Wikimedia CommonsBy Merlix. The Industry of Luxury Goods, driven by HENRY's
Worldwide luxury goods market revenues will grow as much as 50 percent faster than global GDP, with an expectation of four to five percent growth in 2013 and five to six percent annual average through 2015, on track to break the €250 billion sales threshold by mid-decade; this according to Bain & Company, the leading advisor to the global luxury goods industry, in the Spring 2013 update to its industry bellwether “Luxury Goods Worldwide Market Study;” unveiled today at a conference hosted by Fondazione Altagamma (the Italian luxury goods industry trade association).
Bain confirmed that luxury revenues grew by 10 percent in 2012 (at current exchange rates), given the strong growth tailwinds present in the first half of last year. All growth estimates for 2013 and beyond are at constant exchange rates.El estudio que lleva por título “Luxury Goods Worldwide Market” fue presentado este jueves en una conferencia organizada por la Fundación Altagamma, la asociación italiana de las empresas de la industria de bienes de lujo.
Bain’s spring update sees the key drivers of the luxury goods market as:
WHO
Tourists are changing their consumption habits, seeking out new destinations (e.g., Dubai, South East Asia, Australia) and showing more savvy in the items they purchase
Each year, more “HENRYs” (High Earnings, Not Rich Yet) become potential customers, with ten times as many HENRYs as ultra-affluent individuals
The rise of the middle class in emerging countries is polarizing the competitive arena, becoming a “new baby boom sized generation” for luxury brands to target
WHERE
High consumer confidence among the affluent, increased store openings in American cities, and intensive investment in linking physical and digital shopping are all fueling United States sales growth
The impact of 12 percent sales growth across Central and South America (notably Brazil and Mexico) will result in overall growth of five to seven percent in the Americas
In Asia, growth in China is stabilizing to an expected seven percent, while South East Asia will experience 20 percent growth driven by a wave of new store openings, and increasing strength and relevance of second-tier markets
Japan returns to a strong growth story of five percent as the country’s monetary policy depreciates the yen and pushes local consumption
Europe remains a challenge for the industry; as tourism slows, as tourists spend less per visit, and as Europeans, especially in southern Europe, curtail spending—Bain expects flat-to-two percent growth
Middle East is growing at a steady pace, with Dubai continuing as the center of gravity and the only city attracting foreign luxury consumers (e.g. Russians, Indians, Africans)
“We are seeing a more even distribution of global growth,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study. “In turn, brands are refocusing from short-term, reactive hot spot thinking to long-term sustained growth strategies.”
Over the long term, Bain estimates that the global luxury goods market in 2025 will likely be more than five times larger than it stood in 1995. The key for winning in the luxury market over the next 10 to 15 years, says Bain, is “to get ready for Luxury 2.0.”
Foto cedidaFoto: Ronald Doeswijk. World economy inching forward
The global economy has had some of the wind taken out of its sails. One illustration of this is the decline in the US ISM manufacturing index.
But there are no major causes for concern according to Robeco Chief Strategist Ronald Doeswijk as “the underlying movement is more favorable than one headline figure suggests”. It was mainly the inventory component of the ISM index which caused the fall, which means production can take off more quickly once demand gets into gear.
Furthermore improving labor and housing market data indicate ongoing recovery. The self-reinforcing economic recovery here means that the US is still Robeco´s favorite region for equities.
Europe – positive news is hard to find What Ronald Doeswijk describes as the “most striking development in Euroland” is the weakening German economy, marked by a significant decline in producer confidence over the last few months. It is reasonably quiet on the periphery but unemployment is ticking up. A preference for structural reform over austerity measures and stays of execution when it comes to budget-deficit reduction are the order of the day. Therefore a new chapter in the debt crisis is even possible.
Central bankers keep reins loose In both the US and Europe central banks are inclined towards more monetary easing. President Ben Bernanke of the Federal Reserve Bank has kept the doves happy by implying in his press conference that the door is still open for further easing. And in the Eurozone deflationary risks are likely to increase, according to Doeswijk. “Although we are not expecting this in the near term, additional easing may come in the form of a negative deposit rate”. Last but not least the BoE will continue its efforts to stimulate lending to the real economy.
