Barings Investments, a firm specialized in providing financial services for agribusiness, M&A and Wealth Management in Latin America, has just launched its new office in Asuncion, due to the high demand which exists in Paraguay for specialized financial services.
Emerson Pieri, head of Latin America for Barings Investments, hired Carlos Avila, who will be heading the new office and developing the business in Paraguay. Carlos Avila previously worked for Credit Andorra Group’s Valores Casa de Bolsa, as private banking financial advisor dedicated to buying and selling stocks and bonds on Paraguay’s stock exchange.
Barings Investments is diversifying participation in various business areas, looking for new opportunities outside the agribusiness and WM sectors. The company’s first venture is to try to attract a group of financial institutions to Paraguay to invest in the infra-structure sector. The first meetings, which aim to capture about half a billion dollars to build toll roads and airports with public and private funding, took place during the second week of January. For the first time, local companies like BYB Construcciones, Ferrere Abogados and private investors will have the support of an international firm such as Barings Investments to bid for a PPP project.
Paraguay, with a population of 7 million people, is a country with a vast wealth of natural resources. The country is crossed by several rivers which make up the Rio de la Plata Basin, which provides hydroelectric power to the Itaipu and Yacyreta power plants which are shared with Brazil. Other key activities in the country include highly automated agriculture and livestock production.
The latest data published on activity in Paraguay could not be more favorable for promoting investment and business in the country. According to the World Bank, Paraguay rates higher than Brazil on the scale of ease of doing business. According to a study by Brazil’s National Confederation of Industry, labor is 21% cheaper in Paraguay than in Brazil and electricity is 64% cheaper. Foreign direct investment to Paraguay grew by 230% between 2013 and 2014, compared with a 2% drop in Brazil. Indeed, Paraguay stands out in a region where overall FDI fell 16% in 2014 and which is expected to fall by as much as 10% this year. The International Monetary Fund expects Paraguay to expand by 3.8% next year, while a growth of only 0.8% is expected in the rest of the region.
In 1997, Paraguay reviewed their industry views by offering incentives to foreign companies willing to assemble low-end factory goods for the world market. Given the country’s inclination to political turmoil, (the overthrow in 2012 of President Fernando Lugo didn’t help) investors were opposed at first, but the situation has changed with the recent political changes.
Since Horacio Cartes, a tobacco magnate, was elected president in 2013, promising to turn Paraguay into a stable democracy with an improved economy, the government’s fiscal responsibility is improving and the country’s debt remains stable. Prior to his election as president, Horacio Cartes endorsed a bill passing an income tax (until then Paraguay lacked this type of revenue collection) to pay for public services and control the underground economy.
The Fourth Industrial Revolution, which includes developments in previously disjointed fields such as artificial intelligence and machine-learning, robotics, nanotechnology, 3-D printing, and genetics and biotechnology, will cause widespread disruptionnot only to business models but also to labour markets over the next five years, with enormous change predicted in the skill sets needed to thrive in the new landscape. This is the finding of a new report, The Future of Jobs, published last Moday by the World Economic Forum.
The report is based on a survey of chief human resources officers and top strategy executives from companies across nine broad industry categories and covering 15 of the world’s largest economies. These are; Australia, Brazil, China, France, Germany, India, Italy, Japan, Mexico, South Africa, Turkey, the United Kingdom and the United States, plus the ASEAN and GCC groups. Together, these economies account for 65% of the global workforce.
In terms of overall impact, the report indicates that the nature of change over the next five years is such that as many as 7.1 million jobs could be lost through redundancy, automation or disintermediation, with the greatest losses in white-collar office and administrative roles. This loss is predicted to be partially offset by the creation of 2.1 million new jobs, mainly in more specialized “job families”, such as Computer and Mathematical or Architecture and Engineering.
