Despite production volume increasing six percent, 2012 marked only the second year over the past decade that global mining revenue did not increase, according to Mine 2013: A Confidence Crisis, the 10thedition in PwC’s installment on the global mining industry. This publication highlights industry trends based on data from the top 40 mining companies.
According to the report, the growing disconnect between the performance of the mining industry’s share prices, commodity prices, and the broader equity markets continued in 2012. Net profits dropped to $68 billion, a 49 percent decrease from 2011. In addition, market capitalization fell for 37 of the top 40 companies, totaling a loss of over $200 billion. Mining stocks fell slightly in the last year, but stocks have been hit in the first four months of 2013 with nearly a 20 percent decline. Meanwhile, shareholders are calling for change from the top, resulting in half of the CEOs at the 10 largest global mining companies being replaced since April 2012.
“In the rush to build new production capacity, productivity suffered and the full potential of these investments haven’t been recognized, contributing to a lack of investor confidence,” said Steve Ralbovsky, U.S. mining leader at PwC. “Well-positioned mining companies have responded by returning cash to shareholders while setting the stage for stronger future upside by reducing operating costs and increasing productivity of their existing core assets.”
As miners attempt to rebuild the market’s confidence, capital expenditures are being tightened. Forecasted capital expenditures for 2013 have already been reduced by 21 percent compared to 2012, dropping to $110 billion. At the same time, project hurdle rates have increased with some of the top 40 companies stating that only projects with a return above 25 percent will be pursued. Even with cost containment initiatives well-underway, a strategic, thoughtful approach to rebalancing capital spends should not have a negative impact on miners’ ability to meet the continued demand for their products, according to PwC.
Long-term global fundamental demand remains intact, but the ongoing uncertainty in advanced economies has shifted the industry’s center of gravity. Emerging and developing markets have become the world’s growth engine and mining companies have taken a keen interest in staking their claim to these regions. Half of the industry’s 40 largest miners by market capitalization have the bulk of their operations in emerging countries to capitalize on demand. At the same time, China remains the dominant force in driving demand, consuming 40 percent of global metal production.
Wikimedia CommonsPhoto: Pablo Trincado. Chile Applies New Measures to Improve the Transfer Between Pension Funds
A series of measures to improve the mechanism for transfers between pension funds made by members of the Chilean AFP system was announced on Wednesday by Solange Berstein, Chile’s Superintendent of Pensions.
Bernstein stressed that the measures do not include any particular course of action to restrict the freedom which affiliates have to move their pension savings from a particular fund to another, although there will be new measures of information and other regulations in order to better address mass transfers.
The objectives of these measures, said Solange Berstein, are three:
That members who take an active strategy of changes among funds are well informed of how this affects the profitability of their pension savings
Establish greater fairness amongst those who transfer between funds
Provide management flexibility to the E Fund’s portfolio in a scenario of mass fund transfers
The superintendent stressed that pension funds are intended for the finance of pensions, thereby being a long-term investment. She added that Law permits free choice between five Funds which offer different options of expected return and risk and a “default portfolio ” for each age group, with certain restrictions on the funds in which the member can stay when that member is either close to retirement or has already retired.
“The selection of a fund should be a well- informed choice which is consistent with the characteristics of the affiliate in respect of at least, the investment horizon, risk preferences, other sources of funding for the retirement stage and their health,” she added.
After the crisis of 2008, and recently even more so, there has been a significant increase in fund transfers. In view of that, the Superintendent decided to draw up a Technical Note, which is published on the website of the Superintendence, and analyzes the results, in terms of profitability, of the fund transfers made in 2008 by members in different circumstances, showing twelve months of following induced strategies (case study of “F & F-Felices y Forrados,” an advisory firm that has caused most of the fund transfers thus motivating regulatory review).
Using data from member’s actual accounts, results were conclusive that, in general, transfers in these scenarios have not been favorable for members. In addition to the mostly negative effects observed on the members themselves, it also advises of the potential negative effects to passive members and to the operation of the domestic capital market.
The measures adopted are explained below:
Information: Profitability Information Screen
Regulation: Pro-rated basis in mass fund transfers- The prorated proposal is directed towards providing equal treatment to all members who instruct a fund transfer on the same day, as all members in that situation will be transferred in proportion to the total number of fund transfer applications.