“Below-trend growth but positive developments in the US economy and increasing optimism about Japan”
Japan – light at the end of the tunnel? While on the subject of monetary easing, it is important to figure out the effects of Abenomics. Has Abenomics given Japan a bit of its sparkle back? Perhaps. Japanese consumers seem to think so as their household spending jumped 5.2% in March reflecting new optimism also underscored by solid stock market gains. Before he can take a positive view on Japan, Doeswijk would like to see “more evidence of an economic rebound to support the stock price rises”.
Growth momentum slowing in Pacific Elsewhere in the Pacific the growth momentum is slowing – here too inflation is stable or in a downward trend. Our view on the region is neutral.
Equities – defensive sectors outperformance set to continue Equities are beneficiaries of the current low interest rate scenario. Corporate earnings are more or less flat and have given few surprises. Valuation remains neutral but the appetite for riskier asset classes is unlikely to wane until quantitative easing moderates – something unlikely to occur in 2013.
Defensive sectors have outperformed over one and three month periods. Their earnings revisions are also more favorable than their cyclical counterparts. According to Doeswijk and his team the relative performance of these stocks tends to be strong in the May-October period.
Real Estate – valuation is high but upside potential remains Global REITs continue to perform strongly, rising 14% over the last three months. The current environment enables low cost refinancing and yields are attractive. The earnings outlook is more realistic than for equities but a “clearly negative factor” according to Doeswijk is valuation; Japanese REITs rose 48% in the first quarter (prices are now 50% above their NAV).
High yield and emerging market debt favored The outlook for credits and high yield is positive. High Yield in particular offers decent absolute returns in the current low-interest-rate environment. Spreads for high yield are now close to those for the mostly investment grade local currency emerging market debt. Doeswijk is positive on both and summarizes the difference as a “trade-off between a lower rating (HY) and currency risk (EMD)”.
Commodities and government bonds are lagging in the search for yield The outlook for commodities remains weak. Basic metal inventories are high and weaker economic activity in China and a faltering Eurozone have depressed oil prices. Geopolitical risks could cause upside surprises for oil. The outlook for gold remains bleak after its steep decline (prices fell 14.7% on April 15th) triggered by ongoing outflows from gold ETFs, lower physical demand and lower inflation expectations.
The current scenario of falling or low inflation, easier credit and moderate economic growth mean that there are few reasons to hold government bonds. Yields are too low to be tempting – there are more attractive, albeit riskier opportunities to generate returns elsewhere.
Foto: Andrej Jakobčič. Eslovenia, un rescate manejable
The bailout deal for Cyprus cast a shadow over Slovenia’s potentially under-capitalized banking sector. Manolis Davradakis, Senior Emerging Econmist at Axa IM argues that the recapitalization needs of Slovenian banks stand at €3 to €5bn, significantly lower than those of Cyprus. A mix of bailout from Eurozone partners and enacted bail-in clauses should help to overcome these concerns.
According to the report the bailout is likely to be requested once external auditors have completed a due diligence of the banking system, although sovereign-rating downgrades could trigger an early request.
Axa IM points out that Latvia might be the next in line for a bailout.
Abstract – Since the adoption of the floating exchange-rate regime in 1999, the Brazilian Central Bank (BCB) has intervened several times in the foreign exchange market, buying and selling dollars in the spot, futures and derivatives markets. What are the variables that led the central bank to intervene in the foreign exchange market? In our investigation of this question, we find that the behavior of some variables – including, among others, the risk premium, the deviations of the real from its prior trend, comparison of the performance of the real with that of similar currencies, the volatility of markets and of the exchange rate itself – strongly influence the likelihood of BCB intervention in FX. We also conclude that the monetary authority acts in “blocks”, and that the fact that it had intervened the day before increases the likelihood of a new intervention. We also note that the BCB interventions (“reaction function”) change over time, in accordance with different macroeconomic scenarios and administrations.
. Bloomberg nombra a Samuel Palmisano asesor independiente en materia de privacidad y datos
Bloomberg LP announced today the appointment of Samuel J. Palmisano, the former Chairman and CEO of IBM, to serve as an independent adviser regarding the Company’s privacy and data standards.
Mr. Palmisano will immediately undertake a review of the Company’s current practices and policies for client data and end user information, including a review of access issues recently raised by the Company’s clients. In addition, Mr. Palmisano will make recommendations and advise on the implementation of any enhancements to these practices and policies, including the independent verification of the Company’s systems and procedures. Mr. Palmisano will report to Bloomberg’s Board of Directors.
