Quentin Ecrepont / Pexels CC0. El sector de fondo de fondos domina en los CERPIs, mientras que en los CKDs los de bienes raíces
The market value of the 111 CKDs and 24 CERPIs in circulation ended July at 13.369 billion dollars and capital calls to be made acount for 11.354 billion dollars. 80% of resources are concentrated by CKDS and 20% by CERPIs.
Although the rise of CERPIs is just over one year old, despite its youth, it is already possible to observe a specialization and tendency in each of the instruments where CKDs have leaned towards the real estate sector (29% share of market in committed amount), while CERPIs by the fund of funds sector (57%). Curiously, in CKDs the fund of funds sector the offer is low (5%), while in CERPIs the offer of real estate alternatives is also low (4%).
It could be said that the Mexican institutional investor has so far preferred to invest in real estate in Mexico through CKDs than to invest in real estate internationally via CERPIs; while international investments in fund of funds call it more attention than in Mexico. It is important to mention that CKDs are private equity investments that are made exclusively in Mexico, while CERPIs investments 90% are made internationally and the rest in Mexico (10%).
In the private equity sector, there is also a specialization since while in the CERPIs it represents a 26% market share in committed amount, being the second most important sector; in the CKD market it reaches 15%, being the third most important sector.
A less concentrated market share can be seen in term of resources committed by sector in the CKDs, as is the case in CERPIs. In CKDs 4 sectors represent 80% (real estate 29%, infrastructure 21%, private equity and energy 15% each), while in the case of CERPIs only two sectors have 83% (fund of funds 57% and private equity 26%).
In the 10 years that the CKDs have been, it can be seen how there are years in which the offer is skewed towards a specific sector. For the real estate sector in 2018, the greatest placement of resources was achieved by committing 1.823 (31%) of the 5.911 million dollars of the sector. For the infrastructure sector, commitments were reached for 1.222 in 2015 (27%) of the 4.469 million dollars the market is worth. For energy it was 2014 (28% of the committed resources of the sector) and for credit it was 2015 (34%).
Between January and July 2019, a total of 4 new CKDs and 5 new CERPIs have been seen that add commitments for 1.707 million dollars, of which 79% of the resources have been for CERPIs dominating the fund of funds raising. As for CKDs, preference for the real estate and infrastructure sector prevails.
Pixabay CC0 Public Domain. invertido_mix_gestoras.jpg
The US yield curve has been reversed again and the United Kingdom is about to do so, which worries investors. According to the main asset managers, the fact that it is invested can indicate that, at best, investors expect the economy to slow down and at worst, that a recession could be on its way.
In the opinion of Keith Wade, chief economist at Schroders, “The US curve is a reliable indicator of recession, the UK curve less so. Nonetheless, if the US goes into recession it is hard for others not to go the same way given its importance as a driver of the world economy. So the double signal is important. There is normally a lag of about one year from inversion to recession so the curves are signalling problems for 2020.”
The same concern is shared by Mark Holman, Chief Executive Officer of Twentyfour AM (Vontobel), who acknowledges that the reversal of the curve is not good news. “In our opinion, the reversal of the yield curve is fully justified given the weight of geopolitical events, and one thing absolutely certain is that an inverted curve is not good news. The only question is how bad this news is and how it could convey and encourage greater economic concern,” he says.
“August doesn’t seem as calm as we would have thought. Tensions continue between the United States and China. The German and Swiss yield curve is in a negative territory, European equity markets continue to live out, while gold continues to rise. On the economic front, recessions in China and Germany are being felt. Although the global economy seems to resist, investors begin to fear that a recession is not far. However, the United States is managing to maintain a solid cycle and the latest figures show an acceleration in consumption. Central bank measures seem to have become the last line of defense to prolong the cycle and alleviate political tensions. However, it is by no means certain that this is sufficient between now and 2020,” says Igor de Maack, fund manager at DNCA, affiliated with Natixis IM.
For Holman, the investment of the curves is explained by the global slowdown that is continuing over time, and that keep markets restless. “A consequence of this is that fixed-income investors increase exposure to risk-free pure assets such as US, German or UK Treasury bonds, but to protect the portfolios they must maintain a duration greater than the normal, which is one of the main catalysts of the curve’s shape. As a result, the curves become lower and flatter, which is perhaps more sinister than higher and flatter returns, ”he explains.
