Foto: Christine und Hagen Graf
. La SEC aprueba que FINRA solicite información sobre mark-ups en operaciones de deuda
The Securities and Exchange Commission has approved FINRA’s proposal requiring its member firms to disclose on retail customer confirmations the “mark-up” or “mark-down” for most transactions in corporate and agency debt securities. The SEC at the same time has approved a similar proposal from the Municipal Securities Rulemaking Board, which harmonizes the requirements across the FINRA and MSRB rulebooks and eases implementation for the securities industry.
The new rule will require that if a firm sells or buys a corporate or agency fixed-income security to or from a retail customer and on the same day buys or sells the same security as principal from another party in an equal or greater amount, the firm would have to disclose on the customer confirmation the firm’s mark-up or mark-down from the prevailing market price for the security. The confirmation would also have to include the execution time and a reference (and hyperlink if the confirmation is electronic) to trade-price data in the security from TRACE, FINRA’s Trade Reporting and Compliance Engine.
The disclosure requirement will not apply to securities acquired in a fixed-price offering and sold the same day to the retail customer at the fixed price offering price, or in situations where the firm does not have an offsetting principal trade in the bonds sold to the retail customer on the same day. An implementation date for the new rule will be announced in an upcoming regulatory notice.
According to Joachim Fels, PIMCO’s global economic advisor, after a short initial post-election shock, many financial market participants seem to have adopted a Dr. Strangelove attitude toward the election of Donald Trump. Developed market (DM) equities, bond yields and the U.S. dollar rallied on hopes for fiscal stimulus and less regulation. (Fels notices that the exception to this apparent market optimism is in emerging market (EM) assets, which dropped sharply on fears of more U.S. protectionism and adverse repercussions from a stronger dollar and higher “risk free” rates.)
“I’m not Dr. Strangelove, and I believe it’s too early to stop worrying. A more differentiated view of the potential long-term economic and policy consequences of President-elect Trump must take on board both the considerable uncertainties still surrounding the next U.S. administration’s economic policies and the global links between economies and markets (which have become closer over the years).” He mentions
Fels strongly believes that there are five things investors may want to consider before “embracing the bomb”:
First, both right-tail and left-tail risks for the global economy and markets will likely become fatter under President Trump. If the new administration focuses on reforming taxes, increasing infrastructure spending and easing regulations, both demand and potential output growth could be lifted without creating excessive inflation. Conversely, a strong focus on punitive tariffs and immigration bans could risk retaliatory responses from other nations and potentially provoke a trade war that fuels deglobalization. It is too early to tell which of these two scenarios, if either, will prevail. In the meantime, markets are likely to oscillate between hope and fear.
Second, while a U.S. recession over the next year or two may now look less likely, the risk that the current expansion ends in tears in 2019 or 2020 has increased. This is because more fiscal stimulus will lift demand at a time when the labor market is close to full employment and the first signs of wage pressures have already started to emerge. Wage and inflationary pressures would be exacerbated if President Trump gets serious about the curbs on trade and immigration he campaigned on. It is possible the Federal Reserve would initially welcome higher inflation and tolerate an overshoot of the target for some time. However, under that scenario the Fed eventually would likely need to raise rates more aggressively than in a scenario without fiscal stimulus and cost-push inflation through protectionism, which could push the economy into recession in 2019 or 2020.
Third, central bank independence as we know it is likely to come under further attack, given both the long-standing criticism of the Fed in conservative Republican circles and the President-elect’s attacks on the Yellen Fed. At a minimum, the new administration is likely to appoint two hawkish candidates to the two vacant seats on the Federal Reserve Board. Also, a new Fed chair might be appointed when Janet Yellen’s term at the helm expires in February 2018. All of this would be common and legitimate practice and does not, per se, constitute an attack on the Fed’s independence. However, it remains to be seen how closely the policy promoted by any new appointees will hew to the new administration’s views. More importantly, the Republican majority in Congress may well start to push forward some of the proposals to narrow the Fed’s mandate that conservative circles have made in the past. The mere rumor of changing the Fed’s mandate may have an impact on monetary policy decisions.
Fourth, in the face of the sharp sell-off in bond markets, the Bank of Japan’s new strategy of “yield curve control” looks even smarter now and might become a blueprint for other central banks, potentially including the Federal Reserve. Consider a scenario where a large fiscal stimulus (or the expectation of such stimulus) pushes up bond yields so sharply that risk assets and the economy suffer. To prevent a bond tantrum, the central bank may want to limit the rise in yields by intervening in the bond market directly. The cleanest way to do this is to announce a cap on yields and stand ready to buy unlimited amounts to preserve the cap if needed.
