Investors’ appetite for China’s stock market is quickly unwinding. Since the peak almost one month ago the Shanghai Composite Index lost a third of its value. Just like there were no fundamental economic reasons that could explain the earlier steep increase in stock market prices, the current crash has not been triggered by worries about an imminent hard landing. While we would certainly not dismiss this risk as futile and also think growth will slow down faster than consensus estimates, the impact on economic activity looks set to remain fairly modest.
Since the start of the equity rally last summer until its recent peak almost one month ago, Chinese stock prices more than doubled. This sharp upward move always looked suspicious given that economic activity continued its downward growth trend. Looking forward, economic growth in China will continue to decrease from current levels. The fast rise in income levels seen over the past decades (limiting the country’s future catch-up potential), the rebalancing of the economy towards consumption away from investment and China’s rapidly ageing population will all play an important role in this.
Admittedly, this does by no means imply that equity prices should have moved in the same negative direction. First of all, it can be argued that China’s stock market was far from expensive one year ago. Indeed, traditional valuation measures including the price/earnings ratio or the market capitalization of listed firms relative to GDP both suggested in fact the Chinese stock market had become fairly cheap. Moreover, despite slower growth, the rebalancing of the economy is a positive evolution and one that makes future growth more sustainable.
At the same time, however, there were also several reasons to be sceptical, certainly in times when Chinese policymakers are experiencing difficulties in trying to make sure that growth doesn’t slow too abruptly. Importantly, it cannot be denied that a lot of (official state) media attention has been given to the attractiveness of China’s stock market while policymakers were putting further rebalancing measures in place. In other words, Chinese leaders have interpreted rising stock market prices as evidence that their strategy was playing out fine and have not refrained from underlining this. Moreover, the fact that the housing market was struggling at the same time has also helped to drain savings into China’s stock market. All this in combination with the prospect of more capital account openness (including bigger representation of Chinese stocks in global equity indices) has fuelled a speculative stock market bubble.
Since its peak mid-June, the Shanghai Composite Index has fallen by around 32%. Year to date, however, the index increased more than 8%. Over the last 12 months, meanwhile, equity prices are still up more than 70%. The big challenge and difficulty of course is to see what comes next. Authorities are now taking measures to support the equity market. What’s also obvious is that this is proving very difficult, especially when at least a significant part of the money invested is debt-financed. All in all, for reasons explained here, the impact on overall economic activity should remain fairly limited at this point. That said, recent turbulence once again underlines how difficult it is for Chinese leaders to deal with the huge imbalances stemming from the unsustainable credit boom witnessed after the 2008-2009 crisis.
CC-BY-SA-2.0, FlickrPhoto: Tony Hisgett. Investigating the Market Correction
Predecible. Estable. Insulso. Así era el mercado de renta fija durante el decenio anterior a 2008. Ahora se asocia a episodios de alta volatilidad, que pueden aumentar. Incluso los inversores no pueden ya dar por descontada la liquidez. De manera que invertir en renta fija ya no es lo que solía ser.
En renta fija, con los tipos de interés tan bajos, permanece la búsqueda de rentabilidad adicional y las alternativas son escasas. Pero la volatilidad es más frecuente. ¿Qué deben hacer los inversores en bonos?
“La ironía es que el deterioro de las condiciones de contratación se debe a las nuevas normas concebidas para hacer el sistema financiero más seguro. De hecho los reguladores han actuado con firmeza para disuadir a las instituciones financieras de asumir riesgos, pero, al hacerlo han puesto en peligro a los actores que tradicionalmente lubrican los mecanismos: los intermediarios. Antes de 2008 reunían compradores y vendedores, sin que les importara mantener bonos, como un enorme almacén de existencias, con la seguridad de que se trataba de títulos de bajo riesgo que podían cubrirse con facilidad”, dice Raymond Sagayam, CFA, gestor senior en la unidad de rentabilidad total en crédito de Pictet AM.
“Pero su función se ha visto sometida al continuo ataque de las fuerzas reguladoras”, dice. En Estados Unidos, explica el gestor de Pictet, la norma Volcker prohíbe a los bancos negociar por cuenta propia, mientras en Europa las elevadas exigencias de capital y directiva sobre mercados de instrumentos financieros –MIFiD–obliga a reducir posiciones en bonos menos líquidos. Los datos atestiguan el éxito de los reguladores: en EEUU el volumen de renta fija mantenido por los creadores de mercado ha caído desde un máximo de 200.000 millones de dólares en 2008 a menos de 50.000 millones y en Europa la cantidad de deuda empresarial mantenida por los bancos, que se triplicó los cinco años anteriores a 2009, han estado disminuyendo desde entonces.
