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Jupiter Commits to Net Zero Emissions and Announces Alignment with UN Global Compact

leaf-5533218_1920 — Pixabay CC0 Public Domain. Jupiter se compromete a alcanzar las cero emisiones netas y anuncia su adhesión a iniciativas clave de inversión sostenible

Jupiter Fund Management has announced its commitment to achieving net zero emissions by 2050 across its full range of investments and operations, in line with the Paris Agreement, that stablishes the need to limit global warming to less than 1.5°C.

In a press release, the asset manager has revealed that, by the end of this year, it will have defined a detailed roadmap including milestones and targets for achieving this ambition across its 61.4 billion euros investment range, including interim targets for 2030. At the same time, it is aligning with the UN Global Compact (UNGC).

“In line with the Compact, all our investment decision-making and engagement will be guided by the principles of the UNGC and all investee companies will be expected to abide by the Compact’s Ten Principles, committing to meeting fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption”, Jupiter said.

The company has also become a member of the Good Work Coalition. Consequently, across its flagship UK equities business, it will encourage all investee companies to pay a living wage to their employees and will push for better working conditions and reduced workplace inequality, in partnership with ShareAction and other members of the Coalition. “This move reflects Jupiter’s responsibilities as a UK company, its strong stewardship and governance framework and deep investment reach across its home market”, they insisted. To demonstrate this commitment, they will also accredit as a Living Wage Employer.

At its corporate level, Jupiter has already made significant progress in planning for achieving its net zero emissions target. As part of this plan, it has also announced its partnership with Forest Carbon, a not-for-profit scheme providing woodland carbon capture projects in the UK. By investing in woodland creation in the UK, the company is not only removing carbon emissions but also facilitating flood alleviation, habitat creation, employment, public access and cleaner air, benefiting wider society in line with its corporate purpose.

In addition, over the course of the year, the asset manager will further enhance its disclosure on the total Scope 1,2 and 3 emissions produced by its operations and will set operational emissions targets consistent with its net zero objective.

A commitment with sustainability

“Today’s raft of announcement builds on Jupiter’s position as a long-standing supporter of sustainable and responsible investing. We believe that the future is better served by sustainable companies with strong environmental credentials, and it is imperative that we work together as a company, an industry, and a society to tackle climate change. I am pleased at the progress Jupiter is making towards this at both an investment and company level”, Andrew Formica, CEO, said.

In this sense, he pointed out that as a high conviction and active manager, they have a responsibility and an opportunity to do all they can to influence the companies they invest in to adopt more sustainable businesses. “The transition to net zero carbon emissions is imperative but improving wider societal and governance standards is also crucial. Along with net zero commitments, initiatives that align with the wider sustainability agenda, such as the UNGC principles and Good Work Coalition, will result in long term gains for all stakeholders”, he added.

Last month, Jupiter announced a number of senior appointments within its sustainability suite, reinforcing its commitment to this strategically important client proposition which offers clients a range of differentiated investment options with a shared goal of generating attractive returns through long-term sustainable investing.

Should Investors Consider a Stand-Alone All-China Equity Allocation?

| For Beatriz Zúñiga | 0 Comentarios

dragon-872933_1920 — Pixabay CC0 Public Domain. ¿Deberían los inversionistas considerar una asignación independiente a la renta variable china?

As China’s weight within global equity indices increases and its markets mature, should investors consider a dedicated All-China allocation or continue gaining their Chinese equities exposure via international or emerging market (EM) allocations? Our research suggests that despite the growing opportunity, investors are typically under-exposed to Chinese equity.

Our analysis and history also suggest that concerns about US-China tensions—a key reason many investors are cautious on China—are on balance a manageable long-term risk that should not preclude investors from embracing this opportunity.

Chinese equity markets are rapidly changing. Whereas historically China’s economy was powered by State Owned Enterprises (SOEs), the modern economy is increasingly driven by small- and mid-size private companies, foreign investment, increasing capital supply and investment in biotech, artificial intelligence, 5G and other innovative sectors.

Five reasons for China optimism

As a result, we contend that All-China equity is the best way to take advantage of these trends. The market, from Hong Kong to A-share exchanges and the new Nasdaq-like STAR market, has matured and is evolving in five constructive ways:

1. China’s economy is no longer dominated by SOEs: SOEs have significantly reformed and the combination of the growing number of SOE privatizations and IPOs has overhauled the composition of Chinese equity indices (Exhibit 1), making markets more dynamic and efficient.