To assist Mr. Palmisano and the Company in the review of data and privacy issues, the formulation of recommendations, and the implementation of any recommended enhancements, the Board has hired Hogan Lovells and the Promontory Financial Group. Additional expertise will be retained as necessary.
In addition, Bloomberg announced that Clark Hoyt, Editor-at-Large at Bloomberg News until today and formerly the public editor of the New York Times, will conduct a review of Bloomberg News’ relationship with the Company’s commercial operations, including privacy and data policies. He will make recommendations stemming from that review. All necessary resources will be made available to Mr. Hoyt, who will report to Mr. Doctoroff.
Sam Palmisano is the former CEO of IBM, where he served until January 2012. He also served as Chairman of the company until September, 2012. He was promoted to CEO in March 2002 and named Chairman effective January 1, 2003. Under his leadership, IBM achieved record financial performance, transformed itself into a globally integrated enterprise and introduced its Smarter Planet agenda. He serves on the boards of ExxonMobil and American Express. He also serves on the Board of Bloomberg Philanthropies.
Wikimedia Commons. BBVA Compass pone a Andrea Smith al frente de la entidad en San Antonio
After 12 years of successfully managing commercial banking relationships at BBVA Compass, the bank has promoted Andrea Smith to San Antonio city president.
Smith brings more than 18 years of experience in the financial services industry. Most recently, she worked as a commercial relationship manager at the bank in Birmingham, Ala., and focused on governmental and institutional lending to nonprofits, universities and municipalities. She also brings expertise in health care, commercial and industrial lending.
“Given the strong business climate in San Antonio, including the health care and government sectors, we believe this will be a very good fit,” said BBVA Compass Head of Commercial Banking Rafael Bustillo. “San Antonio is the seventh-largest city in the U.S., so it’s a very important market for BBVA Compass.”
Prior to joining BBVA Compass, Smith spent six years in community banking at Lamar Bank and Pike County National Bank in Mississippi. She previously served as president of the board for the Community Food Bank of Central Alabama, and as a board member for the YMCA and the Railroad Park Foundation in Birmingham.
Smith earned a bachelor’s degree and a master’s degree in business administration from the University of Southern Mississippi. In addition, she completed the BBVA Compass UT School of Management program and Alabama-based executive programs such as Project Corporate Leadership and Leadership Birmingham.
Photo: http://www.ForestWander.com. Quality Companies, with Good Dividend Yields – A Successful Strategy
Without doubt, the most significant economic development of 2013 has been the transformation of economic policy in Japan. The authorities have planned a massive monetary injection, combined with a fiscal stimulus and other reforms to encourage growth. Unlike previous attempts by the Japanese to fight their way out of deflation, the size of the package and the determined manner in which it has been implemented, has surprised nearly all observers.
There are clearly still difficult structural issues, which haven’t gone away but the effects of the package, combined with a much weaker yen and the consumption tax that is expected next year, which should bring forward expenditure, could be significant. We forecast 1.5% GDP this year and next, both a little above consensus forecasts.
In the US, we see reasonable growth ahead, despite the tightening of fiscal policy, as the economy appears to have built up useful momentum. Following recent revisions, it appears that employment has shown steady growth this year and the housing market continues to display a healthy recovery. We are looking for 2.0% GDP in 2013 and a further pick-up to 2.5% in 2014.
Eurozone economic activity remains very weak due to fiscal austerity and credit constraints. The recent softening of French activity is an increasing concern, and shows that the region’s problems are not confined to the periphery. Germany is also proving less of a positive factor than was previously the case, and is suffering from euro appreciation against some important competitors. We expect a fall in eurozone GDP of 0.5% in the current year, followed by some recovery to 0.5% growth in 2014. The UK just managed to achieve positive growth in Q1 and we retain our forecast for a 1.0% increase in GDP for the year as a whole. The weak eurozone has hit the UK’s trade balance, but a moderately surprising level of employment growth, a fall in oil prices and the Chancellor’s budget stimulus to the housing market should help consumption. We look for expansion next year of 1.5%.
Our forecasts for a pedestrian global economic recovery lead us to favor quality companies, with good dividend yields, in the more defensive areas. This strategy has been successful and consequently businesses with these profiles have become fairly expensively rated relative to other areas. We continue to favor this broad stance, but we have looked selectively to add to some of the more cyclical stocks, which have underperformed, as we seek value.
