client relationship and management of OICR, also throughout a special dedicated vehicle. A.O. thanks to the agreement with Azimut will increase its product range, innovation capabilities and competencies which will help to bring the Group at an international level in line with its natural evolution in the asset management field.
Capital Strategies Partners, firma especializada en intermediación de fondos de inversión, tiene un acuerdo con AZ Fund Management para distribuir sus productos en Latinoamérica.
Wikimedia CommonsFoto: mattbuck. Decalogue for world conquest
Emerging companies are standing up to the West in the global market. Until relatively recently, brands like Acer Electronics, Corona Beer, Emirates Airlines, Tata Motors and Concha y Toro wines were names unknown to the public.
In a new book, “The launch of the brand: How brands become global emerging”, Nirmalya Kumar and Jan-Benedict Steenkamp, discusses how emerging companies are learning how to position itself in the global market. In what may be termed the emerging consumer Decalogue, the authors set out eight steps.
The more traditional so far has been selling cheap products to gain market share and gradually raise the quality and prices. This is the strategy followed by Pearl River, a world leader in pianos, or appliance maker Haier, both Chinese companies.
A second alternative is to focus on business customers, then go to the final consumer. An example is Mahindra & Mahindra, the Indian company that began manufacturing tractors and now produces cars.
The third is to follow immigrants and sell their products in their host country, as did Goya Foods or Bollywood films in the United States. Or take advantage of tourism and local produce market once tourists return home. Corona beers or Mandarin Oriental hotels are two good examples.
Another strategy is to buy directly prestigious Western brands such as Tata Motors has made to acquire Jaguar Land Rover, or Lenovo IBM Thinkpads.
The authors point to other steps, such as the one followed by Brazil Havaianas, relying on the image of beach and fun, and the Chilean Concha y Toro in the country’s beauty, or institutional campaigns “country brand” as being launched India or Taiwan.
Emirates is a good example of how to achieve success by creating a brand image. The airline of Dubai has grown at double digits in recent years, making the country a center for business and tourism. One of the main components of the strategy of Robeco Consumer Trends emerging consumption both Western companies positioned in the developing countries as companies from these countries are making headway in the most advanced markets. Global brands enjoy much higher margins to local.
Wikimedia CommonsFoto: Alex Proimos . John Blau, nuevo presidente de Oppenheimer Asset Management
Oppenheimer Asset Management, a unit of Oppenheimer Holdings, is pleased to announce the appointment of John Blau as its President. He will be based out of our New York City headquarters.
Since Mr. Blau, 44, joined Oppenheimer in 1998, he has enjoyed wide-ranging success at the firm, first as a Financial Advisor, then as head of West Coast Asset Management Marketing. For the past two and a half years, he has served as co-head of Sales and Marketing for OAM. This very substantial experience has enabled him to develop a thorough knowledge of our Asset Management platform and a strong understanding of the needs of our clients as well as our Financial Advisors, with whom he enjoys excellent relationships.
“Oppenheimer Asset Management is well positioned to expand our leadership in providing investment advice and management to our clients,” said Mr. Blau. “I’m excited to have the opportunity to help shape our plans to achieve new levels of growth and share Oppenheimer’s expertise with our clients.”
“I have great confidence in John, and I look forward to working with him for many years,” said Albert G. Lowenthal, Chairman of the Board of Oppenheimer Holdings. “I have given him an ambitious mandate and believe that the diversity of our investment options and an improving investment climate will permit us to continue growing our managed account business while providing competitive returns on investments to our clients.”
Wikimedia CommonsKyleAndMelissa22. Incubadoras asiáticas de "startups"
As some of our readers may already know, Matthews Asia is headquartered in San Francisco and just north of Silicon Valley, home to some of the world’s largest technology corporations as well as a hotbed for tech startups. The rise of Silicon Valley has been bolstered by its connections to nearby Stanford University as well as to the emergence of the area’s venture capital industry on Sand Hill Road since the 1970s. This energy and entrepreneurial culture has helped create many innovative ventures that have disrupted traditional businesses.
In my conversations with government officials at various science parks throughout Asia, Silicon Valley is still the main reference for the creative environment they wish to build. Nations have tried to replicate its success by following a recipe that fosters partnerships between universities and industries. They have built science parks for specific industries near a research university and provided financial incentives for companies to relocate there. Today, according to UNESCO (the United Nations Educational, Scientific and Cultural Organization), there are more than 400 science parks worldwide. The U.S. tops the list with more than 150 parks, followed by Japan with 111. China, which began developing science parks in the mid-1980s, now has approximately 100.
Billions of dollars have been spent worldwide to build science parks but perhaps none can claim to have the same robust, unique and multi-faceted ecosystem that Silicon Valley has built. History has also shown that attempts to recreate the Silicon Valley phenomenon have met with little success. To be successful, I believe innovative firms need an ecosystem with their own local flavor. One of the critical ingredients to achieving this is the development of venture capital for earlier stages of enterprises, also known as incubators. Over the past decade, we have seen incubators sprouting up across Asia. More recently, in an interesting turn of events, many Silicon Valley incubators have been setting their sights on Asia as low-cost smartphones are creating a mobile generation in which many users are accessing the Internet for the first time through handsets rather than personal computers.