Regulation: Liquidity Funds for the E Fund – This measure proposes that the E Fund may invest in investment vehicles with a low component of restricted instruments (up to 10% in restricted instruments for each vehicle). These liquidity management funds will be limited to 10% use of the Fund. According to the Superintendence, the measure will facilitate the search for foreign investment vehicles which allow for the accommodation of E Fund investments in times of high inflows. It was approved last week by the CTI and is under consultation on its website.
Yves Raymond, Gustavo Lozano, Jaime Lázaro y Salvador Sandoval this Tuesday in Mexico. BBVA Bancomer Signs an Alliance with Pioneer Investments for their BBVANDQ Fund
Looking to generate differential yields over the benchmark through active management, BBVA Bancomer announced in Mexico City on Tuesday that it has entered into an alliance with Pioneer Investments, an investment management company with over 85 years experience and a presence in 27 countries, for advisory services in their BBVANDQ international equity fund.
Yves Raymond, Stock Market fundamental analyst at Pioneer Investments, told Funds Society that taking a bottom-upprocess approach, they will recommend that BBVA Bancomer, keep between 30 and 40 shares in this fund, with a maximum concentration of 20% per sharebut looking for a differential of 1% to 3% against their benchmark weight in the NASDAQ index. Raymond added that his preference for the technology sector is because valuations are below historical, making them “too cheap to pass up.” The management said they will establish weekly communication with the Mexican bank, which may be increased as necessary.
Meanwhile, Salvador Sandoval Tajonar, director of BBVA Bancomer Private Banking, stated during the breakfast presentation that they will continue analyzing alliances with leaders like Pioneer that “will allow us to bring the best product to supplement BBVA Bancomer’s supply. Bringing the world to Mexico.” While Pioneer’s Gustavo Lozano said they are very happy to provide these advisory services, the first since entering the Mexican market late last year.
As for the investment funds’ market in Mexico, Jaime Lazaro Ruiz, CEO for BBVA Bancomer Asset Management, said that it experienced positive development, achieving a growth of 6.88%, or 95 billion pesos so far this year, and reaching 1.5 trillion pesos (approximately US$115 billion) at the end of May. “The overall outlook at the end of this year 2013 is that the industry reaches our initial forecast with an increase of 10-12% in 2013.”
BBVANDQ, which will be actively managed, offers diversification opportunities offering exposure to companies “that intensively use and produce technology in an environment in which it is increasingly in demand” and which have 40% of their income outside the U.S. allowing access from Mexico to the growth which is being experienced in emerging markets, which offers Mexican investors high efficiency on tax matters.
Photo: Saul Slash Hudson . Corredora de Bolsa Sura Appoints professionals from Celfin and Bice for Its Team in Chile
Sura’s brokerage arm expects to begin operations in Chile early in the second half of this year and is now finalizing staffing of its team. Renzo Vercelli, who will be heading the brokerage house, has appointed Juan Pablo Valdés, former managing director of Celfin Wealth Management, as commercial manager, and Daniel Rojas, from Bice Investments as operations manager, as reported by Economía y Negocios.
Last June 3rd , Sura received approval from the Stock Exchange to operate as a broker, but is now waiting to receive approval from the “Superintendencia de Valores y Seguros de Chile (SVS)” (Superintendence of Securities and Insurance).
The hiring of Valdes and Rojas follow Paul Matter’s appointment as CIO, Head of Research, and Trading Desk. Mr. Matter comes from BBVA’s intermediary in Chile.
“We’re aiming for widespread access to savings through investment in shares… In Chile there is still much potential in transactions based on our countries’ GDP. Beyond the financial situation of the companies’ profits, shares as an investment instrument should double or triple their trading volume if we are to reach the standards of the developed countries,” said Andrés Errazuriz, vice president of Wealth Management of Sura in Chile.
The intermediary will begin offering only equity transactions, but within a year would be operating all investment instruments and could initially offer its services to about 10,000 Sura clients who, to date are interested in investing directly in the stock market.
Wikimedia CommonsFoto: Wealthmanagament.com. La confianza de los asesores financieros estadounidenses rebota en mayo
The WealthManagement.com Advisor Confidence Index (ACI), a benchmark of financial advisors’ views on the U.S. economy and the stock market, reversed course and rose 5.6 percent during the month of May to 114.8.