“Esta reducción ya sería inquietante si los mercados de deuda empresarial estuvieran expandiéndose a ritmo normal. Pero la retirada de los creadores de mercado coincide con la mayor inversión en deuda empresarial. Ahora los inversores minoristas poseen más bonos en fondos de renta fija y vehículos cotizados que en cualquier otro momento del pasado”, apunta.
Algunos datos
En Europa el volumen de deuda empresarial mantenida por los fondos ha crecido 250% desde 2007. Además puede decirse que la situación es más extrema en EEUU, donde ya en 2008 los fondos de renta fija mantenían 400.000 millones de dólares en deuda empresarial, el doble que los intermediarios. “Ahora suman más de 1,6 billones de dólares, 16 veces más que los intermediarios. Hay que tener en cuenta que, con la crisis financiera, los bonos grado de inversión han sido de las clases de activos más buscadas por un número récord de inversores, atraídos por su rentabilidad a vencimiento relativamente alta y perfil conservador”, afirma Sagayam.
Además, como los préstamos bancarios son más difíciles de conseguir, la emisión de bonos se está convirtiéndose en vehículo de financiación preferido por una amplia gama de empresas. En la euro zona los bonos ya representan casi 50% de la financiación mediante deuda empresarial, frente a solo 20% antes de 2008.
“El caso es que los efectos de esta discordancia pueden observarse en la contratación del mercado secundario, donde el volumen de operaciones con deuda empresarial como porcentaje de la deuda en circulación ha caído considerablemente desde 2007, tanto en euros, como libras esterlinas y dólares. Peor aún, si un número suficiente de inversores en estos fondos decidiera reducir posiciones al mismo tiempo, podrían crear cuellos de botella en el mercado secundario, causando enormes fluctuaciones de los precios”, reclaca el experto de Pictet AM.
Así pues, ¿qué deben hacer los inversores en bonos? “La vía más segura es centrarse en aquellos que ofrezcan compensación de sobra frente a un potencial deterioro de la liquidez. Cuando el clima de inversión es volátil, la liquidez debe ser prioritaria”, concluye.
After a weekend of long and often very bad-tempered discussions within the Eurogroup, the leaders of the eurozone have finally agreed to offer Greece a third bailout, with the European Commission confirming that Greece will benefit from c.€86 billion of financing over the next three years.
Assuming the steps required in the coming days are met, the immediate bankruptcy of the Greek government has been avoided, and the country will remain within the eurozone. However, the terms of the deal look to be very tough, and the deal will be seen as a humiliation by many Greeks. Given that the ruling Syriza party was elected on an anti-austerity mandate, and that voters rejected a much weaker reform package in the referendum, political upheaval in Greece may now follow. Moreover, there is no debt forgiveness or debt write-offs for Greece, meaning that total Greek debt-to-GDP levels will remain unsustainably high.
The key points of the deal are as follows:
Greece will receive some €86bn in bailout funds.
Before legal negotiations can take place, the Greek parliament must approve a range of significant reforms affecting VAT and the tax base, pensions and other areas of the economy. The EU would like the reforms to be approved by the Greek parliament this Wednesday (15 July). This unusual approach is a response to the complete breakdown of trust between the Greek government and their European partners.
Certain eurozone national parliaments (most pertinently Germany) will then need to give the go ahead before formal negotiations can begin over the specifics of the new bailout program. This could, in theory, be done by the end of the week, although this may prove to be easier said than done.
A €50bn asset fund will be created, chiefly to make sure that privatization commitments are kept. This will be run by Greece but supervised by Europe. Half of this fund will be used to recapitalize the Greek banks.
The European Stability Mechanism (ESM) will provide an immediate €10bn to recapitalize Greek banks, which are close to collapse.
A ‘haircut’ or reduction of Greek debts will not be offered – i.e. there will be no ‘debt forgiveness’ which the German chancellor Angela Merkel has said is ‘out of the question’. Greece’s debts might be restructured to make repayment a little easier (e.g. by extending maturity), but only after Greece has introduced all of its promised reforms.
What happens if the bailout is not approved by the Greek parliament?
Prior to the deal being announced, the Eurogroup had warned Greece that its failure to enact reforms would result in the suspension of Greece’s membership of the euro. In the event of suspension, the exact length of the ‘time out’ was not specified, but comments from the German finance ministry suggest it could have been as long as five years. However, this triggered further tension between the eurozone member states, with France’s President Hollande saying that a temporary exit from the euro area was not an option, and that the issue at stake was not simply whether Greece stayed in or out of the euro but ‘our conception of Europe’. President Hollande was supported by the Italian PM Matteo Renzi, while Germany continued to emphasise its refusal to do a deal ‘at any price’.
