Amidst recent market volatility, the change in China’s stock market has been quite dramatic, shifting from overvalued to possibly undervalued according to data from Thomson Reuters Fundamental Research. Following the Chinese stock market crash, the 360 day growth rate is now a more reasonable 37% compared to a lofty 150% from just a month ago, and the difference between the five year growth rates has swung into positive territory. More details follow:
“A month ago, our StarMine data warned that the Chinese markets seemed overvalued at the time,” said Sridharan Raman, senior research analyst at Thomson Reuters. “With the crash in markets over the past few weeks, the market may be discounting stocks more than necessary, out of fear or panic. Our models now show that the markets may actually be undervalued now in China.”
Countries with the smallest differential between StarMine’s Market Implied Growth Rate and the Compound Annual Growth Rate show where market expectations for growth are above, or match, analyst expectations for the next five years, representing possibly over- or fair- valued markets. After the recent stock market collapse, the difference between market expectations for growth and analysts’ expectations in China has moved from -0.2% in early June to 7.7%; more in line with possible undervalued markets.
Foto: Matthias Rhomberg
. Los Agnelli cierran la venta de Cushman & Wakefield a DTZ
EXOR, one of Europe’s leading listed investment companies -controlled by the Agnelli Family and with a NAV (Net Asset Value) of $14 billion–, has this month closed the sale of its entire shareholding in Cushman & Wakefield to DTZ, a company owned by an investor group composed of TPG, PAG and OTPP.
Cushman & Wakefield and DTZ will now merge to create one of the world’s largest real estate services companies in a transaction that establishes a total enterprise value for Cushman & Wakefield of $2.042 billion. The deal generates net proceeds of $ 1.278 billion in respect of EXOR’s 75% shareholding in Cushman & Wakefield, representing a capital gain for EXOR of approximately $ 722 million.
DTZ owners, TPG Capital, PAG Asia Capital and Ontario Teachers’ Pension Plan, have made clear their commitment to investing in the combined company’s future growth as well as retaining and capitalising upon Cushman & Wakefield’s outstanding senior management and brokerage talent.
Under the leadership of Cushman & Wakefield CEO, Ed Forst, in 2014 the company delivered record results in terms of revenues and margins, with commissions and service fee revenues of $2.1 billion, Adjusted EBITDA of $175.4 million and an Adjusted EBITDA margin of 8.4%. When EXOR acquired its controlling stake in Cushman & Wakefield in March 2007, commissions and service fee revenues were $1.5 billion, EBITDA stood at $116 million and the firm’s EBITDA margin was 7.6%.
Commenting on the transaction, John Elkann, Chairman and Chief Executive Officer of EXOR, said upon announcement of agreement on May 11th: “We are proud to have enabled Cushman & Wakefield build on its strengths, in the face of very challenging markets, to become the great business it is today. Our belief in the Cushman & Wakefield brand and our confidence in the outstanding professionalism of its people have been rewarded not only in the record performance delivered by Ed and the management team in 2014 but also in the ambition they have demonstrated to take the business into a new era of growth and development.”
Foto: Bert Kaufmann
. Pioneer Investments ficha a John Black para dirigir el Desarrollo de Negocio Institucional en EE.UU.
Pioneer Investments announced that it has named John Black as Senior Vice President, Institutional Business Development Officer in the U.S. based in Boston. This is a new position.
“We’re building strong momentum in our institutional business and John will further strengthen our team,” said Bill Porter, Senior Vice President and Head of Institutional – North America. “We’re seeing increasing acceptance of our capabilities in the institutional market across a range of strategies. John has more than 20 years of experience within various segments of the institutional market and has developed a number of strong relationships over the course of his career that will be a welcome addition to Pioneer,” Porter added.
John is Pioneer’s second senior institutional sales hire this year. Michael Dirstine, who also has 20 years of experience in the institutional market, joined Pioneer in June.
Prior to joining Pioneer Investments, John was Senior Vice President, Institutional Sales at McKenzie Investments Corp. in Toronto, Ontario,where he worked closely with Consultant Relations to prioritize U.S. prospects and execute sales strategies. Prior to that, John was Vice President of Institutional Sales at State Street Global Advisors in Boston from 2007 to 2013 and Vice President of Institutional Brokerage Sales from 2004 to 2007. Before State Street, John was Vice President of Institutional Sales, Securities Lending and Prime Brokerage at Goldman Sachs in Boston and New York from 1997 to 2004. John holds a B.A. in Economics from Colby College. He is series 7 and 63 licensed.