While the trend is exciting, it is too soon to assess the impact of these new ecosystems for startups. But over the long term, having a vibrant startup community is critical for the development of innovative sectors within Asia. If successful, this development may bode well for countries that are moving toward service-oriented economies as well as for Asia’s technology investors.
Jerry Shih, CFA is a 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.
Foto: Norbert Nagel . La industria de hedge funds podría asistir a una significativa actividad en la segunda mitad de año
Credit Suisse announce the results of its mid-year Hedge Fund Investor Survey, which polled 185 institutional investors on their current strategy appetite and allocation activity. This survey follows Credit Suisse’s Global Annual Investor survey published earlier this year.
Institutional investors responded that they intend to remain active, with 88% indicating that they plan to make additional allocations to hedge funds during the second half of this year. This indicates thatthe industry maysee continued significant levels of allocation activity in the second half of 2013.
In addition, respondents were asked to share their insights into whether they are planning to allocate, maintain or decrease allocations to various hedge fund strategies in the second half of this year. The top 3 strategies by net demand (percentage increasing allocation – percentage decreasing allocation) were:
All respondents: Long/Short Equity- Fundamental (57%), Event Driven (47%) and Global Macro (39%)
Americas: Long/Short Equity- Fundamental (58%), Event Driven (48%) and Global Macro (22%)
Asia: Long/Short Equity- Trading (50%), Long/Short Equity- Fundamental (40%) and Global Macro (40%)
EMEA: Long/Short Equity- Fundamental (57%), Global Macro (52%) and Event Driven (47%)
By comparison, in the annual CS global investor survey at the start of the year, the top three strategies were Long/Short Equity, Emerging Markets Equity and Event Driven.
When evaluated on a gross basis (straight percentage increasing allocation), respondents believed that Long/Short Equity- Fundamental strategies are likely to see the most gross allocation activity in the second half of this year, with 61% of global investors surveyed indicating that they plan to allocate, followed by Event Driven, with 51% planning to allocate. Conversely, investors indicated that Commodities funds are likely to see the most redemption activity over the next six months, with 32% indicating that they plan to lower their allocation to the strategy, followed by Emerging Markets Credit, with 29% planning to reduce their allocation.
“From this mid-year survey, it is clear that investors remain focused on long/short equity and event-driven strategies, particularly those involving fundamental approaches,” said Robert Leonard, Managing Director and Global Head of Capital Services at Credit Suisse. “We believe that some of this activity is being driven by the gradual rotation of capital from fixed-income markets into equities,” Leonard said. “Investors are also reacting to improving global markets and lower correlations by seeking those funds that can differentiate by their stock-picking abilities. Based upon these responses, wewould expect continued strong inflows to the industry during the second half of this year, as additional capital continues to come off the sidelines and into hedge funds.”
Foto: Peter Clayton . Sovereign Bank pasará a llamarse Santander Bank
Sovereign Bank, a wholly-owned subsidiary of Santander Holdings USA and one of the 25 largest retail banks in the United States by deposits, announced that it will begin to market itself under the Santander brand and legally change its name to Santander Bank, on October 17, 2013.
“October 17th will mark a unique occasion for our company. Under the Santander name, we will marry the local insights and relationships of a committed, community-focused bank with the breadth and expertise of a major global financial institution,” said Carlos Garcia, chief corporate affairs and communications officer at Sovereign Bank and Santander Holdings USA.
Sovereign Bank operates in Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island, serving 1.7 million retail and commercial clients. It has been a financially autonomous member of the Santander Group since 2009. While the Santander Group has had business operations in the United States for over 30 years, this change marks the first time it will operate as a federally chartered U.S. retail and commercial bank under the Santander brand.
With 102 million customers, over $72 billion in market capitalization and a 10.67% core capital ratio, the Santander Group is one of the world’s strongest financial institutions as well as being one of the most respected and recognized global financial brands. Santander Group’s subsidiaries do business under the unified Santander brand in the U.K., Germany, Brazil, Mexico, Chile, Argentina, Spain and Portugal.
In the four years since Sovereign Bank became part of the Santander Group, the Bank’s corporate headquarters were relocated to Boston, it substantially strengthened its capital and improved its asset quality, migrated multiple legacy systems to a single robust technology platform and became a full-fledged commercial bank by changing to a national bank charter.
Enhancements to Accompany Name Change
In addition to its name change, the Bank announced several enhancements to be rolled out between now and October 17th as part of a comprehensive $200+ million three year initiative. “Today’s announcement reflects our commitment to becoming the best bank we can possibly be for both our customers and for our team members,” said David Miree, managing director of the Bank’s retail network.