This reading is what alerts the investor, who sees the possibility of a recession as more and more likely. But the managers ask for peace of mind and continue to insist that we are not facing a recession. “While we agree that the risk has increased, a recession over the next year is not yet an inevitable conclusion. Unlike the period prior to other recessions in the past in the US, current financial stability risks appear moderate, balance sheets are solid, family debt is manageable and the personal savings rate is high. All these fundamental factors should help cushion any economic recession,” say Tiffany Wilding, US economist, and Anmol Sinha, fixed income strategist at PIMCO.
The same message came out of the BlackRock Investment Institute (BII) in its weekly report: “We do not believe that the investment in the yield curve is a sign of recession and we believe that the accommodative turn of the central banks is dilating the growth cycle… Assets considered refuge, such as gold, rebounded. We continue to observe limited short-term recession risks, since the accommodative turn of the central banks helps to prolong the economic cycle, although we note that commercial and geopolitical tensions pose fall risks.”
“The reversal of the yield curve does not cause a recession, but it indicates that we are in an advanced phase of the economic cycle. So, instead of considering it a cause for concern, it could be a good time for investors to verify that their portfolios are well diversified and that their fixed-income positions can limit excess risk. In the final stages of the cycle it is especially important to determine whether fixed income positions offer diversification with respect to equities, as well as the appropriate level of balance,” concludes Jeremy Cunningham, Investments Director at Capital Group.
Between February 27-28, 2020 experts and thought-leaders from around the world will gather at the Omni Orlando Resort at ChampionsGate to participate on the INTL FCStone’ Vision 20/20: Global Markets Outlook Conference. There, they will be offered a global vision of the future for more financial and commodity markets, along with detailed market forecasts, insight on the latest technology, and macro-economic outlooks to help you get a clear picture of the factors impacting your bottom line.
The conference, which is sponsored by CME Group and Barchart, will be divided into four tracks with focused programming specific to each area.
The Global Agriculture Outlook track will offer a global view toward developing strategy, protecting profits and driving growth with detailed forecasts based on the latest available data. In addition to essential market outlooks, this event provides invaluable opportunities to make new connections and network with peers.
The Correspondent Clearing Outlook event, sponsored by SDDCo Group, StoneCastle, Mediant and Aberdeen Standard Investments, is an invaluable opportunity for US and international broker-dealers and investment advisors to hear from industry thought-leaders and participate in discussions. Attendees will experience the latest internal and third-party technology and learn more about INTL’s Correspondent Clearing group.
The Dairy Outlook track will offer attendees insights into emerging trends within the industry, along with strategies to protect profits and enable growth in the current environment. In addition to the essential market outlooks and price forecasts, this event provides invaluable opportunities to connect with dairy market experts and make new connections.
The SA Stone Wealth Management event, sponsored by Gladstone Land, is an invaluable opportunity to listen to some of the best speakers and engage with industry experts to learn about how to build and grow your practice. You’ll also have the chance to make new connections and network with peers.
These tracks will combine for a welcome reception, general keynote sessions, meals and a trade show.
Registration will open in the fall. For more information you can contact kari.hennigan@intlfcstone.com
HSBC Global Private Banking, Americas announced that Roberto Teofilo has joined as Managing Director and Senior Relationship Manager for the Brazil market. He will report to George Moscoso, Market Head for Latin America.
“We are thrilled that Roberto has joined HSBC,” said Moscoso, “he is a highly skilled professional who brings great experience over many years meeting the evolving needs of ultra-high net worth individuals and families in Brazil.”
Based in Miami, Teofilo will be responsible for bringing the global resources of HSBC to help ultra-high net worth clients based in Brazil manage, preserve, and grow their wealth.