Photo: Michelle Bachelet / Courtesy photo. Credit Quality in Chile Poised to Withstand Slow Economic Growth and Weak Commodity Prices
Chile’s (Aa3 stable) strong macroeconomic fundamentals, the sound credit fundamentals of its banks, and the market positions and access to funding for its rated non-financial companies will help the sovereign maintain its credit quality despite slowing growth stemming from domestic factors and a drop in global commodities prices, says Moody’s Investors Service.
Chile derives its fiscal strength, which ranks among the strongest of all sovereign issuers that Moody’s rates globally, from its low debt metrics and policy stability, according to the report “Credit Quality in Chile: Banking, Corporate Sectors Poised to Withstand Slow Growth, Policy Shifts.”
Contrary to market concerns, none of Chilean President Michelle Bachelet’s proposed policy changes appear likely to affect Chile’s main debt metrics, nor is the administration changing the country’s key macroeconomic and fiscal policies. The president has pursued an aggressive agenda including new taxes, changes to the education system, and possibly constitutional reform later in 2015, and both the pace and nature of the reforms have raised questions about a possible shift in Chile’s longstanding fiscal policy. Nevertheless, Chile’s growth through mid-2016 will be close to the median among its regional peers, with a low debt burden and among the strongest fiscal positions of any rated sovereign issuer worldwide. The administration believes the tax reform will increase government revenues by 2%-3% of GDP by 2018.
“While the record-low approval ratings of President Michelle Bachelet and her aggressive reform agenda threaten to upend the political stability that has dominated since Chile returned to democracy in 1989, neither will cause Chile’s debt burden to increase during President Bachelet’s term,” says Marianna Waltz, a Moody’s Managing Director. “Most of the proposed changes would be funded by increasing tax revenues, a credit benefit because it will not raise the country’s debt burden.”
Credit quality still fundamentally strong for Chile’s banks
The credit quality of Chile’s banks remains similarly strong as a result of their ample access to funding. The banks are increasingly using the local capital market to support loan growth.
Chile’s banks continue to exhibit sound credit fundamentals despite the country’s maturing investment cycle and softer domestic demand, as well as uncertainty caused by the new government’s reform agenda. Emerging political issues appear unlikely to have any direct effects on the performance of Chile’s banking system. While asset quality will likely deteriorate slightly amid economic uncertainty, the country’s banks have access to ample funding today.
“Delinquencies will rise slightly amid slow economic growth, but proactive management of credit growth, asset allocation and reserves will help limit problems with asset quality,” says Waltz. Chilean banks will continue to enjoy ample access to funding sources as the economy begins to strengthen.
Reforms and weak commodity prices reduce consumption and investments
Furthermore, Chile’s rated non-financial companies all have strong market positions and access to uncommitted local bank funding, and will maintain their good access to international sources, even if reduced investment makes it less necessary.
Chile’s slowing growth will strain profitability and demand through at least mid-2016 for domestic retailers, which rely on consumption, and weak commodities prices and rising production costs will constrain profitability for copper producer CODELCO in Chile’s crucial mining sector. But operating income for pulp producers Arauco and Inversiones CMPC will improve through at least mid-2016, partly from the peso’s depreciation and partly from increased volume from recent capacity additions and higher hardwood pulp prices.
Moody’s expects GDP growth to improve in 2015-16 despite the challenges of weaker investment this year.
Pixabay CC0 Public Domain. La industria de hedge funds se replantea su tradicional sistema de cobro de tarifas
AIMA’s flagship event will return on Thursday, September 24th to the City of London’s Guildhall. With around 400 delegates, the event is one of the biggest hedge fund industry events of the year. It draws an audience of hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting services and investors, with attendees typically from more than 20 countries worldwide.
The format of the event comprises keynote speeches, panels discussions and an evening drinks reception. The event takes place under the Chatham House rule. A gala dinner for speakers, sponsors and other VIP guests is held on the evening before the Conference.
Speakers at the AIMA Annual Conference comprise senior representatives of hedge fund firms, policymakers and regulators.
To learn more about the AIMA Annual Conference, please contact AIMA’s Head of Events, Deborah Babbage.
Foto: Frank Lindecke
. ¿En qué 5 países habrá mayor transferencia de riqueza en los próximos 30 años?
Half of the world’s UHNW individuals with assets of at least US$30 million are expected to pass on their wealth in the next 30 years.This means that at least $16 trillion of wealth will be transferred to the next generation globally, marking the largest wealth transfer in history: In the next 10 years, a total of $4.1 trillion. In the next 20, the amount will reach 9.2 trillion. And in 30 years time, it will exceed the $16 trillion figure.
Where will it happen? According to the Wealth-X and NFP Family Wealth Transfers Report, The United States, with an expectation of over $6 trillion transfer hits the top position. Germany and Japan, with over $1.6 trillion each, United Kingdom, with $830 billion, and Brazil, with $560 billion, complete the top five.