Gráfico 1

2. Corporate governance has improved: The reduced dominance of SOEs (often used as tools of government policy) and regulatory reforms that better align corporate interests with those of shareholders have changed the governance landscape.

3. Capital markets have developed: The development of China’s markets is illustrated by the number and market capitalization of listings in Shanghai, Shenzhen, Hong Kong and US-listed American Depositary Receipts (ADRs)— 5,333 companies worth $14.1 trillion at the end of June (Exhibit 2). That compares to the $7.8 trillion market capitalization of euro area equities.

gráfico 2

4. China’s benchmark weightings are rising: China’s increasing weight in key benchmarks,
such as the MSCI EM Index and the MSCI All Country World Index, is accelerating the institutionalization of its markets. At the same time, the still relatively high proportion of trading conducted by local individual investors (often funded by margin debt) creates inefficiencies that can be exploited by savvy investors to derive potential alpha.

5. China’s new consumer buys domestic: China’s middle-and upper-income consumers increasingly buy domestic products, eschewing once-favored global brands. The dynamic nature of China’s corporate universe is seen in the fact that China is the “youngest” market regionally in terms of listing years of index constituents (Exhibit 3).

gráfico 3

China is investing heavily in innovation

Beijing is also investing heavily in “new infrastructure”—technologies in which it wants to reduce its foreign reliance; artificial intelligence, 5G, cybersecurity, alternative energy, electric vehicles and semiconductors. Beijing is encouraging a startup culture it hopes can rival Silicon Valley while also attracting international investors. For example, China has filed one third of the world’s 5G patents (Exhibit 4).

Index tracking is a flawed approach to China investing

We believe that allocating to China by index tracking is the wrong approach because, among other reasons, MSCI ACWI weightings heavily favor large-cap firms with negligible exposure to faster-growing, domestic Chinese firms. In addition, MSCI’s EM Index (Exhibit 5) is similarly weighted toward offshore China at the expense of A-shares. So, allocating to China by tracking benchmarks is akin to gaining US equity exposure by overweighting mega-caps at the expense of everything else. An All-China equities allocation offers a more balanced approach and enhances the odds of capturing potential future returns.

Finally, investors should consider the alpha opportunity in Chinese equity markets, which still have inefficiencies that can exploited: Over the past decade, the median China A-shares strategy outperformed the MSCI China A Onshore index by 8.4%, annualized (Exhibit 6, see next page). Meanwhile, in global EM equities, the median manager only marginally outperformed while the median S&P 500 manager underperformed. So, for long-only equity investors, China offers a rare source of meaningful, sustainable alpha potential.

Conclusion

While the specific All-China allocation for any specific investor depends on such factors such as risk appetite, we believe that typical current allocations to China do not reflect the country’s bright prospects and that investors should consider an All-China allocation beyond current benchmark levels, now 5.1% of the MSCI ACWI Index. Less benchmark-sensitive investors that share our strong conviction in China’s improving outlook could consider an even larger allocation.

Column by Anthony Wong, CFA, Portfolio Manager Hong Kong and China Equity; William Russell, Global Head of Product Specialists; and Christian McCormick, CFA, Senior Product Specialist in China Equity in Allianz Global Investors.

Wells Fargo Sells its Asset Management Business to GTCR LLC and Reverence Capital Partners

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The news that has been rumored for months is confirmed: Wells Fargo has announced a definitive agreement to sell Wells Fargo Asset Management (WFAM) for 2.1 billion dollars to GTCR LLC and Reverence Capital Partners, L.P., both private equity firms.

The firm has explained in a statement that WFAM is the trade name used by the asset management businesses of Wells Fargo and includes Wells Fargo Funds Management, LLC, the investment advisor to the funds, Wells Capital Management Incorporated and Wells Fargo Asset Management (International) Limited, both registered investment advisors providing subadvisory services to certain funds.

As part of the transaction, Wells Fargo will own a 9.9% equity interest and will continue to serve as an important client and distribution partner. WFAM currently has 603 billion dollars in assets under management and specialized investment teams supported by more than 450 investment professionals.