Equity markets have continued to show resilience despite a mediocre corporate reporting season and slow economies. We believe this is due to markets continuing to display relatively attractive levels of valuations and on account of the impact of global quantitative easing. This makes low risk investments increasingly unattractive and pushes liquidity into other assets. While valuations remain satisfactory, economies show some recovery and easy money continues, we believe it is right to remain above benchmark in equities.
Government bonds on the other hand have moved to unattractive yields and we have underweight holdings. At some point, yields will rise but it may not be imminent as central banks will endeavor to keep yields low to encourage growth. We continue to see better value in corporate and emerging market debt. These asset classes are enjoying healthy fundamentals and buoyant inflows, as investors search for higher yields.
Wikimedia Commons. AXA IM nombra a Lawrence Remstedt director de Desarrollo y Relaciones Institucionales
In this role, Mr. Remstedt will be in charge of institutional business development and relationships in the U.S. AXA IM has built a significant foundation in the U.S. market through two of its most well-established expertises – High Yield in the Fixed Income arena and AXA Rosenberg in the Equity arena. Mr. Remstedt, along with the other members of the sales team, will cover the U.S. and play a key role in broadening AXA IM’s client relationships. Most recently, Mr. Remstedt served as Portfolio Manager at AXA Rosenberg.
“We are thrilled that Lawrence is taking on this new role as AXA IM sharpens its presence in the U.S.,” said Xavier Thomin, Head of AXA IM U.S. “Lawrence has a deep understanding of AXA IM based on his tenure within the AXA IM family and has exceptional experience across asset classes. His experience within the investment team will bring insights and value to this role. In addition, he has successfully placed mandates in U.S. fixed income, global and U.S. high yield, alternatives and various equity strategies. These credentials fit with AXA IM in a meaningful way and we look forward to expanding current client relationships and developing new ones in the U.S.”
Remstedt said, “I’m looking forward to this new expanded role. AXA IM has direct experience in managing liabilities and has developed sophisticated expertise across asset classes to address some of the key issues facing investors today. For example, AXA Rosenberg’s SmartBeta approach has evolved from over seven years of managing volatility for clients.”
Mr. Remstedt’s career spans 24 years in the investment management industry, during which he has focused on developing and servicing institutional clients with extensive U.S. relationships. Prior to joining AXA Rosenberg, Lawrence served as a director of business development for American Century Investments from 2003 to 2008; and prior to that he was in a business development and client service role at Citigroup Asset Management for over nine years, including three years based in London.
Wikimedia CommonsFoto: Zscout370. Las reformas de México pueden añadir hasta un 1,5% al crecimiento del PIB, según AllianceBernstein
The signing of an addendum to the Pacto por México and the launch of a banking reform proposal suggest a solution to the country’s interparty political dispute. According to a research note twitted by AllianceBernstein, they also reinforce the commitment to much-needed structural reforms, creating a constructive economic and financial outlook.
On Tuesday, May 7, Mexican President Enrique Peña Nieto and representatives from the three largest political parties—the ruling PRI and opposition PAN and PRD—signed an addendum to the Pacto por México (PPM). This new accord rekindled the multiparty compromise to implement a series of ambitious policy reforms throughout Mexico’s economy. These reforms were initially included in the original PPM, which was signed last November.
A Likely Boost to GDP Growth
According to AllianceBernstein’s calculations, Mexico’s potential gross domestic product (GDP) growth rate is currently near 3.5% annualized. “The enactment of a wave of reforms seems likely to lift that GDP cruising speed by at least 1.5% annualized over the medium term, and gradually contribute to rising per capita incomes”, points out the research, adding that the opening of the energy and telecom sectors to competition is likely to lure foreign direct investment inflows bolstering foreign investment, which has been lagging that in other Latin American nations and providing support for peso-denominated assets.
Finally, AllianceBernstein thinks the chances are good for Mexico’s sovereign-debt rating to be further upgraded. Fitch recently upgraded Mexico, and Standard & Poor’s shifted its rating outlook to positive from neutral in March. They wouldn’t be surprised to see further upgrades this year and in 2014.
A transformation of the asset management industry is taking place as traditional guideposts are replaced by a new set of market demands. Economic, technological, behavioral and demographic macro trends are driving the need for firms to re-evaluate their strategies and business models. This paper presents a thematic introduction to the issues the industry is facing, the key implications to asset managers, and the questions firms should be asking to best adapt their strategies and take advantage of these new and emerging industry demands.
The five key macro trends are highlighted below:
Rise and inter connectivity of the emerging markets