These predictions are likely to be relatively conservative and leave no room for complacency. Yet the impact of disruption will vary considerably across industry and gender as well as job type. For example, Healthcare is expected to experience the greatest negative impact in terms of jobs in the next five years, followed jointly by Energy and Financial Services and Investors. The industry that stands to create the most jobs, perhaps less surprisingly, is Information and Communication Technology, followed by Professional Services and Media, Entertainment and Information professionals.
When it comes to respondents’ outlook on how best to deal with these sweeping changes, the news is more encouraging. The most popular workforce strategy across every industry is investing in reskilling current employees. Other practices, such as supporting mobility and job rotation, attracting female and foreign talent and offering apprenticeships, also scored high.
Drivers of change
Drivers of change will also have a very disparate impact within specific industries. For example, processing power and big data will have an especially strong impact on Information and Communication Technology, Financial Services and Professional Services. The rising middle class in emerging markets will have the largest effect on Consumer, Financial Services and Mobility. Consumer ethics and privacy issues will have a significant impact on the Consumer, Financial Services and Information and Communication Technology sectors.
The business model changes created by these drivers will, in turn, have specific and different consequences for employment and skills needs in each industry. While there is a modestly positive outlook for employment across most sectors over the 2015-2020 period, underneath this aggregate outlook there is significant relative growth in some job families and significant relative decline in others. Skills instability is expected to impact all industries but is particularly pronounced in Financial Services where 43% of the top skills needed in all job families across the industry are expected to change by 2020.
You may find the complete report following this link.
Standard Life Investments, a global investment manager, suggests that structural reforms in China will play an important role in determining the trends of global financial markets in 2016. In the January edition of Global Outlook, the manager also shines a spotlight on emerging markets, examines the global economy into 2016, the outlook for US bond markets and sterling, and drivers of global equities.
Alex Wolf, Emerging Markets Economist, Standard Life Investments said: “In China, we expect policymakers to continue walking a tightrope – balancing enough fiscal and monetary stimulus to prevent a sharper growth collapse, while slowly proceeding with supply side reforms to remove excess capacity. Slowing Chinese demand, which we believe was worse than official data reflected, was one of the largest causes of the emerging market trade and output contraction experienced last year. As such we see some room for cyclical upside, as policy measures take effect.
However, our longer-term outlook on China has become increasingly negative. Our own view is that GDP growth is closer to 5% than the 6.9% reported by the Chinese authorities. Although we believe policy makers will avoid a hard landing, it is becoming more likely that Chinese leaders will not enact necessary reforms quickly, especially of state owned enterprises (SOE). SOEs are at the heart of China’s problems, and reforms here would deliver the biggest dividends from a growth and rebalancing perspective, but Beijing has been dragging its feet.”
According to Standard Life Investment, SOE reform plans delivered over recent months were received with optimism, but they believe they failed to address corporate governance issues or the reduction of excess capacity through corporate restructuring and closures.
“Consolidation has been the preferred path, and the government seemed unwilling to sell or reduce state assets in a meaningful way. The plan will lack effectiveness if the focus on addressing loss-making companies and overcapacity is limited to a small number of centrally-owned SOEs, and not the mass of locally-owned SOEs, where most of the overcapacity and inefficiencies lie.
If China growth does disappoint this could drive continued volatility in global markets. Sluggish growth is priced into markets but a hard landing which impacts on currency, capital flows, commodities and social stability is not. This could result in more aggressive domestic monetary easing, forcing the renminbi lower against the dollar, with adverse implications for global inflation and a blow to emerging markets dependent on robust Chinese demand for manufactured goods and commodities.”
Foto: Dani Vázquez
. Hermes IM nombra presidente a David Stewart
Hermes Investment Management has announced the appointment of David Stewart as the new Chairman of the Board effective 1 April 2016. He assumes the position from Paul Spencer, CBE, who has been Chairman since 2011.
