After a weekend of long and often very bad-tempered discussions within the Eurogroup, the leaders of the eurozone have finally agreed to offer Greece a third bailout, with the European Commission confirming that Greece will benefit from c.€86 billion of financing over the next three years.
Assuming the steps required in the coming days are met, the immediate bankruptcy of the Greek government has been avoided, and the country will remain within the eurozone. However, the terms of the deal look to be very tough, and the deal will be seen as a humiliation by many Greeks. Given that the ruling Syriza party was elected on an anti-austerity mandate, and that voters rejected a much weaker reform package in the referendum, political upheaval in Greece may now follow. Moreover, there is no debt forgiveness or debt write-offs for Greece, meaning that total Greek debt-to-GDP levels will remain unsustainably high.
The key points of the deal are as follows:
Greece will receive some €86bn in bailout funds.
Before legal negotiations can take place, the Greek parliament must approve a range of significant reforms affecting VAT and the tax base, pensions and other areas of the economy. The EU would like the reforms to be approved by the Greek parliament this Wednesday (15 July). This unusual approach is a response to the complete breakdown of trust between the Greek government and their European partners.
Certain eurozone national parliaments (most pertinently Germany) will then need to give the go ahead before formal negotiations can begin over the specifics of the new bailout program. This could, in theory, be done by the end of the week, although this may prove to be easier said than done.
A €50bn asset fund will be created, chiefly to make sure that privatization commitments are kept. This will be run by Greece but supervised by Europe. Half of this fund will be used to recapitalize the Greek banks.
The European Stability Mechanism (ESM) will provide an immediate €10bn to recapitalize Greek banks, which are close to collapse.
A ‘haircut’ or reduction of Greek debts will not be offered – i.e. there will be no ‘debt forgiveness’ which the German chancellor Angela Merkel has said is ‘out of the question’. Greece’s debts might be restructured to make repayment a little easier (e.g. by extending maturity), but only after Greece has introduced all of its promised reforms.
What happens if the bailout is not approved by the Greek parliament?
Prior to the deal being announced, the Eurogroup had warned Greece that its failure to enact reforms would result in the suspension of Greece’s membership of the euro. In the event of suspension, the exact length of the ‘time out’ was not specified, but comments from the German finance ministry suggest it could have been as long as five years. However, this triggered further tension between the eurozone member states, with France’s President Hollande saying that a temporary exit from the euro area was not an option, and that the issue at stake was not simply whether Greece stayed in or out of the euro but ‘our conception of Europe’. President Hollande was supported by the Italian PM Matteo Renzi, while Germany continued to emphasise its refusal to do a deal ‘at any price’.
Wider implications
The key focus in the short term will surround the navigation of the immediate hurdles (Greek parliamentary approval, then German parliamentary approval) and how long the banking sector can continue to provide cash to Greek citizens while emergency loans from the ECB remain frozen. All of these situations are urgent and any hold-up would increase significantly the risk of a messy Grexit scenario. In the bigger picture, in agreeing to support this bailout process, Alexis Tsipras has effectively reneged on all of his party’s pre-election commitments and handed sovereignty for domestic policy to Europe. This comes at a time when the economic situation is likely to deteriorate further in part thanks to the newly-prescribed austerity that he was so vehemently against. Against this backdrop, while the short-run risks of Grexit have declined, the risk that the Greek population begin to question the merits of euro membership must surely be increasing.
The implication for markets has been unclear through much of this saga, as investors have found it difficult to assess the direct costs or benefits of the different scenarios. Following months of indecision and reasons to be cautious, it is perhaps unsurprising to see a stark positive reaction to what is a ‘deal’ full of pitfalls and contradictions. The bigger picture message is perhaps for citizens of Europe who might want to re-negotiate the status quo with the establishment. From a position of weakness before, Greece’s economy now lies in tatters once again, facing the prospect of more austerity and outside control. For sure, Tsipras’ management of the situation could be called into question, but any budding protest parties elsewhere will think twice before taking on the elite.
Opinion column by Martin Harvey, Fund Manager at Columbia Threadneedle
. Mark Mobius dejará de ser el portfolio manager de referencia del Templeton Emerging Markets Investment Trust a partir del 1 de octubre
Mark Mobius will be replaced by Carlos Hardenberg as lead portfolio manager of the Templeton Emerging Markets investment trust on October 1st.