With a career spanning nearly 20 years, Teofilo has worked at Deutsche Bank, JPMorgan, Merrill Lynch, and Credit Suisse. Earlier in his career, he worked in strategic planning at IBM in New York. He has a Master’s degree from the Thunderbird School of Global Management and earned his undergraduate degree from Auburn University where he graduated summa cum laude and was named the student-athlete of the year in 1995. Before moving to the United States, he participated in several professional tennis tournaments after a successful run in the International Tennis Federation’s Junior Circuits, reaching the top three in Brazil and Top 50 in the World Rankings in 1988.
“Brazil is one of our key markets within Latin America and we look forward to continuing to strengthen our team and our proposition so that we can best serve the needs of ultra-high net worth families and individuals,” added Moscoso. In addition to Brazil, HSBC Global Private Banking’s core markets within Latin America include Mexico, Chile, and Argentina.
The Brazil market team also recently added Cristiane Suzzio, as a Relationship Officer from JP Morgan and Rodrigo Medina, as a Client Service Executive from Banco do Brasil. These additions come after the Bank welcomed Alessandro Merjam and Monica Mavignier as Relationship Managers for the Brazil market team earlier this Summer.
Julius Baer has signed a declaration to support the United Nations (UN) Principles for Responsible Banking making it the first Swiss bank to commit to them. The Bank will formally sign the principles on the occasion of the UN General Assembly in New York in September 2019.
The Principles for Responsible Banking have been developed by the UN Environment Finance Initiative (UNEP FI) and 28 banks from around the world and will be officially launched on 22 September 2019. The Principles set out the banking industry’s role and responsibility in shaping a sustainable future and in aligning the banking sector with the objectives of the UN Sustainable Development Goals and the 2015 Paris Climate Agreement. The principles represent a single framework for the banking industry that aim to embed sustainability across all business areas.
Bernhard Hodler, Chief Executive Officer Julius Baer said: “We are very proud to be the first Swiss bank to commit to the UNEP FI Principles for Responsible Banking. At Julius Baer, we continuously include sustainability practices into our business, meeting a number of notable milestones in our pursuit of long-term value creation for clients, shareholders, and society as a whole. We see our responsibility as encompassing all aspects of sustainability: economic, social, as well as environmental. With our declaration to the Principles for Responsible Banking, we affirm our willingness to assume an active leadership role in sustainable changes.”
The 19th CLAB Financial Technology and Innovation Conference, organized by the Florida International Bankers Association (FIBA) and the Federación Latinoamericana de Bancos (FELABAN), will reunite 1,000 banking executives and tech leaders from across the Americas in Hollywood, FL on September 4-6.
Experts from some of the world’s leading banking, technology and consulting companies, such as Netflix, PayPal, Microsoft, VISA, JP Morgan, Santander, McKinsey, EY, Deloitte, IBM, CITI and BBVA will join regulators and government officials to provide a broad and diverse perspective on how FinTech and digital transformation are impacting the financial services sector.
The speakers’ lineup includes: Jorge Machado, McKinsey; Dan Mendes, Deloitte; Gustavo Monteiro, Netflix; Rene Salazar, PayPal; Alan Koenigsberg, VISA; Fernando Moreno, BBVA; David Zimmerman, IBM; Driss Temsamani, CITI; John Hunter, JP Morgan; Liliana Marcos, CNBV Mexico; Irene Arias, IDB Lab; Nikhil Lele, EY and Belisario Contreras, OAS, in addition to senior executives from leading global organizations and FinTech innovators and entrepreneurs.
In addition, CLAB also announced that Andres Oppenheimer, the multiple award-winning columnist with The Miami Herald, CNN anchor and author of seven books, will deliver the keynote presentation on Friday, September 6 at 10 am.
“There is no question this is one of the best teams of speakers ever assembled for a CLAB event. From RegTech, blockchain and payment innovation to cybersecurity, CX and AI, participants will have first-hand access to the leaders and experts that are directly involved in the ongoing transformation of the financial sector,” said David Schwartz, FIBA president and CEO. “This is the platform to stay current with the leading-edge of FinTech.”
CLAB 2019 is supported by strategic partners, including Ernst & Young, Asi Group, Automation Anywhere, Entrust Datacard, Latinia, Vierge Group, Cloudflare, Microsoft, Infocorp, Prisma Technologies, Grupo Clai, Open Legacy, Tememos, Veritran, Charge Anywhere, Fiserv, ProColombia and more than 85 supporting organizations.