The agreement is in line with the decisions made by Charles Scharf, former BNY Mellon CEO, who joined the bank in 2019 following a sales practices scandal. The clearest precedent is that the bank agreed in January to sell its Canadian direct equipment finance business to Toronto-Dominion Bank. The deal is expected to be fully closed by the second half of 2021.

Nico Marais, CEO of Wells Fargo AM since June 2019, will remain in his position and together with his team will continue to oversee the business. Joseph A. Sullivan, former chairman and CEO of Legg Mason, will be named executive chairman of the board of the new company following the closing of the transaction

JP Morgan Asset Management Launches a Multi-Asset Fund with a Focus on ESG

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future-431270_1920 — Pixabay CC0 Public Domain. JP Morgan AM lanza un fondo multiactivo con enfoque sostenible

JP Morgan Asset Management has launched the Global Income Sustainable Fund (SICAV), a globally diversified multi-asset income fund with a sustainable focus. In a press release, the asset manager has announced that this vehicle will complement its flagship JPMorgan Investment Funds – Global Income Fund, with 29 billion dollars in assets under management.

The new fund will be run by the same portfolio managers, Michael Schoenhaut and Eric Bernbaum, and will use the same investment philosophy as the Global Income Fund, taking a flexible approach to seeking out the best sustainable income opportunities from around the globe, leveraging sustainable exclusions and a positive environmental, social and governance (ESG) tilt.

Also, JP Morgan AM has revealed that the new offering will go further on ESG with two additional sustainability characteristics. First, it will exclude companies from 10 unsustainable sectors based on client values, industry norms and regulation. Second, leveraging the firm’s well-established global research capabilities for finding attractive income-producing investments globally, the Global Income Sustainable Fund will be tilted towards securities with more effective governance and superior management of environmental and social issues.

This, in their view, will produce a portfolio with a higher overall ESG score and a materially lower carbon footprint. Reflecting the Global Income Sustainable Fund’s concentration on ESG leaders, the two funds are expected to only have about 30% overlap in holdings. The new vehicle, which will have a TER of 75 basis points (C share class), is expected to register 65% lower carbon emissions than the multi-asset income investment universe.

“In the continued incredibly low yield environment, investors need more sustainable sources of diversified income. For more than a decade with our Global Income Fund, we’ve provided investors with a disciplined and rigorous approach, supported by strong research capabilities, to finding the best risk-adjusted income opportunities globally, across multiple geographies and asset classes. We’re thrilled to now expand our offering with this dedicated sustainable multi-asset income fund,” said Massimo Greco, Head of EMEA Funds at JP Morgan AM.

Meanwhile, Rob Stewart, Global Head of the Multi-Asset Solutions Investment Specialist team, pointed out that a huge challenge for sustainable multi-asset income investing is incorporating widely varying ESG factors, from across different asset classes, and bringing those together into a diversified portfolio that produces attractive risk-adjusted income.

“That’s why we believe it is critical for sustainable multi-asset investors to leverage well-established fundamental and quantitative research capabilities. We’re able to draw on over 50 years of experience in multi-asset investing. This enables us to optimize top-down global asset allocation to strive for stable income, while the fund’s bottom-up asset class specialists focus on the most sustainable securities within their respective sub-asset classes,” he added.

Pandemic Caused 220 Billion Dollars of Global Dividends Cuts in 2020

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scissors-2759721_1920 — Pixabay CC0 Public Domain. La pandemia provocó recortes por valor de 220.000 millones de dólares en los dividendos a escala mundial en 2020

The cuts or cancellation of dividends made headlines during the worst part of the pandemic. Now, according to the latest Global Dividend Index from Janus Henderson, we know that global dividends fell 12.2% to 1.26 trillion dollars in 2020. On an underlying basis, this means dividends were 10.5% lower in 2020.

In a press release, the asset manager reveals that this data is better than its initial best-case forecast of 1.21 trillion dollars thanks to a less severe fall in Q4 payouts than anticipated. On an underlying basis, the decline was smaller than after the global financial crisis. Janus Henderson’s index of global dividends fell to 172.4, a level last seen in 2017.

The dividend cuts were most severe in the UK and Europe, which together accounted for more than half the total reduction in payouts globally, mainly owing to the forced curtailment on banking dividends by regulators. “But even as payouts in Europe and the UK fell below the levels seen in 2009 when our index began, they rose 2.6% on a headline basis in North America to a new record”, points out the asset manager’s study.