Mobius, executive chairman of Templeton Emerging Markets Group, has been leading the trust since its launch in June 1989. He will remain a portfolio manager on the team, the trust explained in a statement.
Hardenberg will relocate to London. Having joined the firm in 2002, he is senior vice president and managing director of Templeton Emerging Markets group.
Hardenberg will be supported by Chetan Sehgal, director of the small cap strategy, who will remain a senior research analyst. Mobius will continue to lead the 52 person Templeton Emerging Markets group and will remain “fully engaged in the team’s research and investment activities.”
Peter Smith, chairman of Temit, said : “Under the Templeton Emerging Markets Group, Temit has grown to be the largest emerging market investment trust in the AIC Investment Trust – Global Emerging Markets sector, with assets under management of £1.9bn.
“We believe that the appointment of Carlos Hardenberg as lead portfolio manager, supported by Mark Mobius and Chetan Sehgal, will provide renewed focus for the next stage in the company’s development.”
Research from Standard Life Investments suggests that the biggest threat to the global economy is currently China. In the latest edition of Global Outlook, Standard Life Investments investigates what is driving China’s growth slow-down and looks beyond simple GDP figures.
Jeremy Lawson, Chief Economist, Standard Life Investments, said:“China is seeing its slowest rate of economic growth since the financial crisis, along with rapidly declining commodity prices, falling export trade and a dramatic deterioration in nominal activity. However, the epicentres of China’s economic problems are the industrial and property sectors.
“Growth of industrial output has declined from 14% in 2011 to around 6% in 2015, whilst industrial electricity consumption is in outright decline. China’s trade with the outside world is falling, and real estate investment – the primary engine of growth until last year – is going through a prolonged slump.
“The main components of activity preventing a deeper downturn are: private spending on financial services, government-led spending on transport infrastructure, retail sales and services-led electricity consumption. This suggests that China has begun the rebalancing towards a more sustainable, consumption-led growth model – although it’s too early to claim success.
“A hard landing in China would obviously be a large negative shock for the global economy, representing as it does 12% of global GDP and 18% of global manufacturing exports. Some countries stand to lose the most from any failure of China to stabilise growth. On the commodities front, countries like Australia, Brazil, Canada, Chile and Peru stand out. In manufacturing – Hong Kong, Korea, Malaysia, Singapore and Taiwan are most exposed. Whilst developed economies like Germany export a sizable amount of capital goods to China.
“There is good news – our research shows that most of the emerging markets are in a much better position to withstand external shocks than they were in the 1990, thanks to improved fiscal and monetary frameworks.
“Overall, the government has stepped up the pace of structural reforms – liberalising the financial system, cracking down on corruption and loosening fiscal policy, albeit in a targeted way. As a result we expect there to be modest success in boosting GDP although the longer-term glide path is towards slower growth.”
CC-BY-SA-2.0, FlickrFoto: Koshirokun, Flickr, Creative Commons. Las mayores oportunidades para el negocio de wealth management están en EE.UU.
The global wealth management industry had a solid business year in 2014 in terms of financial results for the operating model. In spite of financial market uncertainties and currency volatility most lead players experienced overall growth in client volumes. However, the latest KPI growth rates came off the higher ratios in the previous reporting year. The financial year also heralded a landmark breakthrough for two operators – UBS and Morgan Stanley – as their assets under management (AUM) figures surged beyond USD2 trillion (Figure 1).
According to The Global Private Banking Benchmark 2015 released from Scorpio Partnership, AUM for the over 200 industry players annually assessed moved upward by an average 3.4% and operating profits also improved by an average of 3.3%. However, these solid figures are tempered by continued pressure on the operating efficiency measured by cost-income ratios. In the latest report the industry average rose 90 basis points to 84.4% (Figure 2).
“This is a complex moment in the history of our industry. The operating model is facing major growing pains to accomodate the expectations of financial groups for wealth management divisions to deliver sustained high margin results. The good news is client volumes and demand for wealth services are strengthening for many. But the bad news is the industry is still tackling major compression factors in terms of costs versus income. Some are not moving quickly enough with rates of growth slowing,” said Sebastian Dovey, managing partner of Scorpio Partnership.