CC-BY-SA-2.0, FlickrCEPAL building. FDI Flows to Latin America and the Caribbean Increased by 13.2% in 2018
In contrast to the global trend, foreign direct investment (FDI) flows to Latin America and the Caribbean increased by 13.2% in 2018 compared to 2017, totaling 184.287 million dollars, which reversed five years of falls.
Although the figure reached last year is still below the values recorded during the boom price cycle of raw materials, the Economic Commission for Latin America and the Caribbean (ECLAC) reported in Santiago, Chile that, “when analyzing the different components of FDI, it is observed that the recovery of dynamism in 2018 was not based on the entry of capital contributions, which would be the most representative source of the renewed interest of companies to settle in the countries of the region, but in the growth of the reinvestment of profits and loans between companies”.
The study shows great heterogeneity in national results: In 16 countries there is an increase in entries compared to 2017 and in 15 countries there is a decrease. Most of the growth of FDI in 2018 is explained by the greater investments in Brazil (88.319 million dollars, 48% of the regional total) and Mexico (36.871 million dollars, 20% of the total).
They are followed, in terms of the amount received, Argentina (11,873 million dollars, 3.1% increase over 2017), Colombia (11,352 million dollars, 18% drop), Panama (6,578 million dollars, increase in 36.3%) and Peru (6.488 million dollars, 5.4% drop). Entrances to Chile (6,082 million dollars) grew slightly (3.9%), but, as in 2017, capital flows to the country were clearly below the average of the last decade.
“In an international context of reducing FDI flows and strong competition for investments, national policies should not be aimed at recovering the amounts recorded at the beginning of the decade, but rather attracting more and more FDI that contributes to the formation of capital from knowledge and move towards sustainable production, energy and consumption patterns,” said Alicia Bárcena, ECLAC Executive Secretary.
“The increasing incorporation of a sustainable development approach in the strategic decisions of the main transnational companies in the world is an opportunity to design policies that accompany this paradigm shift,” said the senior official. The outlook for 2019 is not encouraging because of the international context. A drop of up to 5% in FDI inflows is expected, according to the report.
In 2018, FDI in Central America grew 9.4% compared to 2017 due to the momentum of Panama. In the Caribbean, the entries decreased 11.4% due to lower investments in the Dominican Republic (2,535 million dollars, -29%), the main recipient in this subregion.47% of FDI inflows in 2018 corresponded to the manufacturing industry, 35% to services and 17% to natural resources. On the other hand, cross-border merger and acquisition megaoperations were concentrated in Chile and Brazil, in the mining, hydrocarbons and basic services (electricity and water) sectors.
Regarding the behavior of Latin American transnational corporations, known as translatinas, the ECLAC document reports that the outflow of FDI from Latin American countries decreased in 2018 for the fourth consecutive year and reached 37.870 million dollars. 83% of direct investment abroad from Latin America originated in Brazil, Chile, Colombia and Mexico.
Most of the capital that entered the region came from Europe (which has a greater presence in the Southern Cone) and the United States (main investor in Mexico and Central America). China, meanwhile, lost participation in mergers and acquisitions in Latin America and the Caribbean, according to the report Foreign Direct Investment in Latin America and the Caribbean 2019.
Finally, the report indicates that 7.9% of FDI received by Latin America between 2012 and 2016 went to the agrifood chain, especially to the agribusiness sector, a percentage that rises to 15.5% in the case of Uruguay, 14.5 % in Paraguay, 14.4% in Mexico and 11.9% in Argentina. “FDI can contribute to the need for changes in regional agri-food chains to meet the environmental and social challenges of the coming decades,” concludes ECLAC.
Pixabay CC0 Public DomainFoto: MaxPixel CC0. Los riesgos de una espiral de reducción de tasas están aumentando
Stocks closed at all-time highs on eight days during July to end the month with a gain despite a broad last day surprise sell off during Chairman Powell’s post FOMC statement press conference. The Fed cut its policy rate by 25 basis points. Stocks headed down when he characterized this reduction as a ‘mid-cycle policy adjustment’ but rallied later when he said this cycle may not be ‘just one’ cut.