Fifth, the market reaction to Donald Trump’s election provides a serious test case for the “Shanghai co-op,” as I have called an informal understanding by the world’s major central banks that excessive dollar strength is bad for everyone and should be avoided. The dollar strengthened not only against emerging market currencies but also against the euro and the yen in recent days. While the European Central Bank and the Bank of Japan probably welcome some weakening of their currencies given persistent “lowflation,” too much dollar strength would hurt the dollar debtors in EM, commodity prices and the U.S. energy sector, and could induce China to aim to devalue the yuan more aggressively against the dollar in order to prevent a sustained appreciation against the currency basket.
In the wake of Donald Trump’s election, Mexico, together with China, appears to be the country most exposed to Trump’s economic policy.
According to AXA IM, Trump’s proposed fiscal stimulus has already led to a strong increase in inflation expectations, and his pledges to restrict imports and immigration has spurred a record broad EM selloff.
Manolis Davradakis, Research and Investment Strategy at AXA IM says: “Mexico has been at the eye of this storm given its vicinity and close trade relations with the US. The Mexican peso has depreciated by 10% relative to its pre-election day closing level, the stock market is down 6% and the local currency sovereign 10-year rate has shot up by 112bps. The Mexican central bank had already pre-emptively tightened policy rates to mitigate the impact of a declining peso on headline inflation.”
Since election day, the president-elect has adopted a more reconciliatory tone, downplayed trade protectionism, and focused on deporting illegal immigrants and securing the US/Mexico border. Davradakis believes downside risks for Mexico are mainly exports and remittances, with implications on the current account deficit and economic growth. The US is Mexico’s main trading partner, shipping 81% of its total exports, or 27% of GDP, to the US, mainly consisting of machinery and transport equipment. Mexican exports to the US stood at 10% of GDP in 1994, before the implementation of the North American Free Trade Agreement that president-elect Trump argued in favour of renegotiating during the election campaign.
Remittances are an important component of Mexican household income, and a significant source of the hard currency flows which support the current account balance. The latter recorded a deficit of 2.8% of GDP in 2015, which would have been 5% of GDP without the remittances from the US. Remittances from Mexicans living abroad equate to 2%-3% of GDP over the last decade. Of these Mexicans living abroad, 95% reside in the US, 23% of which do so as illegal immigrants. “Remittances to Mexico from the US would be curbed, also, if levies on remittances for securing the US-Mexican border were to be imposed.”
He believes FX forwards suggest that the Mexican peso will depreciate (against the US dollar) by another 2.5% by year- end, bringing total year-to-date peso depreciation to 25%. This could top up inflation by 0.4pp to 3.4% in 2017 after 2.9% in 2016.
Paris-headquartered boutique Amiral Gestion is set to open an office in Singapore in 2017, the firm’s chairman François Badelon has announced during a conference earlier this month.
Amiral Gestion runs the Sextant fund range that includes four France-domiciled equity funds (Sextant PEA, Sextant Europe, Sextant PME, Sextant Autour du monde) and one diversified strategy (Sextant Grand Large).
Its investment team has a focus on small and mid-cap European stocks.
The manager is already established in Barcelona since 2013.
Founded in 2003, Amiral Gestion has over €1.9bn of assets under management.
Foto: LincolnGroup11. Bill Gross dice que los inversores deben estar satisfechos con retornos anuales de entre el 3 y 5%
In his latest monthly outlook, titled Populism Takes a Wrong Turn,Bill Gross mentioned that President elect, Donald Trump will be a one term president, whose “tenure will be a short four years but is likely to be a damaging one for jobless and low-wage American voters.”
The Bond Guru believes that while Trump “promised jobs and to make America great again, his policies of greater defense and infrastructure spending combined with lower corporate taxes to invigorate the private sector continue to favor capital versus labor, markets versus wages, and is a continuation of the status quo.” Mentioning that Trump’s plan to repatriate corporate profits to the US for infrastructure spending would doubtly succeed, favoring instead dividends, corporate bonuses, and stock buybacks.
However, he doesn’t believe a Clinton Administration could have done much better. He did not vote for either of them given “both the Clinton Democrats and almost all Republicans represent the corporate status quo that favors markets versus wages; Wall Street versus Main Street.”
In his mind, there are better solutions than either party’s election platform. He mentions a “Keynesian/FDR job corps or a Kennedyesque AmeriCorps that puts people to work helping other people” as an example of this. According to him, the government must step in, not by reducing taxes, which will only increase profits at the expense of labor, but by being the employer of last resort in hopefully a productive way.