In its view, North America did so well mainly because companies were able to conserve cash and protect their dividends by suspending or reducing share buybacks instead, and because regulators were more lenient with the banks. In Asia, Australia was worst affected, due to its heavy reliance on banking dividends, which were constrained by regulators until December. Elsewhere, China, Hong Kong and Switzerland joined Canada among the best performing nations.

The analysis shows that Q4 payouts fell 14% on an underlying basis to a total of 269.1 billion dollars while the headline decline was just 9.4%. This was less severe than expected as companies like Sberbank in Russia and Volkswagen in Germany restored suspended dividends at full strength, while others like Essilor in France brought them back at a reduced level.

Also, special dividends were also larger than expected, while in the US the dividends announced for the next four quarterly payments were better than expected.

Clearly, COVID-19 affected global dividends: although the cuts and cancellations totalled 220 billion dollars between April and December 2020, companies nevertheless paid their shareholders 965 billion dollars, still far outweighing the reductions. One company in eight cancelled its payout altogether and one in five made a cut, but two thirds increased their dividends or held them steady.

The study shows that banks accounted for one third of global dividend reductions by value, more than three times as much as oil producers – the next most severely affected sector. Six in ten consumer discretionary companies cut or cancelled payouts, but the classic defensives – food retail, pharmaceuticals and personal products – were well insulated. Among the world’s larger stock markets, the impact in Spain and France was particularly widespread with 71% of companies making reductions compared to just 9% in Canada.

The outlook

Janus Henderson believes that 2021 will see payouts fall, although the decline is likely to be smaller than between Q2 and Q4 2020. The outlook for the full year remains “extremely uncertain”.

“The pandemic has intensified in many parts of the world, even as vaccine rollouts provide hope. Importantly, banking dividends will resume in countries where they were curtailed, but they will not come close to 2019 levels in Europe and the UK, and this will limit the potential for growth. Those parts of the world that proved resilient in 2020 look likely to repeat this performance in 2021, but some sectors are likely to continue to struggle until economies can reopen fully”, says the asset manager.

In its view, a slow escape from the pandemic, and the drag caused by the first quarter, suggest that dividends may fall by 2% (headline) for the full year in a worst-case scenario (-3% underlying). Its best-case at this stage suggests an increase of 2% on an underlying basis, equivalent to a headline rise of 5%, yielding a total of 1.32 trillion dollars.

“Although the pandemic has changed the lives of billions in previously unimaginable ways, its impact on dividends has been consistent with a conventional, if severe, recession. Sectors that depend on discretionary spending have been more severely impacted, while defensive sectors have continued to make payments“, said Jane Shoemake, Client Portfolio Manager on the Global Equity Income Team at Janus Henderson.

“At a country level, places like the UK, Australia and parts of Europe suffered a greater decline because some companies had arguably been overdistributing before the crisis and because of regulatory interventions in the banking sector. But at the global level, the underlying 15% year-on-year contraction in payouts between Q2 and Q4 has been less severe than in the aftermath of the global financial crisis”, she added.

Professional Fund Selectors Anticipate Heightened Risk in 2021 but Are Optimistic about Market Opportunities

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traffic-light-876050_1920 — Pixabay CC0 Public Domain. Los selectores de fondos profesionales anticipan un mayor riesgo en 2021, pero son optimistas sobre las oportunidades de mercado

Natixis Investment Managers recently published the results of its annual Global Survey of Fund Selectors, which found that, against the backdrop of continued market volatility and negative interest rates, professional buyers are positioning portfolios to capture the upside potential in 2021.

The survey was conducted last November and December among 400 investment professionals, including fund selectors at independent financial advisors, registered investment advisors, insurance company investment platforms, private banks and family offices around the world, representing 12.7 trillion dollars in assets.

One of the conclusions of Natixis IM is that, despite the newfound optimism provided by the approval of the Pfizer and Moderna vaccines towards the end of 2020, six in ten fund selectors believe the COVID-19 “new normal” is here to stay and two-thirds predict the global economy will not recover from it in 2021.

Significant concerns about the pandemic and politics have not necessarily translated into a negative view on markets and the majority (80% of those surveyed) believe central banks will support the market in the event of another downturn.

According to respondents, volatility and negative rates are the first and second portfolio risks for global fund buyers in 2021, at 49% and 39% respectively. Other risk concerns included inflation (37%), a credit crunch (34%) and liquidity issues (25%).