The Fed made it clear that it will reduce rates again to ‘insure’ downside risks if global economic growth falters and/or the trade war escalates. Stocks dropped sharply on August 1, after President Trump announced a new 10 percent tariff on $300 billion of Chinese imports. The risks of a trade war/rate cut spiral are rising.
Up to this point, the consumer driven U.S. economy and corporate profits have done relatively well. On July 30, the Commerce Department reported that May wages and salaries were revised to up 5.3% y/y, a large incremental increase of about $230 billion with June up 5.5%, the savings rate at 8.1% and the PCE deflator at 1.4% according to ISI. Bottom line – real wages and salaries up 4.1%.
Additionally, with a major global central bank easing cycle now under way, the U.S. Fed’s balance sheet is likely to increase about $9 billion a month, and in combination with the ECB and BOJ, at an annualized rate of about $700 billion.
We continue to expect M&A activity to pick up for small and mid-sized companies during the second half of the year as lower rates get strategic and private equity buyers to take a closer look at the intrinsic values versus the market prices of these companies. We continue to keep our eye on the upcoming election in the U.S. and the potential effects on the market.
Column by Gabelli Funds, written by Michael Gabelli
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The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.
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Participant Capital, a Miami-based private equity real estate investment firm, founded by Royal Palm Companies, a developer with more than 40-years of success, has announced today the promotion of Claudio Izquierdo to Chief Operating Officer. With Claudio’s years of experience in international investment and business development, the company is strongly aimed to elevate its global expansion.
Claudio Izquierdo has a long history of working with institutional investors and ultra-high net worth individuals throughout Latin America. His successful career includes impressive achievements at some of the world’s most prestigious investment banks such as Morgan Stanley where he rose to the position of Vice President. He also served as a Senior Vice President of Investments at UBS and a Senior Financial Advisor at HSBC.
“Claudio is an exceptional professional with international business acumen and deep expertise. He is managing over 30 distributors and building partnerships with key financial institutions across the globe,” comments Daniel Kodsi, Participant Capital CEO. “We are proud to have him on our team!”
Prior to joining Participant Capital, Claudio enjoyed a successful career as an entrepreneur having established a number of international export and trading businesses. He has a degree in finance from Florida International University. He is a frequent contributor to a variety of trade and business publications and a sought-after speaker and expert authority on international investment and management products.
“I am happy to oversee how fast Participant Capital is growing,’’ says Claudio. “Thanks to the dedication of our team, we are creating long-lasting value for our clients and providing direct access to world-class real estate projects from the ground-up at the developer’s cost basis.”
Pixabay CC0 Public DomainFoto: PxHere CC0. La "manipulación de divisas" de China: ¿una señal de pánico o un plan astuto?
Over the past several months, there has been hype about the prospect of the Chinese renminbi (RMB) weakening past 7 per U.S. dollar, despite no evidence that 7 is a magical number. China’s central bank, People’s Bank of China (PBOC), had denied that it was focused on defending 7, and the IMF said it wasn’t significant. So when the RMB finally broke 7, the media treated it as a dramatic event, but I believe, this will soon pass.
It is likely that the timing of the move was deliberate, following President Trump’s latest round of tariffs last week.
A sign of panic?
In a Monday morning tweet, President Trump responded to a depreciating Chinese renminbi by stating, “It’s called ‘currency manipulation.’ ”
The decision to tag China as a currency manipulator was either a sign of panic, or a cunning plan. Or a bit of both.
My interpretation of yesterday’s tweet is that the president still wants to sign a trade deal with Chinese President Xi, because Trump recognizes that a deal is better than no deal for his re-election prospects.
No deal would mean continued taxes on Chinese goods, paid for by American families. (And the next round of tariffs would fall largely on consumer goods, which had previously been spared because of the direct impact on voters.) No deal would mean a continued Chinese boycott of American soybeans, which is contributing to harsh conditions for farmers in politically important states. No deal would mean continued economic uncertainty, which is leading to weaker corporate capex and worries about a recession. Moreover, the prospect of no deal, and an escalation of the tariff dispute into a full-blown trade war, has had a clear, negative impact on investor sentiment.