Wider implications
The key focus in the short term will surround the navigation of the immediate hurdles (Greek parliamentary approval, then German parliamentary approval) and how long the banking sector can continue to provide cash to Greek citizens while emergency loans from the ECB remain frozen. All of these situations are urgent and any hold-up would increase significantly the risk of a messy Grexit scenario. In the bigger picture, in agreeing to support this bailout process, Alexis Tsipras has effectively reneged on all of his party’s pre-election commitments and handed sovereignty for domestic policy to Europe. This comes at a time when the economic situation is likely to deteriorate further in part thanks to the newly-prescribed austerity that he was so vehemently against. Against this backdrop, while the short-run risks of Grexit have declined, the risk that the Greek population begin to question the merits of euro membership must surely be increasing.
The implication for markets has been unclear through much of this saga, as investors have found it difficult to assess the direct costs or benefits of the different scenarios. Following months of indecision and reasons to be cautious, it is perhaps unsurprising to see a stark positive reaction to what is a ‘deal’ full of pitfalls and contradictions. The bigger picture message is perhaps for citizens of Europe who might want to re-negotiate the status quo with the establishment. From a position of weakness before, Greece’s economy now lies in tatters once again, facing the prospect of more austerity and outside control. For sure, Tsipras’ management of the situation could be called into question, but any budding protest parties elsewhere will think twice before taking on the elite.
Opinion column by Martin Harvey, Fund Manager at Columbia Threadneedle
. Mark Mobius dejará de ser el portfolio manager de referencia del Templeton Emerging Markets Investment Trust a partir del 1 de octubre
Mark Mobius dejará de ser el portfolio manager de referencia del Templeton Emerging Markets Investment Trust –Temit- a partir del 1 de octubre y será remplazado en el cargo por Carlos Hardenberg.
Mobius, presidente ejecutivo de Templeton Emerging Markets Group, ha sido el portfolio manager de referencia de este trust desde su lanzamiento en junio de 1989. Pese a su decisión, explicó la firma en un comunicado, seguirá siendo portfolio manager del equipo.
Por su parte, Hardenberg trasladará a Londres. Tras unirse a la compañía en 2002, actualmente desempeña el cargo de vicepresidente senior y director general del grupo de Templeton Emerging Markets.
La labor de Hardenberg estará respaldada por Chetan Sehgal, director de las estrategias de empresas de pequeña capitalización, que continuará trabajando como senior research analyst. Mobius continuará liderando el grupo Templeton Emerging Markets, compuesto por 52 expertos y seguirá «plenamente comprometido en la estrategia de inversión y de research».
Peter Smith, presidente de Temit, explicó: «Bajo la dirección de Templeton Emerging Markets Group, Temit ha crecido hasta convertirse en uno de los principales trust de mercados emergentes, con unos activos bajo gestión de 1.900 millones de libras”.
Creemos que el nombramiento de Carlos Hardenberg como portfolio manager de referencia en la estrategia, con el apoyo de Mark Mobius y Chetan Sehgal, proporcionará un renovado enfoque para la siguiente etapa en el desarrollo de la empresa«.
Research from Standard Life Investments suggests that the biggest threat to the global economy is currently China. In the latest edition of Global Outlook, Standard Life Investments investigates what is driving China’s growth slow-down and looks beyond simple GDP figures.
Jeremy Lawson, Chief Economist, Standard Life Investments, said:“China is seeing its slowest rate of economic growth since the financial crisis, along with rapidly declining commodity prices, falling export trade and a dramatic deterioration in nominal activity. However, the epicentres of China’s economic problems are the industrial and property sectors.
“Growth of industrial output has declined from 14% in 2011 to around 6% in 2015, whilst industrial electricity consumption is in outright decline. China’s trade with the outside world is falling, and real estate investment – the primary engine of growth until last year – is going through a prolonged slump.
“The main components of activity preventing a deeper downturn are: private spending on financial services, government-led spending on transport infrastructure, retail sales and services-led electricity consumption. This suggests that China has begun the rebalancing towards a more sustainable, consumption-led growth model – although it’s too early to claim success.