David Stewart is currently a Non-Executive Director of Hermes Investment Management since joining the Board in April 2015. He previously spent nine years at Odey Asset Management, initially as Chief Executive and latterly as a Non-Executive Director. He is Chairman of IMM Associates, a Non-Executive Director of the Caledonia Investment Trust, and sits on the Investment Committee of MacMillan Cancer Care.
Saker Nusseibeh, Chief Executive, Hermes Investment Management, says:“Since joining the Board as Chair of the Risk and Compliance Committee, David has quickly established himself as an insightful and trusted advisor. His advice and counsel will be greatly beneficial as we take Hermes through the next stage of its growth.”
David Stewart, Chairman elect,Hermes Investment Management, says:“I look forward to taking up my new role, and working with Saker, the leadership team at Hermes and my fellow Board members to build on the successes Hermes has already achieved. I see Hermes as an asset manager which is fully embedding responsible capitalism at the very heart of its business. This gives the firm a unique advantage, for which it is increasingly being recognized. ”
BBVA Compass and FutureAdvisor are forging an alliance to bring investment management services to a greater slice of the bank’s clients through digital means, making the Sunbelt-based financial institution the first major bank to sign on with FutureAdvisor after the San Francisco firm’s milestone year in which it combined forces with leading asset-management firm BlackRock.
BBVA Compass clients will be able to use the award-winning firm’s automated investment services later in 2016. The bank sees the alliance as a way to make sophisticated tools and guidance available to its digital-savvy clients who aren’t currently taking advantage of its investment services. The alliance demonstrates BBVA Compass’ willingness to align with innovators regarded by some as industry disruptors.
“FutureAdvisor gives us a way to connect more of our clients with convenient, affordable and trusted advice,” said BBVA Compass Chairman and CEO Manolo Sánchez. “The ultimate goal here is to help our clients take greater control of their finances so they can build bright futures.”
The alliance follows a headline-generating year for FutureAdvisor, which was acquired in September by BlackRock Inc., the world’s largest asset manager. FutureAdvisor has managed more than US$ 700 million in client investments since it launched its managed service in 2013.
Its innovative, always-on technology is guided by a proprietary algorithm, and its investment decisions are backed by theory developed by Nobel Prize-winning economists and continuously refined by a council of notable scholars and finance experts.
“We are very pleased to be deepening BlackRock’s longstanding relationship with BBVA through FutureAdvisor’s partnership with BBVA Compass,” said Laurence D. Fink, Chairman and CEO of BlackRock, whose firm has long helped BBVA serve clients in the U.S., Latin America, Spain and Portugal. “The role of technology in our industry continues to evolve as consumers increasingly look to engage with digital-advice platforms. FutureAdvisor powers an entirely new digital client experience for investors, which includes a diverse set of investment products, proprietary retirement technologies and risk analytics.”
BBVA Compass clients will be able to link external investment accounts with FutureAdvisor and receive a customized plan for their portfolios. FutureAdvisor’s investment management service will also be available for clients who want direct management of a portfolio, with the assets being held through the bank’s broker-dealer affiliate BBVA Compass Investment Solutions, a division of BBVA Securities Inc., member FINRA and SIPC. The service will include auto-rebalancing based on market movement and tax loss harvesting to help improve after-tax, risk-adjusted rates of returns.
FutureAdvisor is the latest innovator to join forces with BBVA Compass in the bank’s pursuit to lead the technology-driven transformation of the financial services industry. In 2014, its parent company, BBVA, acquired Simple, a Portland, Oregon-based company that has created a new standard in digital banking, through BBVA Compass. And through its alliance with the all-digital payments network Dwolla, the bank is helping account holders bypass conventional networks to send and receive funds instantly. It also is the latest in a series of BBVA Compass offerings designed to give clients greater control of their finances. In November, via the second release of BBVA Wallet, BBVA Compass became the first major U.S. bank to offer its credit card clients real-time redemption of rewards earned on qualified purchases made at any retailer. And in September, the bank introduced its ClearSpend prepaid card with a mobile budgeting app, a nod to the increasing use of prepaid debit cards across all ages and income levels.