With more fiscal and monetary stimulus likely to come from policy makers, fund selectors think stocks have even more room to run in 2021 and will look around the globe for opportunities.

In this sense, projections at the end of Q4 2020 favored a risk-on strategy, with 61% calling for small-caps to outperform large-caps, 60% predicting emerging markets to outperform developed markets, and 66% saying aggressive portfolios will outperform defensive in 2021. Fund selectors will be focusing on finding the potential bright spots in difficult markets and 70% forecast active investment will outperform passive in 2021.

“2020 marked a year of extreme challenges for markets that went beyond the health pandemic, including climate events and natural disasters, political tensions and the fastest market correction in history. Uncertainty continues and concerns are mounting that financial markets may have entered bubble territory. However, fund selectors surveyed view market risk as an opportunity, while acknowledging close analysis is required to uncover the opportunities to generate alpha for clients”, said Matt Shafer, Head of Wholesale & Retail Distribution, Natixis Investment Managers commented:

An optimistic vision

According to the survey results, optimism carries over into sector views and pro buyers are particularly bullish on healthcare, with 56% of those surveyed calling for the sector to outperform, followed by consumer discretionary (46%), information technology companies (45%) and energy (44%) and financials (44%).

ESG investing has remained a consistent focus area for global fund buyers. ESG strategies were a proven winner from the market turmoil in 2020 and 57% of respondents believe outperformance will continue in 2021. To access the full breadth of opportunities in the market, more than half of fund buyers intend to add to their model portfolios offering and enhance their lineup with specialty strategies for ESG and thematic investing.

Adapting asset allocation

In an environment of low to negative interest rates and slow growth, the survey revealed that value investing is making a comeback in 2021. Entering 2020, fund buyers focused their attention on sectors with strong secular growth drivers, while conversely, in 2021, 63% of fund buyers anticipate that value stocks will outperform growth.

Over one third (36%) of fund selectors surveyed intend to reduce their US equity holdings to capitalise on the opportunities presented by market performance in other territories, with 55% planning to acquire APAC stocks.

Against a backdrop of continued market volatility, Natixis IM shows that fund buyers seek to reorientate portfolios to take advantage of the emerging markets opportunity beyond Asia, with 65% of participants stating that emerging markets are more attractive now than they were before Covid-19. Moreover, 52% of participants confirm that they will be increasing their emerging markets positions.

Concerns about investor risk appetite

Given that fund selectors see the potential for greater volatility and are projecting value stocks to outperform growth, 83% believe markets will favor active investments in 2021.

The asset manager believes that commitment to active strategies was likely reinforced last year, when two-thirds say active investments on their firm’s platform outperformed during the market downturn.

“There is growing concern amongst professional buyers that individual investors will be able to successfully navigate the risks they face in 2021″, the survey points out. In Natixis IM’s view, the strong market performances throughout the pandemic is likely to have caused retail investors to take on risk more carelessly than before Covid-19 and 78% of fund buyers have concerns that increased volatility will cause individuals to liquidate their investments prematurely.

As a result, fund selectors see their firms transforming the investment offering to achieve greater consistency across client portfolios to better meet client needs, with 80% saying the emphasis is on quality rather than quantity. Given the focus on riskier, more volatile assets and concerns about potential liquidations, more than half (54%) among the 295 professional buyers whose firms offer clients model portfolios anticipate that they will move more clients to model portfolios in 2021.

IK Investment Partners and Luxempart Become Investors of iM Global Partner

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philipe — Foto cedidaPhilippe Couvrecelle, consejero delegado y fundador de iM Global Partner. IK Investment Partners y Luxempart se incorporan como socios a iM Global Partner

The project of Philippe Couvrecelle, iM Global Partner, enters a new phase in its development, welcoming two new investors. IK Investment Partners and Luxempart have bought part of Eurazeo‘s stake in the company, subject to the approval of the French Autorité des Marchés Financiers and the Commission de Surveillance du Secteur Financier.

In a press release, iM Global Partner highlighted that the addition of both firms as shareholders marks an important step in the development of the company. It believes their support strengthens its development potential and will accelerate its growth for years to come. iM Global Partner’s strategy is to continue to invest, both organically and through external growth, to further develop the company with the aim of exceeding 100 billion dollars in assets under management within five to seven years.