“North America’s $6,350 billion of wealth expected to be handed down in the next 30 years represents 40% of the global total. In terms of global UHNW wealth, North America holds 35% of the total; this slightly higher amount being passed down to the next generation reflects the fact that North America’s UHNW population is older”, the report explains.
In Europe, things are different since it already has a higher proportion of inherited wealth -45% compared to only 25% in North America-, meaning that a large portion of wealth has already been transferred to the new generation.
The firms expect Asia´s UHNW population and wealth to become the largest in the world in the next 20 years. But the wealth creation is this region is so recent that there is not a big need to transfer yet. “Whilst we expect Asia to be at the center of wealth creation in the coming decades, it will still take a long time for the impact of this to affect wealth transfers to the next generation in the region”, the report says.
If we take a look at the countries with largest expected wealth transfers as proportion of UHNW wealth in the next 30 Years, we find that Malaysia, Taiwan, France, Japan and Brazil lead the ranking. The explanation offered by the Wealth-X and NFP Family Wealth Transfers Report for the presence of three Asian countries in the top five –with over or almost 70% of their wealth to be transferred- is that “in each of these countries some of the wealthiest billionaires are already in their 70s or 80s, and this has a disproportionate impact on the whole country.”
The latest Preqin research into infrastructure investment has found that the average deal size has risen 56% between 2013 and 2015 YTD. Transactions completed in 2013 had an average size of $401mn, compared to $626mn for deals done so far in 2015. The number of deals taking place each year has fallen notably in three years, from 1,056 in 2013 to just 325 so far in 2015. This comes alongside news that the majority of infrastructure investors now list valuations as their primary concern for the infrastructure market. Following a recent survey by Preqin, the proportion of investors concerned about current valuations of investments has risen from 13% in H1 2014 to 56% in H2 2015.
Average deal sizes in all geographic regions have hit record highs in 2015. In particular, deal size is up 42% in Europe and 13% in North America versus 2014. And, although average deal size has risen, aggregate deal value is not projected to meet 2014 levels by year-end. Estimated aggregate deal value reached $435bn in 2014, yet the aggregate deal value for 2015 YTD is only $204bn.
“Average infrastructure deal sizes have reached all-time highs so far in 2015, experiencing significant increases since 2013. However, this growth has not been completely linear across the industry. Transactions in the more developed infrastructure markets of North America and Europe have seen the largest increases in average deal value. Furthermore, the appetite for the favourable characteristics of brownfield sites among investors has driven prices for these assets up at a faster rate than infrastructure at both the greenfield and secondary stages. What worries investors is that capital committed now may not deliver the strong, stable returns to which they have become accustomed. Only time will tell whether large asset prices will have an effect on the overall performance of unlisted infrastructure funds currently investing capital”, comments Andrew Moylan, Head of Real Assets Products – Preqin.
Among other findings, according to Preqin, transport, telecoms and energy deals have all seen notable rises in average deal size over the past year, with the average transport deal size for 2015 YTD reaching $889mn, a 32% increase compared to 2014.
Since 2010, greenfield and secondary stage projects have seen average deal sizes rise by approximately 70%, while brownfield deals have increased by 148% in size. Since 2014, the average deal size for brownfield sites has increased by 35%.
Following valuations being named as the key issue for the infrastructure market by 56% of investors at present, 43% of respondents stated deal flow was a significant issue and 30% named performance.
The European funds industry faced estimated net outflows of €11.1 bn from long-term mutual funds for June. That said, mixed- asset funds enjoyed opposite flows with estimated net inflows of €12.1 bn during the month, followed by real estate products with €0.2 bn and commodity funds with €0.03 bn. However, bond funds faced estimated net outflows of €17.5 bn, bettered by equity funds (- €2.5 bn), alternative/hedge products (-€2.1 bn), and ”other” funds (-€1.3 bn). These flows added up to estimated net outflows of €11.1 bn from long-term investment funds for June.
“Despite these flows for June, the European investment industry enjoyed outstanding estimated net inflows of €296.5 bn into long-term investment funds for the first six months of 2015”, said Detlef Glow, Head of EMEA research.
Even money market products, an asset class that can be seen as a safe haven, faced massive outflows (-€34.7 bn) for June. Despite these outflows, money market funds still showed net inflows of €1.2 bn for the first half of 2015.
The flows for the money market segment brought the overall net flows for June to minus €45.8 bn and to a positive €297.8 bn for the first six months of the year.