FutureAdvisor was awarded the World Economic Forum’s Technology Pioneer award in 2015, and American Wealth Management Innovator award in 2014.
According to the latest research from global analytics firm Cerulli Associates, the U.S. offshore channel accounts for more than half of the assets raised by cross-border managers in the Latin American region. These findings and more are from Latin American Asset-Gathering Strategies 2016: Cross-Border Distribution to High-Net-Worth and Pension Markets, a newly released report developed in partnership between
Cerulli and Latin Asset Management.
Cerulli and Latin Asset Management consider the wealth management market in Latin America to consist of three channels: The U.S. offshore, Latin American offshore, and Latin American onshore markets. The U.S. offshore market mainly consists of distributors based in financial hubs of South Florida (mostly Miami and Coral Gables), Texas (mostly Houston and San Antonio), New York, and Southern California (mostly San Diego).
“According to our estimates, the overall size of the three asset-gathering segments stands at US$ 105 billion, with the U.S. offshore segment accounting for more than half of the total at US$ 56 billion,” states Thomas V. Ciampi, founder and director of Latin Asset Management.
“A factor that differentiates the market in Latin America is the perceived risk of the home country, in terms of political risk, personal security, and stability of markets and currencies,” explains Ciampi. “For residents of countries who are passing through difficult times, or have volatile leadership unfriendly to foreign companies, such as Argentina or Venezuela, investors are of course eager to shelter their assets from the local banking system. In countries such as Mexico, Chile, Colombia, and (up until recently) Brazil, the wealthy may seek to have some of their savings offshore, but are still comfortable putting their money to work in the local economy or saving in locally domiciled financial instruments.”
Although the U.S. offshore market accounts for half of the assets under management, the Latin American offshore market is growing for a host of reasons. Among them are: sophisticated distribution tactics, enhanced technology offerings of product services, greater client trust in local advisors, and changes in the profile of the typical wealthy investor residing in the region.
Asset gathering from within Latin America has become more critical in recent years and this local growth has come at the expense of U.S. offshore booking centers such as South Florida, Texas, and New York. However, the importance of maintaining a presence in the U.S. offshore market should not be discounted. Asset managers should remain focused on serving clients in key locales such as Miami, which is bustling with activity.
Foto: Simon Cunningham
. Los inversores institucionales estadounidenses ampliarán sus posiciones en ETFs en 2016
U.S. institutions plan to increase their use of ETFs in 2016 according to a new report, “Institutional Investment in ETFs: Versatility Fuels Growth” from Greenwich Associates.
The study, which is in its fifth year and sponsored by BlackRock, found that institutions are increasingly using ETFs for longer-term, strategic allocations as well as cost-effective replacements for bonds and derivatives.
U.S. institutions currently represent approximately 36% of the total $2.1tn in U.S. ETF assets. All of the ETF users in the study invested in equity ETFs, with 36% planning to increase allocations in the year ahead and 35% of those planning to boost allocations by 10% or more. 35% of fixed income ETF users expect to increase allocations this year, and 36% plan to do so by 10% or more.
The firm found that approximately 43% of institutional users invest 10% or more of their overall portfolio in ETFs. Nearly 20% of non-ETF users are considering adding ETFs to their portfolios in the next year.
Matching the exposure needed was the most important factor when selecting an ETF as mentioned by 82% of interviewed investors. Other factors considered when selecting an ETF included liquidity/trading volume (76%), expense ratio (72%) and tracking error of the fund (68%).
The study identified five key trends driving ETF growth in the U.S. institutional market:Existing institutional users are finding new applications for ETFs in their portfolios, and a growing number are using ETFs as a primary vehicle to implement long-term strategies; Fixed income ETF use is expanding; Institutions are using ETFs alongside derivatives; Innovative ETF strategies and approaches are gaining traction among institutions; And Insurance companies are adopting ETFs as a means of investing both surplus and reserve assets
Daniel Gamba, Head of iShares U.S. institutional Business at BlackRock commented: “We expect 2016 will be another record year for the ETF industry, and we look forward to working with our clients as they use ETFs to help achieve their goals.”