Following the transaction, Eurazeo, as a controlling shareholder, will continue to actively support the company alongside shareholders IK Investment Partners, Luxempart and Amundi. Proceeds from the disposals relating to this transaction of 20% of the capital represent about 70 million dollars for Eurazeo, a cash-on-cash multiple of 2.1x and an internal rate of return of 22%. Dassault/La Maison, a shareholder from the outset, sold its stake at the time of the operation.

A growth story

“We are pleased to welcome IK Investment Partners and Luxempart alongside Eurazeo and Amundi, which have been accompanying and supporting us since the beginning of this great adventure. Together, we will continue to develop our unique asset management model and further accelerate the growth of our activities worldwide“, stated Philippe Couvrecelle, CEO and founder of iM Global Partner.

Also, Marc Frappier, Managing Partner of Eurazeo and Head of Eurazeo Capital, said that their strong belief in the growth of the asset management profession, coupled with “the talent and the vision” of Couvrecelle, led them to support the development of “an innovative network bringing together the best managers worldwide and leading distribution capacities”.

As for the new investors, Thomas Grob, Partner at IK Investment Partners, added that they were impressed by the growth trajectory, quality of the teams, international nature and development project of iM Global Partner. “We are pleased and proud to have won the trust of Philippe Couvrecelle, Eurazeo and Amundi to join them in contributing to the company’s growth story”, he commented.

Lastly, Olaf Kordes, Managing Director of Luxempart, claimed to be pleased to be able to join the group of the firm’s shareholders: “We have been convinced by the quality and vision of the management team. We are very keen to continue supporting the development of this leading player with significant international ambitions. This operation is perfectly in line with Luxempart’s revised strategy, which aims to support first-rate management teams in their development projects over the long term”.

This transaction comes after iM Global Partner, a global network dedicated to asset management, increased its assets under management by 65% -of which 46% was organic growth- to more than 19 billion dollar in the year to end December 2020. With Eurazeo and Amundi, which have supported Couvrecelle and the management team since the company’s inception, iM Global Partner has become a major international asset management network in just a few years.

Calm After the Storm: Opportunities Ahead for Asian Fixed Income in 2021

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boy-1822614_640 — Pixabay CC0 Public DomainNiño con linterna. Emergentes

The COVID-19 pandemic caused a slowdown in many major economies and increased volatility in global capital markets, forcing governments around the world to implement a series of stimulus measures that have included trillions of dollars in financial aid to individuals and businesses, as well as record low interest rates to revive spending and investment.

That glut of liquidity on the back of COVID has had a big influence on global fixed income, with Asian credit markets impacted in much the same ways as other regions, with a decline in spreads and borrowing costs that helped them side-step what could have been an onslaught of defaults.

While that scenario has been good for investment grade names that are lowering their average funding costs, some companies are biding their time on a lifeline that isn’t going to last forever. The main concern with this whole dynamic is a potential reversal of flows and reversal of economic variables over the next 12 months, particularly inflation. Core rate pressure, steeper yield curves and higher growth make tight credit spreads unattractive, not to mention the fact that dividend yields relative to bond yields are the widest in history.

This outlook means investors are likely to remain very selective, holding more cash and venturing into opportunities where there’s value and good beta.

Opportunities ahead

While it might be hard to find many options in Asia Pacific high-yield corporate credit, there could be a lot of upside in lesser-known names if investors are discerning and understand the business. Focusing on cash flows and coverage, along with a flexible expenditure model to ensure that the company can navigate harsh times are key. There’s value in names in the region that are tied to the global commodity cycle because those risks are typically aligned with higher commodity prices and goods demand; for example, a ports operator who has solid take-or-pay contracts.

For investors who are comfortable with name, sovereigns, and geopolitics, it pays to layer on risk. Indonesia local sovereigns are a case in point, with a modest and closing fiscal deficit, rising reserves, improving terms of trade, and one of the steepest curves in emerging markets.

Looking at different industries, the technology space remains comfortable with large cash positions. Low leverage and awe-inspiring equity cushions benefit semiconductor makers in Taiwan and South Korea and ecommerce and social media companies in China. Yields on some of those names may not be great, but investors can’t expect outsized compensation for such high-quality names in that space.