“A hard landing in China would obviously be a large negative shock for the global economy, representing as it does 12% of global GDP and 18% of global manufacturing exports. Some countries stand to lose the most from any failure of China to stabilise growth. On the commodities front, countries like Australia, Brazil, Canada, Chile and Peru stand out. In manufacturing – Hong Kong, Korea, Malaysia, Singapore and Taiwan are most exposed. Whilst developed economies like Germany export a sizable amount of capital goods to China.
“There is good news – our research shows that most of the emerging markets are in a much better position to withstand external shocks than they were in the 1990, thanks to improved fiscal and monetary frameworks.
“Overall, the government has stepped up the pace of structural reforms – liberalising the financial system, cracking down on corruption and loosening fiscal policy, albeit in a targeted way. As a result we expect there to be modest success in boosting GDP although the longer-term glide path is towards slower growth.”
CC-BY-SA-2.0, FlickrFoto: Koshirokun, Flickr, Creative Commons. Las mayores oportunidades para el negocio de wealth management están en EE.UU.
La industria global de la gestión patrimonial o wealth management vivió un buen 2014: a pesar de las incertidumbres en los mercados, la mayoría vio crecer su volumen de negocio y de clientes, aunque algunos de los indicadores clave mostraron crecimientos algo menores que los vividos en 2013.
Según el informe hecho público por Scorpio Partnership (el SP Private Banking Benchmark), la industria cuenta con 20,6 billones de dólares en activos invertibles en nombre de clientes de altos patrimonios, de los cuales un 47,1% están concentrados en las diez mayores entidades. Sobre todo, UBS y Morgan Stanley, que han superado la barrera patrimonial de los 2 billones de dólares y cuentan con cuotas de mercado cercanas al 10% (ver cuadro 3). Entre las previsiones del informe destaca que Bank of America Merrill Lynch también lo hará en los próximos doce meses.
Según el informe, los operadores de EE.UU. siguen dominando el mercado con sus franquicias domésticas. ¿La razón? Los expertos apuntan a que EE.UU. sigue siendo el mayor mercado de oportunidades para el negocio de gestión de altos patrimonios (HNW), y esa escala de oportunidades se refleja en el fuerte crecimiento en volumen registrado por los operadores del país. En concreto, las 10 mayores firmas del país registraron en 2014 una ratio de crecimiento media del 7,1% (ver cuadro 4), más del doble que la media global, situada en el 3,3% (cuadro 2).
Y es que el análisis de los más de 200 jugadores globales muestra un crecimiento de activos medio del 3,3% y del 3,4% en beneficios operativos. Unas cifras bajo presión, según los autores del estudio. “Es un momento complejo en la historia de la industria. El modelo operativo afronta grandes retos para acomodarse a las expectivas de los grupos financieros de que sus divisiones de wealth management ofrezcan altos márgenes. La buena noticia es que la demanda por estos servicios se fortalece pero la mala noticia es que la industria aún afronta factores negativos en términos de costes frente a los ingresos. Algunos no se están moviendo lo suficientemente rápido, y sus ratios de crecimiento se desaceleran”, comenta Sebastian Dovey, socio de Scorpio Partnership.
De hecho, al margen del gran crecimiento de UBS y Morgan Stanley, varias firmas vieron estancado su negocio; sobre todo aquellas con sede en Europa, que se vieron afectadas en 2014 por la evolución del euro.
Paris-based DNCA Finance, which has recently become a Natixis’ boutique, rebrands itself as DNCA Investments, celebrating 15 years of existence.
This change aims to improve the visibility of the firm towards international investors as it is now set to speed up its development both on retail and institutional businesses by using Natixis’ global distribution platform. «In order to expand internationally DNCA decided to slightly adapt “its signature” and make it sound more global. The name of the legal entity remains DNCA Finance but the marketing brand becomes DNCA Investments, that way it resonates globally”, the company says to Funds Society.
DNCA Investments intends to enter new markets, including Spain, and to expand its presence in existing markets such as Germany, Switzerland, USA Offshore and Latin America.
DNCA Investments, which has expertise in European equities, manages €16.5bn in assets as at June 2015.
Foto: Nothing is impossible for a willing heart, Flickr, Creative Commons.. Radiografía del sector tecnológico en Asia
China’s stock market crash must act as a wake-up call for investors to urgently reassess their portfolios, warns the chief executive of one of the world’s largest independent financial advisory organizations. Nigel Green, the founder and CEO of deVere Group, is speaking out as the China stock market’s downward spiral enters its third week, with share prices losing 30 per cent of their value since the middle of June.
Mr Green observes: “Much of the world’s attention is on Greece right now. Whilst it is right that investors keep a close eye on the Greek saga, one eye must remain firmly on the burgeoning crisis in China.