The upward tick in confidence comes a month after the index fell almost 6.8 percent to its lowest point since the start of the year. Advisors then said they believed that stock prices were rising too far too fast, and that the underlying economic recovery was still too fragile to support record-high valuations.
The most recent uptick in optimism suggests advisors may be capitulating to the bull market and perceive that the economic foundation of the recovery is getting stronger. Many still suggest that the markets are being supported more by government stimulus than a strong economy.
“For 2013, it has been buy the dip as the market has grinded higher,” says Kenny Landgraf of Kenjol Capital Management. “This probably the most hated bull-market rally. The bears and their cash positions earning zero are getting pulled off the sidelines. Central banks will continue to provide liquidity for the market and prevent companies from running out of cash. Interest rate yields are terrible. As bond investments mature, the bond investors are slowly forced to take more risk to replace the same yield as their maturing debt. We expect a sideways market and then we will hit new highs in the fall again.”
WealthManagement.com‘s ACI records the views of a panel of some 150 financial advisors who agreed to participate on a monthly basis, recording their level of confidence across four categories: confidence in the current state of the economy, confidence in the economy in both six months and twelve months, and confidence in the near-term future of the stock market.
Still, several advisors suggested the improved picture was in fact due to the underlying economy getting stronger. Housing and unemployment numbers seem to be getting better and that is fueling more aggressive market positions.
Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management business, said, “Over the second half of the month financial markets became increasingly nervous over the possibility that the Federal Reserve will begin to taper its program of asset purchases in coming months. This sent the ten-year yield sharply higher and started to increase risk aversion. The heightened concerns were due to numerous mentions of scaling back the pace of quantitative easing by various members of the Federal Reserve Board. Also, US economic data began to come in better than expected. Markets are currently caught between good economic news being positive as it can indicate the recovery is gaining traction, or good economic news being negative in the short term as it may mean monetary policy will tighten. However, the bias of most major central banks, especially in the US and Japan, seems to be toward being overly easy, rather than risk tightening too early.”
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, “As a result of these mixed signals, uncertainty surrounding the future of the global economic recovery remains high. With global growth remaining below average in the first quarter, and recent data suggesting continued weakness this quarter, commodities continue to face headwinds. However, some key indicators suggest stronger growth further out, which would ultimately support economically sensitive commodities. With the market currently not expecting higher inflation and central banks not overly concerned by it either, commodities may benefit should growth materialize at higher levels than expected.”
The Dow Jones-UBS Commodity Index Total Return decreased 2.24% in May. Overall, 15 out of 22 index constituents posted negative returns. Precious Metals was the worst performing sector, down 6.09%, as the dollar strengthened and interest rates rose sharply. Holdings in gold exchange-traded funds continued to fall, reaching their lowest levels in four years. Energy declined 4.71%, led by Natural Gas. Crude oil and petroleum products also decreased as a weak economic outlook continued to weigh on demand expectations, while the current supply and demand balance is not overly tight. The US Department of Energy conditionally approved a permit allowing a US company to export liquefied natural gas to countries without existing free trade agreements with the US, providing a potential boost for longer term demand. Livestock was relatively unchanged, down 0.33%, as Lean Hogs increased while Live Cattle decreased. Exports were reported weaker for the first quarter of 2013, partially due to import restrictions in China and Russia. China’s largest publicly-traded meat processor announced its bid for the largest pork producer in the US, Smithfield Foods. This may boost US pork exports to China. Agriculture was also relatively unchanged, up 0.04%. Corn was supported by Chinese buying and strong demand from US ethanol manufacturers. Coffee declined on the back of expectations of a record “off year” crop out of Brazil, which accounts for about one-third of the world’s coffee supply and existing comfortable inventory levels. Industrial Metals gained 1.61% as declining zinc and aluminum stocks in London Metals Exchange warehouses supported the sector, in addition to gains in copper. The better than expected US employment report at the beginning of the month along with strong consumer confidence readings provided a boost to the economically sensitive sector at the beginning of the month.
As of May 31st, 2013 the team managed approximately USD 10.8 billion in assets globally.