The outlook for financials is trickier to read because non-performing loans (NPLs) have been held in check due to government measures to support the region’s economies. That’s an elephant in the room, making it hard to read how much the situation may decline and how good the debt coverage will be once that support is gone. Within that space, names that are closer to small- and medium-sized enterprises (SMEs) and state-owned enterprises (SOEs) might be better off than those with outsized retail exposure.

Macau gaming companies will also be interesting to watch as discussions around concession renewals scheduled for 2022 develop., as This year may also see a rebound of foot traffic and a possible increase in regulatory red tape, including less generous capex tax treatment, and distinction between offshore and onshore entities. Currently, the market isn’t differentiating between these points, but these concessions are a lifeline and can determine the success of a name for the next 20 years.

Higher returns in China

The biggest impact of recent government stimulus efforts in Asia and elsewhere around the world has been in financials. Lending schemes, interest deferrals and other measures have provided a lifeline to borrowers, which in turn has bolstered banks. This will have to change going forward and private banks that might not readily see government capitalization will probably be more impacted, while public sector lenders are in much better standing.

Governments will be more selective with spending over the next couple of years, so investors should make sure that they align with high priority initiatives, like import-export in India or China’s One Belt One Road project.

China stands out because it has both fiscal and monetary firepower. Where and what the leadership will spend it on and how investors can capture the upside is the most apparent unknown for the year ahead. The local debt market presents good opportunity. After the pork shortage, real yields look good given limited movement in the policy rate despite inflation falling. Foreign investors have taken heed, moving to 8% from 1% of the local market.

The renminbi is stable and managed. Nominal and real rates are elevated, while foreign investors such as sovereign wealth funds, pension funds, banks, insurers and other asset managers continue to demand local market debt. These investors benefit from a greater open market as they search for higher returns, while the lack of a major fiscal impulse means there won’t be paper indigestion like we have seen elsewhere.

Ayman Ahmed is a senior fixed income analyst for Thornburg Investment Management.

Founded in 1982, Thornburg Investment Management is a privately-owned global investment firm that offers a range of multi-strategy solutions for institutions and financial advisors around the world. A recognized leader in fixed income, equity, and alternatives investing, the firm oversees US$45 billion ($43.3 billion in assets under management and $1.8 billion in assets under advisement) as of 31 December 2020 across mutual funds, institutional accounts, separate accounts for high-net-worth investors, and UCITS funds for non-U.S. investors. Thornburg is headquartered in Santa Fe, New Mexico, USA, with additional offices in London, Hong Kong and Shanghai.

For more information, please visit www.thornburg.com

BNP Paribas AM Appoints Sandro Pierri Deputy CEO

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sandro OK — Foto cedidaSandro Pierri, Deputy CEO y director de Global Client Group de BPN Paribas AM.. BNP Paribas AM nombra a Sandro Pierri para el cargo de Deputy CEO

BNP Paribas Asset Management announced this week the appointment of Sandro Pierri as Deputy CEO, with effect from 1 January 2021. He will be based in London and report to Frédéric Janbon, CEO of the firm.

In a press release, the asset manager revealed that he will maintain his current role as Head of the Global Client Group, which he has held since 2017. “I am honored to have been given this new responsibility and by the confidence placed in me to contribute more widely to the development of our company”, Pierri said.

Meanwhile, Janbon highlighted that Pierri has transformed their Global Client Group into an efficient sales platform. “In expanding his responsibilities, Sandro will bring his invaluable expertise to additional transversal projects. This appointment reflects the breadth of his contribution to our company and his commitment to developing our culture and values for the benefit of our clients”, he added.

Three decades in the industry

Pierri has more than 30 years’ experience in the asset management industry. He joined BNP AM in 2017 as Head of the Global Client Group, its global sales and marketing organization. The asset manager believes that he has contributed to implementing their growth plan, positioning them as “a key player offering high added value investment solutions for individual savers, companies and institutions”.

Pierri began his career in 1989 as a portfolio manager with San Paolo Fondi, moving to BNL Gestioni in 1992, before joining ING Investment Management in Italy in 1994, where he held several commercial roles.

Between 2002 and 2003 he was Chief Executive of ING Group’s Italian retail business. Following the acquisition by UniCredit/Pioneer of ING’s Italian business, he joined Pioneer Investments, UniCredit’s asset management division, in 2004, where he spent 10 years in various commercial and managerial positions, including CEO in 2012. Pierri graduated in Economics from the Università degli Studi di Torino, Italy.