So he warns that “unless the worker’s share of GDP reverses its downward trend, and capital’s share peaks, then populists worldwide will reject establishment parties in almost every future election – initiating in some cases growth-negative policies revolving around trade, immigration, and yes, in Trump’s case, lower taxation that may lower GDP growth, not raise it.”
He believes investors must drive with caution, understanding that higher deficits resulting from lower taxes raise interest rates and inflation, which in turn have the potential to produce lower earnings and P/E ratios. “There is no new Trump bull market in the offing. Be satisfied with 3-5% globally diversified returns.” He mentioned before warning that the Populist sunrise has barely broken the horizon.
CC-BY-SA-2.0, FlickrFoto: audvloid
. La noche es más oscura justo antes del amanecer
The victory of Donald Trump in the U.S. presidential election has led to widespread market movements. After initial adverse movements, equities rallied and bond yields jumped as Trump’s initial statements reassured markets, calling for unity and pledging that he will be the “president of all Americans”.
In Lyxor AM‘s weekly commentary, the team notes that cyclical sectors have done better than defensive sectors (except health care stocks which have done well) as looser fiscal policy is expected to support economic activity. Coupled with the possibility that the Trump administration will implement protectionist trade policies, expectations of fiscal stimulus are leading to a sharp repricing of bond yields.
Philippe Ferreira, Director, Senior Cross-Asset Strategist at Lyxor Asset Management, points out that although they do not yet have comprehensive data on hedge fund performance covering the period since the U.S. election, their initial estimates suggest that:
Long term CTAs were down as losses on their long fixed income positions were only partially offset by gains on long equities, long USD and long energy in commodities.
Global Macro experienced a wide dispersion in returns. Some strategies that were long EM currencies (MXN in particular) experienced losses in the range of 2-3% over the recent days. Meanwhile, managers that were short duration in fixed income were up and some managers investing in equities were flat as gains on longs on European and Japanese indices were offset by losses on shorts on U.S. indices.
Within the L/S equity space the long biased managers benefitted from the market rally as well as from positions on health care stocks. EM L/S specialists are down in the order of 2% on the day of the election and are deleveraging quite aggressively.
Event Driven strategies marginally benefitted from their exposure to health care stocks but overall their lower net exposure ahead of the election prevented them from joining the market rally. Implications for the strategy are rather long term and could be positive to the extent that the march towards tougher regulations might be stopped.
L/S Credit and Fixed Income Arbitrage were resilient in front of higher bond yields. We estimate L/S Credit funds were down 8 to 15 bps on the day of the election.
CC-BY-SA-2.0, FlickrPhoto: Carlos ZGZ
. Why Brexit Offers Opportunities for Private Equity
According to Christopher Moxon, Antoon Schneider, and Philippe Morel from BCG, the UK’s vote to exit the European Union is already leaving a mark on the country’s economic landscape. They believe that while the full timing and extent of the break are uncertain and may not be known for several months, many British companies are starting to reassess aspects of their business. Therefore, private equity firms will have to step up their due diligence and accept additional risk in UK investments. But the breakup also offers an opportunity for PE firms that have honed their capabilities in helping companies deal with change.
The company is certain PE firms have notable advantages over corporate acquirers and IPOs during periods of change since they combine abundant capital with a sense of urgency, yet their longer investment horizons allow them to acquire companies in uncertain times. “Whether the goal is operational efficiency, investment for growth, bolt-on acquisitions, or spinoffs, companies can generally move more aggressively under private equity than under corporate or independent ownership.”
Among sectors likely to be hit by Brexit, they identified four of particular interest to PE firms, as well as several secondary sectors. They chose them mostly because they think they present the greatest opportunities, but also because they illustrate the advantages that PE firms have in competing for these assets, especially in the short term. Most promising are companies that depend heavily on EU trade, workforces, or regulations.
For the BCG team Industrial Distribution, Private Medical Clinics and Laboratories, Aerospace Manufacturing, and Employment and Recruitment Services, will face substantial risks at this time of uncertainty and volatility. But PE firms, especially those focused on adding value to opera- tions, are well placed to help them succeed.
Other sectors of interest include Nonfood Retail, Agricultural Suppliers, Specialty Chemicals and Asset Management.
Regarding AM they mention that like other areas of financial services, “this sector could be hit hard by companies shifting activity from London to elsewhere in Europe. It was already slowing down before Brexit, and now many banks are withdrawing from the market. But with the Bank of England keeping interest rates around zero, investors will continue to seek asset managers that can offer higher returns. PE’s best opportunity here may be with niche asset management companies.”
You can read their complete article following this link.