I believe Trump wants a deal, but is struggling to find a way to close the deal.
Given that the currency manipulator label carries no concrete consequences, Xi is unlikely to feel more pressure to sign a deal that he believes is disadvantageous. He may see the accusation as a sign of panic. I believe the timing of latest currency move was a short-term political signal by Xi.
Xi is unlikely to resort to a significant devaluation to respond to Trump, in my view. The tariffs are having little direct impact on China’s economy (net exports were less than 1% of China’s GDP last year, and only 20% of total exports went to the U.S.), and Xi has far better tools to deal with the more significant indirect impact: weak confidence by manufacturers, who have slowed output and deferred investment. Further, China’s consumer story—the largest part of its economy—remains pretty healthy, as does employment and wage growth, so there is no reason for Xi to panic.
A cunning plan?
In the past, Treasury Secretary Steven Mnuchin ignored the president’s calls to tag China as a currency manipulator. And when the law required a formal ruling on the question, Mnuchin—following in the footsteps of many Democratic and Republican predecessors—declared that China was not a manipulator.
His last finding was just a few months ago, on May 28, when Mnuchin informed Congress that China did not meet the criteria for being designated as a currency manipulator under either the 1988 or 2015 legislation.
Yesterday, however, just several hours after Trump’s tweet, Mnuchin issued a press release designating China as a currency manipulator under the 1988 legislation. “In recent days, China has taken concrete steps to devalue its currency…to gain an unfair competitive advantage in international trade,” according to the press statement.
What changed between May 28 and Monday that led Mnuchin to reverse course?
During that period, the RMB depreciated by all of 0.4% against the dollar. Was that enough to justify a change in policy? Was that sufficient to provide, as the Treasury press release claimed, “an unfair competitive advantage in international trade.”
The timing of Xi’s decision to relax his central bank’s interventions that had for many months prevented market forces from pushing the RMB below 7 was clearly politically motivated, in response to Trump’s August 1 announcement of additional taxes on Chinese goods. But this market pressure itself was the result of uncertainty created by the Trump tariffs, and Xi’s action was modest: The PBOC lowered its target rate for the currency by only 0.3%, although market forces pushed it down further.
Here’s another way to look at it: between Trump’s August 1 announcement of additional taxes and Monday’s currency manipulation decision, the RMB depreciated 0.3% against the dollar.
Yet another perspective: over the course of 2019, the RMB is behaving as it has in recent years, with its direction vs. the dollar determined by the strength or weakness of the dollar. Year to date, the RMB is down 1.5% vs. the dollar, while the U.S. Dollar Index (DXY) is up 1.5%.
(China has in fact been manipulating its currency to stop market forces from weakening it even more. The Trump administration wants them to stop? And on Tuesday, China’s central bank guided the exchange rate a bit higher, consistent with its statement that they are “not carrying out competitive devaluation.”)
It is fair to conclude that little has changed since the Treasury’s May 28 decision that China did not meet the legislative criteria for currency manipulation.
So, did Mnuchin change course yesterday simply due to pressure from his boss?
Or, was it part of a cunning plan?
Yesterday’s press release says, “As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions.” Well, we know that the IMF believes the RMB is roughly fairly valued, so this is unlikely to worry Xi.
Did Mnuchin decide that designating China as a manipulator might calm the president without blowing up the trade talks, because there are no consequences to the designation? Mnuchin may have decided that this course of action would lead Trump to give U.S. Trade Representative Robert Lighthizer and him more time to negotiate with their Chinese counterparts, in an effort to reach the deal that Trump knows he needs, but doesn’t know how to achieve.
If they are given room to negotiate, I think a deal can be reached by the end of the year, as I believe that Xi continues to want to reach a deal. While tariffs are not a huge problem, as China is no longer an export-led economy, failure to conclude a deal would open up the risk that a full-blown trade war leads to restrictions on China’s access to American tech, everything from semiconductors to research collaboration. That would be a setback to China’s economic growth, which Xi wants to avoid.
Column by Matthews Asia, written by Andy Rothman, Investment Strategist