Based on analysis of reported financials from over 200 wealth management business lines across the globe, this year’s worldwide ranking saw few changes among the top cohort. Aside from UBS and Morgan Stanley breaking through the USD2trn barrier, the majority of the market leaders remained in stasis.
A number of firms – mostly headquartered in Europe – have been adversely affected by the currency performance of the Euro. The most notable step change was posted for BMO Financial Group based on an effective acquisition strategy during the year in review. Meanwhile, based on growth projections it is likely that Bank of America Merrill Lynch will pass the USD2trn hurdle in the coming 12 months.
“Looking ahead, in the intensively competitive market it will be the details that make the margin of difference. The winners will be those that pay the most detailed attention to the optimised commercialisation of the client journey and benchmarking this among peers. Aside from the annual benchmarking, our unique collation of HNW and UHNW client satisfaction ratings of firms identifies who is leading in this context,” added Scorpio Partnership’s Dovey.
Market share of wealth assets dominated by a select few
Now in its 14th year, the influential annual Scorpio Partnership Private Banking Benchmark, estimates that the global industry now manages USD20.6 trillion in investable assets on behalf of high net worth investors. Amid this total industry AUM data point, the market share concentration among the largest houses is significant. The top 10 global operators in AUM terms collectively manage 47.1% of the market (Figure 3). UBS holds a 9.9% industry share.
The US operators continue to dominate the market share ratios driven largely by their domestic franchises. According to various industry estimates the US remains the largest market of opportunity for HNW business. Equally, the scale of the market opportunity is also reflected in the strong growth in AUM posted by US operators. The 10 leading firms are registering an average AUM growth ratio of 7.1% – over twice the global average (Figure 4).
Paris-based DNCA Finance, which has recently become a Natixis’ boutique, rebrands itself as DNCA Investments, celebrating 15 years of existence.
This change aims to improve the visibility of the firm towards international investors as it is now set to speed up its development both on retail and institutional businesses by using Natixis’ global distribution platform. “In order to expand internationally DNCA decided to slightly adapt “its signature” and make it sound more global. The name of the legal entity remains DNCA Finance but the marketing brand becomes DNCA Investments, that way it resonates globally”, the company says to Funds Society.
DNCA Investments intends to enter new markets, including Spain, and to expand its presence in existing markets such as Germany, Switzerland, USA Offshore and Latin America.
DNCA Investments, which has expertise in European equities, manages €16.5bn in assets as at June 2015.
Foto: Nothing is impossible for a willing heart, Flickr, Creative Commons.. Radiografía del sector tecnológico en Asia
China’s stock market crash must act as a wake-up call for investors to urgently reassess their portfolios, warns the chief executive of one of the world’s largest independent financial advisory organizations. Nigel Green, the founder and CEO of deVere Group, is speaking out as the China stock market’s downward spiral enters its third week, with share prices losing 30 per cent of their value since the middle of June.
Mr Green observes: “Much of the world’s attention is on Greece right now. Whilst it is right that investors keep a close eye on the Greek saga, one eye must remain firmly on the burgeoning crisis in China.
“With the Chinese stock market losing a third of its value since mid June, which is about equivalent to the UK’s entire economic output last year, or in other terms the GDP of Greece every two days for the last 10 days, this has all the makings of morphing into a major financial crisis.
“China’s government and regulators appear to be pulling out all the stops to support share prices – including a defacto suspension of new listings and interest rates being cut to new record lows – although investors seem to be unconvinced that this will help.
“Despite few foreign investors having much exposure to the Chinese stock markets, the meltdown matters.
“Indeed, it is hugely significant because it will send shock waves throughout global capital markets, not least because China is the world’s second largest economy and one of the largest consumers of commodities and other goods sold by other countries.
“As such, China, not Greece, is arguably the main cause for concern for investors right now.”
Mr Green continues: “Bearing in mind the potentially enormous fallout of China’s plunging markets, I would urge investors to urgently reassess their portfolios to ensure they are appropriately diversified.
“Investors with the most diversified portfolios stand to lose the least. Geopolitical events like this highlight once again the need for multi asset investing, across regions and asset classes, as a way of reducing the adverse consequences of such events.”