Just over a month in his new post, Barclays’ CEO, Jes Staley, has taken an ax at the investment banking arm of the firm cutting around 1,200 jobs and pulling out of several Asian countries.
Barclays said the cutbacks form part of the 19,000 job cuts announced in May 2014 to refocus on the UK, the US and serving clients globally. A memo sent by Barclays’ investment banking chief executive, Tom King mentioned that the U.S. is “one of our two home market franchises, in the world’s largest single pool of capital, our leading U.S. business is another distinct competitive advantage for Barclays.”
The UK bank plans to pull out of countries like Australia, Taiwan, South Korea, Indonesia, Malaysia, Thailand, the Philippines, Brazil, and Russia, offering banking coverage for those countries from other locations.
Barclays plans to keep offices in Hong Kong, China, Japan, Singapore and India.
With increasing concern over China’s growth, investors are significantly less confident in the global economic outlook, according to the BofA Merrill Lynch Fund Manager Survey for January. Allocations to equities have fallen sharply, while cash holdings have risen.
A net 8% of fund managers see the global economy strengthening over the next 12 months, the survey’s lowest reading on this measure since 2012.
Despite this, just 12% believe a global recession will occur in the next 12 months.
Slowdown in China now stands out as the panel’s biggest “tail risk” by far.
More respondents now think global profits will decline over the next 12 months than increase, the first negative reading in over three years.
Over half of respondents expect no more than two Fed hikes in the next 12 months, up from 40% a month ago.
Long U.S. dollar remains the most crowded trade, but bullishness on the currency is waning.
Average cash balances are up to 5.4%, the third-highest reading since 2009. A net 38% of investors are now overweight cash.
Net overweights in equities have halved to a net 21% from December’s net 42%, while bond underweights have retreated.
Bearishness towards Global Emerging Markets equities has increased to a record level. Europe and Japan remain the most favored stock markets.
“Investors are not yet ‘max bearish’. They have yet to accept that we are already well into a normal, cyclical recession/bear market,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
“Investors’ bullishness towards Europe remains intact, but conviction is rooted to the floor. The positioning gap between the most and least preferred sectors is the lowest in two years,” said James Barty, head of European equity strategy.
According to the latest Investment Funds Industry Fact Sheet, released by the European Fund and Asset Management Association (EFAMA), the main developments in November 2015 can be summarized as follows:
Net sales of UCITS increased to EUR 55 billion, up from EUR 51 billion in October. The increase in UCITS net sales can be attributed to a rise in net inflows into money market funds.
Long-term UCITS (UCITS excluding money market funds) registered net sales of EUR 27 billion, down from EUR 28 billion in October.
Equity funds registered EUR 17 billion in net sales, down from EUR 19 billion in October.
Bond funds suffered from net outflows of EUR 2 billion, compared to net inflows of EUR 0.3 billion in October.
Multi-asset funds finished the quarter with net sales of EUR 10 billion, up from EUR 8 billion in October.
UCITS money market funds experienced an increase in net inflows to EUR 28 billion, from EUR 23 billion registered in October.
Total AIF registered net inflows of EUR 9.5 billion, down from EUR 12.5 billion in October.
Net assets of UCITS stood at EUR 8,430 billion at end November 2015, an increase of 2.5 percent during the month, while net assets of AIF increased 1.5 percent to stand at EUR 4,467 billion at month end. Overall, total net assets of the European investment fund industry increased 2.2 percent to stand at EUR 12,897 billion at end November 2015.
Bernard Delbecque, Director of Economics and Research at EFAMA, commented: “Net sales of UCITS remained sustained in November, which suggests that investors were still confident about economic outlook late last year.”