The Argentinean Nicolás Aguzin Named CEO of Hong Kong Exchange

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210209news — Foto cedidaNicolás Aguzin. El argentino Nicolás Aguzin, CEO de JP Morgan International Private Bank, ha sido nombrado CEO de la Bolsa de Hong Kong

Hong Kong Exchanges and Clearing Limited (HKEX) has annouced the appointment of Alejandro Nicolas Aguzin as Chief Executive of HKEX, effective 24 May 2021 for a term of three years until 23 May 2024, subject to the approval of the Securities and Futures Commission. Aguzin, subject to such approval, will also become an ex-officio member of the HKEX Board of Directors (the Board) effective 24 May 2021.

Aguzin joins HKEX from JP Morgan, where he is currently Chief Executive Officer of JP Morgan’s International Private Bank and a member of the Operating Committee for the firm’s asset and wealth management business. Prior to this, from 2012 to 2020, Mr Aguzin was CEO, JP Morgan, Asia Pacific where he oversaw and led JP Morgan’s growth in China, and the region.

Aguzin joined JP Morgan in 1990, and has held a number of leadership roles spanning lines of business and geographies during his 30 years with the firm, including as Head of Investment Banking Asia Pacific from 2015 to 2019, and as CEO of JP Morgan Latin America from 2005 to 2012. Aguzin holds a Bachelor of Science degree in Economics from the Wharton School of the University of Pennsylvania in the US. Aguzin has been based in Hong Kong for the last nine years.

Laura M Cha, HKEX Chairman, said: “We are delighted to announce the appointment of Mr Aguzin as the new Chief Executive of HKEX. He brings with him a wealth of international and regional experience in capital markets and financial services, including extensive knowledge of Mainland China, having served as chief executive for JP Morgan in Asia. This will be invaluable to us as we continue to build our business’ success, as well as drive the ongoing growth and development of Hong Kong as a leading international financial centre.

“As a highly respected and experienced executive, his broad experience in Greater China, the Americas and globally, makes him extremely well-placed to lead HKEX as we enter a post-Covid world, with the many opportunities and challenges that this will bring. Mr Aguzin’s skills and expertise will help us drive forward our strategy, utilising our deep China experience, but also reinforcing our international reach and relevance. Strong leadership, integrity, excellent relationships and a global outlook will be defining factors in our, and our markets’, long term success and we look forward to welcoming Nicolas to HKEX as we continue to Connect China, Connect the World.

“On behalf of the Board, I would like to thank Mr Calvin Tai for his excellent stewardship this year, and for his continuing commitment to our business and support of markets and our community,” said Mrs Cha.

Nicolas Aguzin, Chief Executive-designate of HKEX, said: “I am deeply honoured to be asked to lead the world’s largest stock market group, especially at such an important time for global financial markets. In recent years, HKEX has been instrumental in defining the evolution of Asian finance and has become the world’s leading IPO venue. I am excited to now have the opportunity to build on the solid foundations of innovation, impact and progress created by my predecessors.

“HKEX has a critical role to play in the evolution of strong, resilient and interconnected global financial markets. As China’s economy and capital markets continue to open, HKEX will become ever more relevant, facilitating anticipated significant new flows of capital, and supporting the strong demand for capital to fuel growth, acting as a catalyst that connects China with the world, and the world with China. I am optimistic and energised for the future and believe that with Calvin and my new colleagues, we have a unique opportunity to help drive and deliver our collective global prosperity,” said Mr Aguzin.

The Board believes that Aguzin’s extensive experience in Hong Kong, Mainland China, Asia and globally, and his deep knowledge of global capital markets, will help HKEX continue to build its competitiveness, as well as support the ongoing growth and development of Hong Kong’s unique financial markets. Alongside his financial sector expertise, Aguzin’s track record of strong leadership, his excellent regional and international relationships and his global outlook were contributing factors in the selection process. Further, the Board believes that Aguzin’s expertise will complement the existing skills within the organisation and be invaluable to HKEX as it continues to drive forward its strategy to be China Anchored, Globally Connected, and Technology Empowered.

With the appointment of Aguzin, Calvin Tai will cease to be the Interim Chief Executive of HKEX and an ex-officio member of the Board on 23 May 2021. He will continue in his roles, as Co-President and Chief Operating Officer of HKEX-