“With the Chinese stock market losing a third of its value since mid June, which is about equivalent to the UK’s entire economic output last year, or in other terms the GDP of Greece every two days for the last 10 days, this has all the makings of morphing into a major financial crisis.
“China’s government and regulators appear to be pulling out all the stops to support share prices – including a defacto suspension of new listings and interest rates being cut to new record lows – although investors seem to be unconvinced that this will help.
“Despite few foreign investors having much exposure to the Chinese stock markets, the meltdown matters.
“Indeed, it is hugely significant because it will send shock waves throughout global capital markets, not least because China is the world’s second largest economy and one of the largest consumers of commodities and other goods sold by other countries.
“As such, China, not Greece, is arguably the main cause for concern for investors right now.”
Mr Green continues: “Bearing in mind the potentially enormous fallout of China’s plunging markets, I would urge investors to urgently reassess their portfolios to ensure they are appropriately diversified.
“Investors with the most diversified portfolios stand to lose the least. Geopolitical events like this highlight once again the need for multi asset investing, across regions and asset classes, as a way of reducing the adverse consequences of such events.”
He adds: “Failure to diversify a portfolio is widely regarded as one of the most common investment pitfalls – and history teaches us that diversification in these times of rising market volatility is even more essential as the tides can change quickly. Spreading your money around is a vital tool to manage risk.”
CC-BY-SA-2.0, FlickrFoto: Aedo Pulltrone, Flickr, Creative Commons. Hector Sants sustituye a Gian A. Rossi como presidente de Julius Baer London
Sir Hector Sants se ha unido a Julius Baer International Limited como presidente, un puesto que ocupa desde el pasado 1 de julio.
Sants sustituye a Gian A. Rossi, responsable de Europa del norte, central y del Este, y miembro del Consejo Ejecutivo de Julius Baer & Co. Ltd, que deja de ser presidente tras nueve años en el cargo pero seguirá estando activamente implicado con el negocio de la firma en Reino Unido.
Sants trabajó en la Financial Services Authority (FSA) de Reino Unido como CEO de 2007 a 2012, uniéndose a la FSA desde Credit Suisse First Boston, donde había sido CEO para Europa, Oriente Medio y África. Tras abandonar Barclays Bank en noviembre de 2013, ha liderado el grupo de trabajo del Arzobispado de Canterbury para promover el ahorro responsable y el crédito y asesoramiento a Abu Dhabi Global Market. Desde el pasado 1 de julio, también trabaja como vicepresidente y socio de Oliver Wyman.
CC-BY-SA-2.0, FlickrBill Gross volverá a trabajar con uno de los fundadores de Kapstream Capital, con el que coincidió en PIMCO durante 10 años.. Janus Capital compra el 51% de la gestora australiana de renta fija flexible Kapstream
Janus Capital Group ha anunciado y cerrado la compra de una participación mayoritaria en la gestora australiana Kapstream Capital, gestora global especialista en renta fija sin restricciones, con 6.600 millones de dólares bajo gestión, con datos a 31 de marzo de 2015. Con la transacción, los activos en estrategias de Renta Fija Global Macro ascienden a 8.700 millones de dólares.
La compra incluye un pago inicial en cash de unos 85 millones de dólares, si bien Janus tiene la opción de comprar el 49% restante de la compañía en el futuro.
Los veteranos de renta fija Kumar Palghat y Nick Maroutsos fundaron Kapstream en 2006, una de las gestoras pioneras en la gestión de renta fija global sin restricciones. Bill Gross, que se unió a Janus en 2014, Dick Weil (CEO de Janus Capital) y Palhat trabajaron juntos en PIMCO durante diez años.
Ahora, el equipo de Renta Fija Global Macro seguirá estando separado, siendo autónomo y con distintas capacidades de las del equipo de Renta Fija Fundamental en Janus, dos plataformas en las que la gestora seguirá invirtiendo, dice la firma, pues ofrecen estrategias complementarias.
Gross seguirá siendo el gestor principal de la estrategia Janus Global Unconstrained Bond, con Palghat apoyándole como co-gestor. Este último seguirá siendo gestor del Kapstream Absolute Return Income Fund y Steve Goldman –de Kapstream- asumirá un mayor rol en la gestión de las estrategias de Kapstream, que no cambiarán.
El equipo combinado de Renta Fija Global Macro (con 15 profesionales tras la transacción) operará conjuntamente desde la base de Kapstream en Sidney y desde la de Janus en Newport Beach, en California.