The single fund market with the highest net inflows for June was Luxembourg (+€7.9 bn), followed by Switzerland (+€0.7 bn) and Denmark (+€0.2 bn). France (-€25.7 bn), Ireland (-€10.2 bn), and Italy (-€8.1 bn) stood on the other side.
Mixed-Asset EUR Flexible-Global (+€4.2 bn) was the best selling sector among the long- term funds, followed by Mixed-Asset EUR Conservative-Global (+€3.3 bn), Mixed-Asset EUR Balanced-Global (+€2.7 bn), and Equity Japan (+€1.9 bn) as well as Equity Eurozone (+€1.2 bn). At the other end of the spectrum Bond EUR suffered net outflows (-€5.0 bn), bettered somewhat by Absolute Return EUR (-€5.0 bn) and Bond EUR Corporates (-€3.5 bn) as well as Bond EMU Government (-€2.5 bn) and Equity Asia Pacific ex-Japan (-€2.3 bn).
Commerzbank has been authorized by the Brazilian Central Bank to set up a subsidiary in Sao Paulo. It is now expected that business operations for the target group of small and medium-sized enterprises as well as major and capital market companies will be launched in the first quarter of 2016, according to PR Newswire.
“Even though the growth momentum in Brazil has slowed recently, the country still remains the seventh largest economy in the world and is by far the most important economy in Latin America and thus a major economic partner for Germany and Europe. Even in times of volatile markets, it is important for our Mittelstandsbank, the market leader in Germany for SMEs, to have a local presence to support our customers outside Germany,” says Bernd Laber, Divisional Board Member International of the Corporate Banking segment (“Mittelstandsbank”).
Harald Lipkau will take on the position of General Manager of Commerzbank in Brazil. A native of Brazil, he started his career in his home country and, after progressing through various positions, was most recently responsible within Commerzbank for financial institutions in Asia.
Around 1,400 German companies are currently represented in Brazil, of which approximately 900 are located in the metropolitan area of Sao Paulo. The majority of these companies are already customers of Commerzbank in Germany. It is now planned to serve their local units through the new Commerzbank subsidiary in Sao Paulo. A total of around 50 staff will be available locally for these customers.
Commerzbank plans to offer its comprehensive range of corporate and investment banking services in Brazil. Commerzbank will serve European companies operating in Brazil, and also provide support for international companies aiming to do business in Europe.
Foto: juantiagues
. Los hedge funds captaron 76.000 millones hasta junio
The global hedge fund industry has seen a $76bn net inflow of assets through the first half of 2015, bringing the size of the industry to $3.22tn. The second quarter saw the greater amount of inflows from investors, with $48bn in Q2 compared to $29bn in first quarter. Single-manager hedge funds specifically saw net inflows of $52bn in Q2, three times as much as the $18bn net inflow of assets they recorded in the first quarter. CTAs, on the other hand, had a net outflow of $5bn in the second quarter, eroding the $11bn growth they had seen in Q1.
49% of multi-strategy funds saw net inflows in Q2, the highest proportion of all major hedge fund strategies. Conversely, only 29% of niche strategy funds saw net inflows, with 65% of funds in these niche strategies witnessing outflows.
Funds based in North America, Europe, and Asia-Pacific all had similar asset flows in Q2, with 41-44% of funds seeing inflows, and 38-39% seeing outflows. In contrast, funds based outside these regions had net inflows in only 33% of cases, while 62% of funds had outflows.
43%of all hedge funds have seen an increase in allocation from North American investors, and 20% have seen increases from Asia-based investors. Conversely, 14% of funds with Europe-based investors saw decreases from that group, the highest of any region.
60% of hedge funds with more than $500mn in assets under management had net inflows in Q2, almost twice the proportion that saw net outflows. Only 38% of funds worth less than $100mn grew in the quarter, with net outflows experienced by 43% of funds in this group.
57% of hedge fund managers reported increased allocations from high-net-worth individuals (HNWIs) and family offices respectively during H1 2015
Amy Bensted–Head of Hedge Fund Products at Preqin comments:“Despite recent Preqin research indicating that investors are growing impatient with the returns of hedge funds, the industry has continued to accumulate assets in the first half of the year. Hedge funds now manage over $3.2tn in assets, amassing net inflows of more than $76bn in the first six months of 2015. The largest funds continue to see the highest inflows, with approximately 60% of funds with more than $500mn in assets gaining net inflows in Q2 2015.
The growth of the hedge fund sector highlights the continued need for these products by institutional investors, despite any short-term concerns around performance and fees. In light of recent equity market turbulence, the ability of hedge funds to provide consistent and non-correlated returns may prove even more valuable to investors in the second half of the year and we could see continued inflows over the rest of 2015.”