He adds: “Failure to diversify a portfolio is widely regarded as one of the most common investment pitfalls – and history teaches us that diversification in these times of rising market volatility is even more essential as the tides can change quickly. Spreading your money around is a vital tool to manage risk.”
CC-BY-SA-2.0, FlickrFoto: Aedo Pulltrone, Flickr, Creative Commons. Hector Sants sustituye a Gian A. Rossi como presidente de Julius Baer London
Sir Hector Sants has joined Julius Baer International Limited as chairman -effective 1 July 2015-.
Sants succeeds Gian A. Rossi, head Northern, Central and Eastern Europe and member of the Executive Board of Bank Julius Baer & Co. Ltd., who will step down as Chairman after nine years but will remain actively involved with the firm’s business in the UK.
Sants worked at the Financial Services Authority (FSA) as Chief Executive Officer from 2007 to 2012 joining from Credit Suisse First Boston where he had been Chief Executive Officer for Europe, Middle East and Africa. After leaving Barclays Bank in November 2013, Sir Hector has been chairing the Archbishop of Canterbury’s taskforce on promoting responsible savings and credit and advising Abu Dhabi Global Market. From 1 July 2015 Sir Hector also is working as Vice Chairman and Partner at Oliver Wyman.
“It is a great honour to welcome Sir Hector to Julius Baer. With his appointment we continue to demonstrate our ongoing commitment to the UK, and I am sure that we will benefit greatly from his long-standing experience in the financial services industry,” said Gian A. Rossi.
CC-BY-SA-2.0, FlickrBill Gross volverá a trabajar con uno de los fundadores de Kapstream Capital, con el que coincidió en PIMCO durante 10 años.. Janus Capital compra el 51% de la gestora australiana de renta fija flexible Kapstream
Janus Capital Group Inc. has announced and closed the acquisition of a majority interest in Kapstream Capital Pty Limited, a global unconstrained fixed income asset manager with USD$6.6 billion in assets under management as of March 31, 2015. With this transaction, the total Janus Global Macro Fixed Income assets under management would be USD$8.7 billion as of March 31, 2015. The transaction includes an initial upfront cash consideration of approximately USD $85 million. Janus Capital has the option to purchase the remaining 49% interest in the future.
“This transaction underscores three key commitments at Janus,” said Dick Weil, Chief Executive Officer of Janus Capital. “First, we want to be the place where great investors come to invest. Kapstream’s Kumar Palghat, Steve Goldman and Nick Maroutsos are simply great people and great investors. Second, we passionately believe that given volatility in global rates, investors need excellent fixed income choices that offer less exposure to interest rate risk. Third, the acquisition of Kapstream furthers our commitment to expand our fixed income capabilities as part of the firm’s intelligent diversification strategy. Kapstream has a rapidly growing business in one of the world’s best asset management markets. In addition, this transaction will reinforce our efforts to build a global macro fixed income team offering best-in-class global unconstrained bond strategies.”
Fixed income veterans Kumar Palghat and Nick Maroutsos founded Kapstream in 2006. Kapstream is one of the pioneers in managing global unconstrained fixed income. Gross, Weil and Palghat worked together at Pacific Investment Management Company for 10 years. The Global Macro Fixed Income team will remain a separate, autonomous and distinct capability from the Fundamental Fixed Income team. Janus is firmly committed to supporting and investing in both its Global Macro and Fundamental Fixed Income platforms, which offer highly complementary strategies.
Bill Gross, who joined Janus in September 2014, will remain the primary portfolio manager of the Janus Global Unconstrained Bond strategy, with Palghat supporting him as co-portfolio manager. Palghat will remain portfolio manager of the Kapstream Absolute Return Income Fund, and Goldman will assume a greater leadership role in managing Kapstream’s strategies. The strategies for both will not change. The combined Janus Global Macro Fixed Income team (comprised of 15 professionals following the completion of the transaction) will operate jointly from Kapstream’s existing base in Sydney, Australia, and Janus’ Newport Beach, California, office.
“We are delighted to offer our clients the highest level of macro fixed income investment expertise with Bill Gross, Kumar Palghat and the highly sophisticated professionals that make up the Kapstream team,” Weil said. “Combining the success and experience of Kapstream’s unconstrained fixed income business with Bill’s reputation as one of the world’s most successful fixed income investors creates a powerful opportunity for our clients and for Janus Capital.”