Credit Suisse today announced the launch of two new commodity index ETNs which are listed under the ticker symbols “CSCB” and “CSCR” and began trading on the NYSE ARCA this morning. CSCB is the first exchange traded product in the US market to offer investors access to the Credit Suisse Commodity Benchmark Total Return Index. CSCR is the first exchange traded product in the US market to offer investors exposure to the Credit Suisse Backwardation Total Return Index.
The Credit Suisse Commodity Benchmark Total Return Index underlying the CSCB ETN is a long-only diversified commodity benchmark index composed of notional futures contracts on 34 physical commodities (as of the 2013 annual rebalance). The index seeks to provide wider diversification and closer reflection of the overall global commodity complex than existing commodity indices. The index features an extended roll period of 15 days per month. The index also invests in contracts that expire between one to three months (where available), spreading exposure across multiple delivery periods, versus the more traditional front-month contract only investment.
The Credit Suisse Commodity Backwardation Index, underlying the CSCR ETN, is a long-only diversified commodity index composed of single-commodity indices that follows a rules-based strategy to select eight commodities based on the price of the commodity futures contracts of various terms. The index measures the level of backwardation (where the prices of futures contracts nearer to expiration are higher than prices of futures contracts with longer to expiration) or contango (where the prices of futures contracts nearer to expiration are lower than prices of futures contracts with longer to expiration) between two observation points on the curve (month 1 and, generally, month 6). Each month, the Index takes a notional weighted long position in eight single-commodity sub-indices from a universe of 24 eligible sub-indices.
Mark Harvey, global head of commodities structuring for Credit Suisse commented, “The Credit Suisse Commodity Benchmark Total Return Index updates a physical commodity futures index originally formulated in 1975 by commodities expert Bob Greer and first published in 1978. We have retained the key aspects of that index – including rebalancing, multi-period exposure and weighting methodology – to create an updated robust benchmark for the performance of the current global commodities markets.”
Wikimedia CommonsBy Jessica from Hove, United Kingdom. Switzerland has the Most Expensive Club Sandwich in the World & Colombia One of the Cheapest
Geneva has taken over from Paris as the most expensive city in the world in which to order a Club Sandwich, at an average of $30.45, according to research released today by Hotels.com. Using the classic hotel staple of a chicken, bacon, egg, lettuce and mayonnaise sandwich as a barometer of affordability, the Hotels.com Club Sandwich Index (CSI) offers travelers an indication of the cost of living associated with their destination of choice.
Now in its second year, the Index reflects not only changes in the actual price of a Club Sandwich across the globe but also the effect of currency fluctuations. Travelers will be pleased to note that, on the whole, prices are falling: the Genevan average of $30.45, although higher than any other destination, is also lower than last year’s most expensive, which was $33.10 in Paris.
Gastronomic hub and last year’s chart topper, Paris, this year slipped to number two with a new average of $27.45, closely followed by Oslo, which held on to the number three spot with $26.72. India’s New Delhi remained the cheapest destination to buy a Club Sandwich, with an average price of just $9.11.
New York City, the only U.S. destination to make the global list*, anchored the middle with an average of $17.51, up $1.57 from its 2012 average of $16.93. Prices in NYC ranged from a hefty $27 at the 5-star renowned St. Regis New York to a more modest $7.95 at a 3-star property elsewhere in Midtown. Another U.S. region that saw significant increases in Club Sandwich pricing includes the West Coast, with Los Angeles and San Francisco increasing by approximately $4 to $15.21 and $3, to $15.52 respectively. On the East Coast, Orlando saw a $4 decrease to $11.17, while in the country’s center cities like Houston and Las Vegas remained the same year over year.
Alison Couper from Hotels.com said: “The Club Sandwich, available on hotel menus across the globe, is the perfect spending barometer, helping tourists factor into their travel plans the everyday cost of simple items such as food and drink. The price changes when comparing 2013 to 2012 hide a complex story of factors from changes in the local price of basic food items through to currency fluctuations. The beauty of the CSI is that we are able to offer travelers a simple price comparison to show how far their money may stretch in each country.”
Foto cedidaFoto: Richard Speetjens. Darwin in the Digital Age: Robeco Consumer Trends
Back from a long weekend and about to board the plane, my husband commented … “Apple and Samsung have their days numbered”, “Say what?” I said, a little annoyed because I just got hold of the last iPhone model. “They don’t offer any added value, all smartphones are equal.”