Lombard International, a global leader in wealth structuring solutions for high-net-worth individuals, has appointed Andreas Meier as Head of Latin America. This appointment is the group’s ninth senior level hire since the global relaunch in September 2015 and highlights Lombard International’s continued commitment to servicing the Latin American market.
In this newly created role, Andreas, who will be based in Luxembourg, will report to Axel Hörger, CEO Europe and Ken Kilbane, Executive Vice President, Head of Global Distribution. Drawing on his 24 years of experience of working in the Latin American market, Andreas will be responsible for Lombard International’s business development for the region, combining the wealth structuring expertise and local knowledge of teams based in the USA and Europe.
According to a press release, this is a strategically important region for the Group and Andreas will be instrumental in growing new opportunities, both for the offshore market via key hubs in Miami and Switzerland, and in leading the sales and implementation strategy for the onshore market in the region. Andreas will take up his newly created role on the 1st January 2017.
“I’m delighted to welcome Andreas to the team. His knowledge of the LatAm market will prove invaluable as we continue to expand our proposition in this region,” commented Hörger. “The experience Andreas brings to the role will enable us to deliver best-in-class wealth structuring expertise that we have become synonymous with, not just for our Latin American clients but also for our clients globally.”
Andreas joins Lombard International from UBS Deutschland AG, where he was Head of Wealth Management for Latin America. As Managing Director and Member of the Management Committee Germany and Austria, he was responsible for leading advisor-teams with clients from 14 Latin American countries across all client segments. Andreas has held previous senior positions at UBS Group, including Head of Latin America Southern Cone, Head of Financial Intermediaries and Regional Head of Northern Germany Domestic.
“I am excited to be joining Lombard International and leading the LatAm team.” said Andreas. “This is a growing market, which I know well, where high-net-worth individuals and their families are looking for wealth solutions to support them through a complex and ever changing world.”
CC-BY-SA-2.0, FlickrPhoto: Ana Patricia Botín, World Travel & Tourism Council
. Santander Buys Back its AM Unit From Warburg Pincus and General Atlantic
After Santander and Unicredit decided not to merge its Asset Management branch with Pioneer Investments –which would have given them over 400 billion in assets under management, Santander has reached an agreement to buy back the 50% stake Warbug Pincus and General Atlantic bought back in 2013.
The deal, for an undisclosed amount, will give Santander full control of Santander Asset Management, which in 2013 was valued at 2.05 billion.
In a statement to Spain’s financial regulator, the CNMV, the spanish bank mentioned that, as part of the deal, the parties are considering a sale of Allfunds bank, confirming previous rumors. Santander, Warbug Pincus and General Atlantic, currently own 50% of the business, while Italian Intesa Sanpaolo holds the other 50% stake of Allfunds. Santander created Allfunds in 2000 to help financial institutions get access to so-called open architecture funds. Italian lender Intesa acquired a stake in 2004 as part of Allfunds’s international expansion. The company has offices in Spain, Italy, the U.K., Chile, Colombia, Dubai, Luxembourg and Switzerland andcould be valued at about 2 billion euros ($2.2 billion) and attract interest from private equity firms.
Allfunds reported profit of 69 million euros in 2015, up from 46.4 million euros a year earlier, according to the company’s financial report.
Santander Asset Management has over 170 billion euros in AUM and presence in 11 countries. Santander Asset Management has over 755 employees worldwide, of which around 220 are investment professionals. they expect that in 2018 this operation will give them a ROI above 20% and above 25% for 2019.
Tikehau Capital has completed the purchase of 80% of the capital of Ireit Global Group, the manager of Ireit Global.
Ireit Global is a real estate investment trust listed in Singapore investing directly and indirectly in a portfolio of real estate in Europe, used primarily for office purposes.
The current portfolio consists of five freehold properties in Germany valued at around €450m.
Tong Jinquan, founder of Shanghai Summit (Group) Co. and Lim Chap Huat, founder and executive chairman of the Soilbuild Group, remain shareholders of Ireit Global Group alongside Tikehau Capital.
Bruno de Pampelonne, president of Tikehau IM, will be appointed member of the Ireit Global Board of Directors.
De Pampelonne said: “We are very pleased with this transaction that will enable Tikehau Capital to significantly expand its pan European real-estate footprint and extend our reach toward Asian investors. Also, we are bringing Ireit our extensive Pan-European network combined with strong local operational expertise and existing pipeline of real estate transactions in Europe to accelerate the REIT’s growth. This acquisition further consolidates our position in Asia from Singapore, a hub where we have been operating from, for two years now. We are looking forward to further developing Ireit Global’s assets together with our new partners.”
Tikehau Capital’s AUM stood at €9.9bn as of 31 October 2016.