Kapstream’s unconstrained bond business in Australia will continue in essentially its current form. The flagship Kapstream Absolute Return Income Fund has delivered consistent, positive returns over the one-, three- and five-year periods ending March 31, 2015 (net of fees).
“I look forward to working with my old colleague, Kumar Palghat and the rest of the Kapstream team as we deliver value for our clients,” said Bill Gross, Portfolio Manager of the Janus Global Unconstrained Bond strategy.
“While our U.S. expansion plans began in 2013 with Kapstream’s Newport Beach, California, office opening, the opportunity to work with Bill again and create a truly global team, was not one we could pass up. Our combination brings a number of advantages, primarily giving our existing clients the benefit of additional input from Bill, one of the most highly regarded fixed income portfolio managers in the world, enabling us to deliver more value to our client portfolios,” Palghat said.
CC-BY-SA-2.0, FlickrIleana Salas será la responsable de mantener las relaciones en mercados clave de Europa y LatAm y del desarrollo de nuevos mercados. Foto cedida. Ileana Salas: nueva responsable global de Ventas Institucionales de Santander AM
Santander Asset Management (SAM) has appointed Ileana Salas as Global Head of Institutional Sales, as the business looks to further develop its institutional capabilities globally.
Based in London, Ileana will be responsible for building and leading SAM’s global institutional sales capability, and introducing SAM to new markets, whilst leveraging its large and long standing presence in key countries in Europe and Latin America, including the UK, Spain, Portugal, Germany, Mexico, Brazil and Chile. Ileana will also lead the development of SAM’s key relationships with Sovereign Wealth Funds, Pension Plans, Investment Consultants, Corporates, Insurers, Wholesale clients and Family Offices.
Ileana joins SAM from Bradesco Asset Management where she served as Head of Business Development and Sales for Europe and the Middle East for over four years. Prior to this, Ileana held senior business development roles at ABN Amro, Gartmore Investment Management, and Schroders. Ileana holds an MBA from Babson College.
Juan Alcaraz, Santander Asset Management Global CEO, said: “Developing our institutional business globally is a core part of our strategic growth plans, and reflects our overall ambitions to be a global leading provider of investment solutions to clients”.
“With over 20 years experience in institutional sales, Ileana has a long and strong track record of success in developing and building institutional businesses and leading global distribution teams. She is a strong addition to our senior leadership team and Executive Committee. We look forward to working with her to drive our institutional business forward, and supporting our overall growth ambitions”.
Foto: OTA Photos. Beamonte Investments México invertirá en Master Kiwi
Beamonte Investments, along with its affiliate, Beamonte Mexico Holdings SAPI de CV (“Beamonte”), has announced their investment inOrigin Bit SAPI de CV (“Master Kiwi”), an innovative platform that simplifies video game creation for designers and helps with marketing campaigns. The transaction is scheduled to close during the summer and the value was not disclosed.
Master Kiwi is the winner of the first Venture Academy in Mexico. Venture Academy in an intensive boot camp divided in six modules, including Management 101, Valuations, Term sheets, and Financing. The first Boot Camp was held in Mexico City May 27, 2015 to May 29, 2015. More than 45 entrepreneurs participated.
Claudia Yan of Venture Academy said “We are exited to be creating a platform where we can teach entrepreneurs like Alejandro and Master Kiwi and help them to develop the skills needed to raise institutional money. The first Boot camp was a tremendous success thanks to partners like Cinepolis, Posible, and Coopel.” The next Venture Academy boot camp will be held in late August in Monterrey, Mexico and will accommodate up to 50 entrepreneurs.
Master Kiwii was founded in February of this year by CEO Alejandro Hernandez, and has been incubated in class of 2014 by Wayra Mexico the accelerator of Telefonica, the company offers a platform with a wide catalog of pre-designed games where, through a visual, simple, and intuitive interface, it is possible to generate games in minutes aligned to the branding and image of a company potentiating the marketing campaigns.
Luis F. Trevino, Senior Managing Director at Beamonte Investments commented, “We are exited to invest in Master Kiwi and help them to grow the company to the next level. We see a huge potential in a platform like Master Kiwi that can create a video game in seconds