I did not give that comment any further thought until a few days later, when Richard Speetjens, co-manager of Robeco Global Consumer Trends Equities Fund, explained a very similar concept. “In 2013, within our Digital World trend, we have greatly reduced our exposure to semiconductor manufacturers and other manufacturers of hardware for mobile devices.” While consumer secular change into the digital age is still one of the strongest thematic pillars of this fund, Speetjens notes that “60% of users already have a smartphone, and Apple and Samsung have taken the bulk of these purchases, but now low cost Chinese competitors with lower margins are entering the market.” Darwin has entered fully into the digital age.
In fact, the fund sold its entire position in Apple and AMR Holdings and has reduced its exposure to Samsung.“We’ve reassigned these positions to internet companies with a good strategy for mobile devices like Google, LinkedIn, eBay, TripAdvisor, Amazon, Yelp or MercadoLibre, one of our two only positions in Latin American companies,” the manager added.
The Robeco Consumer Trends fund, with about $850 million in assets under management, explores the trends which will shape consumption over the next five to ten years, investing in global companies exposed to these themes. “They must be global trends with consistent growth prospects over 5-10 years,” says Speetjens adding that “it is just as important to select good consumer trends as it is to select the individual companies which will represent these trends in the portfolio.”
The fund’s second major trend is consumption in emerging markets, both on the theme of consumption of luxury goods, “where we have remained stable in recent months,” as in the basic needs “where we had a strong bias towards Chinese consumers which we have recently diversified by investing in consumer companies exposed to Brazil, Indonesia and Russia. “One example is the Brazilian department store Lojas Renner, “very competitive, benefitting from the increased middle class in Brazil,” said Speetjens.
The fund’s third consumption trend focuses on the big brands; Speetjens explains that “generally these allow us to balance the risk that comes from the digital and the emerging consumer themes.” This year the strategy has added positions in Estée Lauder and Coca Cola, “two major brands with very reasonable rates and unappreciated right now.” The fund will typically hold between 35% and 40% in these “big names” of the consumer sector.
Foto cedidaGeorge Crosby, nuevo presidente de FIBA. FIBA elige nueva Junta Directiva, encabezada por George Crosby de HSBC
FIBA, a global trade association whose membership includes most of the largest financial institutions in the world who are active in correspondent banking, trade finance and international wealth management/private banking services, has elected its new Board of Directors to be headed by President-elect George de F. Crosby. Mr. Crosby will serve during the 2013-2014 fiscal year and has served as First Vice President of FIBA for the past year as well as chaired the Wealth Management Committee for the past 8 years. He will take office on July 1st for a one-year-term, succeeding Grisel Vega of Bci Miami Branch.
Mr. Crosby is a Managing Director and Group Head for Brazil at HSBC Private Bank International overseeing a team of bankers in Miami and New York. He is responsible for developing the Brazilian market strategy for the U.S. and is part of the Brazil Global Market Management team. Mr. Crosby is on the Board of HSBC Private Bank International in Miami.
Several areas contribute to the success of this forum, foremost of which are the constituency of it membership comprised due to the bankers, brokers, financial industry attorneys, accountants and consultants in the hemisphere. During his term, he will aim to achieve important goals focusing on four key areas:
FIBA Wealth Management Forum in September 16-17. A recent study showed that Miami is one of the top ten cities for global wealth management in the world. And with this in mind, FIBA is the right organization to showcase the future of our wealth management industry by hosting the first annual FIBA Wealth Management Forum in September.
The new FIBA Private Banking and Wealth Management Series. This initiative is lead by FIBA and the Private Banking Committee and the intention is to bring together not only bankers but also brokers and other practitioners. We focus on education, best practices and networking as these are all keys to sustaining our business.
Advocacy. FIBA has successfully taken important steps forward to have our voice heard in Washington and Tallahassee and we are recognized as the voice of the industry on international banking issues. The importance of working closely with the regulators for the benefit of our industry continues to be a key priority for us. With this, FIBA will maintain open lines of communication between the private and public sectors.
Preparing the next generation of banking leaders. FIBA’s role in providing relevant training programs and networking to ensure that we strengthen our next generation’s skills and vision is a key. This initiative is being well executed by the FIBA Young Professionals Committee through programs and after work happy hour activities. Few organizations offer their members so much in terms of information and knowledge sharing opportunities.
