Foto: Lies Thru a Lens. La directora de Negocio Institucional de AXA IM en Reino Unido ficha por MFS Investment Management
AXA Investment Managers Head of UK Institutional Madeline Forrester has left the firm and it set to join MFS Investment Management in a similar capacity, based in London, according to several media sources in the UK.
Forrester’s career includes extensive insurance asset management experience, starting at Threadneedle Asset Management where she spent 16 years prior to joining AXA IM in 2011. She was a leader in Threadneedle’s UK expansion as well as supporting the firm’s growth across EMEA and Australia.
Forrester also held fund manager and fixed income sales roles at JP Morgan and UBS, respectively.
Photo: Diego Delso. Advanced Capital Completes Purchase of Broker-dealer Lake Forest Securities
Advanced Capital Securities, a Latin American investment bank, has completed the purchase of Lake Forest Securities LLC, a Chicago-based broker-dealer, which specializes in high-grade corporate fixed income securities and municipal bonds. The sale, which was initially announced in April, received final approval on August 20th from FINRA, the Financial Industry Regulatory Authority. Lake Forest Securities will now operate under the name of AdCap Securities.
With the acquisition of Lake Forest, Miami-based Advanced Capital expands its U.S. client base and broadens its product offerings, as well as its research capabilities, for its international clients, primarily in Latin America. Advanced Capital has brokerage, capital markets and asset management operations in Argentina, Uruguay and Peru.
“The acquisition of Lake Forest, which operates in six States, not only expands our footprint in the United States,” said Daniel Canel, CEO of Advanced Capital Group, “but also deepens our expertise in the U.S. corporate and government bond markets, as well as our overall market intelligence. It’s another key piece in our regional capital markets strategy.” In February, Advanced Capital acquired Latmark Asset Management LLC, a boutique investment advisor based in Miami.
Advanced Capital is a regional investment bank that operates in the capital markets of both Latin America and the U.S. “The fact that Advanced Capital is headquartered in the United States, with execution capabilities in its equity and fixed income markets, provides our clients in Latin America a stamp of approval for our regulatory infrastructure and corporate governance,” said Gustavo Dominguez, CEO of AdCap Securities.
Lake Forest Securities, founded in 1998, operates in the U.S. Mid-West, specifically in Illinois, Ohio, Wisconsin and Michigan, as well as the southern States of Texas and Florida. The broker-dealer is primarily focused in high-grade corporate fixed income and municipal bonds, but also engages in equities trading, mutual funds and mortgages trading.
Regional Footprint
Lake Forest is a strategic addition to Advanced Capital’s international platform, which it has been building through acquisitions across the Americas. Following the acquisition of Latmark in February, the firm purchased Andes Securities SAB and Andes Securities SAFI, a leading brokerage firm and investment fund manager in Peru.
With established brokerage, asset management and investment banking talent and capabilities across Latin America and in the U.S., Advanced Capital has a regional footprint that allows it to offer investment opportunities to clients, as well as capital raising services for emerging companies in Latin America. “Our geographic diversification gives us unparalleled insight and access,” says CEO Canel. “The cross-fertilization and cross-border synergies that this generates is unmatched in our industry.”
When Prince Akeem, aka Eddie Murphy, came to America in the hit 1988 film, investment immigration opportunities for the wealthy could be challenging despite having deep pockets. As other countries began to make it easier for wealthy foreigners to immigrate, America started examining its policies and created the EB-5 program. The EB-5 visa for Immigrant Investors is a United States visa created by the Immigration Act of 1990.
America continues to be the “go-to” country for foreign individuals with high net worth who are seeking immigrationopportunities. Many countries have programs which allow individuals and families to immigrate based on financial commitments, but America’s program is slightly different. It has a two-step process.
Potential immigrants who have examined investmentimmigration opportunities, or “EB-5,” are also familiar with I-526 and I-829. The I-526 and I-829 are the forms, or applications, which investors complete during the EB-5 procedure.
The I-526 is submitted to the U.S. Citizenship and ImmigrationService (USCIS) for a green card which permits a two-year window of access to the country. When the 24 month “conditional” period is successfully completed, then the individual can file an I-829 which removes the conditions and grants the individual indefinite and permanent residency.
Currently, Chinese investors are dominating the EB-5 visa market with applicants from South Korea trailing far behind. However, InvestorVisa.ae reports record level of applications submitted by Middle East investors.
Previously, little has been documented about those that reached the second, or I-829, level in the process. Data released by the USCIS seem to show that Chinese applications are running at record levels. In fiscal year 2013, Chinese applicants totaled 49 percent of all I-829 applications stamped approved. The trip from the initial investment to permanent residency can be rocky for many potential immigrants looking at the EB-5 agenda.
Stages
To take part in the American plan, investors must be willing to invest a minimum of $1,000,000. If they are willing to invest in “target employment areas,” the amount of investment required is halved. An investment in a target employment area qualifies if a minimum of 10 jobs is created within the first twenty-four months and the investor must have invested in projects operated by USCIS approved centers.
To make it past the I-829 stage, the individual must document that their initial investment remains invested in the project as well as document the creation and continuation of the required jobs.
At the first stage, the I-526, the government normally gives approval based primarily on the business plan and projected costs. The I-829 stage requires the USCIS getting involved and confirming the job-creation requirement. Basically, approval requires that the investor be able to prove that the business plan was accomplished.
How Long Does It Take?
The permanent green card is not necessarily issued precisely after the I-526 has been approved. The two-year calendar only starts when the individual is actually admitted to America and not upon approval of the I-526.
Processing times and dates will vary based on investments and applications. Some individuals may be ready to head to America immediately after filing while others make take longer to complete the journey. The longer an individual waits before traveling to America, the longer the wait for the start of the two-year countdown.
Processing times for both I-526 and I-829 have changed as well. As immigration investment becomes more known and utilized, processing times have gone from several months to often over a year. The USCIS has reacted to this crunch by hiring and training more staff to process the application, but a wait time close to twelve months could still be often expected.
The Future
The number of investors has jumped from 1992 to 2008 according to the USCIS. One example is that of Chinese applicants. In 2008, Chinese applicants made up 13 percent of I-829 approvals. By 2011, that figure had jumped to 40 percent and, as of August, 2014, Chinese applicants account for 86 percent of approved I-829 applications.
Regardless of country-of-origin, every application has a family story behind it. The family wants to build its future in America and each puts their security and future at risk when beginning the process. The final stamp of approval on an I-829 application is a victory.
Photo: Pudelek (Marcin Szala). What Happened to Income Distribution and Poverty in Latin America?
Income distribution is a subject of interest to all. It recently gained renewed attention with the research that Thomas Piketty published in the book Capital in the Twenty-First Century. Although data limitations restricted Piketty’s work to a group of developed countries, the debate on the issue gained prominence worldwide, including in Latin America.
What happened to income distribution in Latin America? In order to answer this question, Itaú will use -in a new report by Gino Olivares and Ilan Goldfajn- the information available on the Socio-Economic Database for Latin America and the Caribbean (SEDLAC), a joint initiative of the Centro de Estudios Distributivos Laborales y Sociales (CEDLAS), Universidad Nacional de la Plata (Argentina) and the World Bank, compiling household surveys from 24 countries in the region. Currently, SEDLAC provides information for the period 1992-2012, as well as information for prior years for some countries. Their sample includes eight countries: Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, Peru and Uruguay, representing 80% of the region’s population and 86% of GDP.
Measures of income distribution
There are several ways to measure income distribution, all of them imperfect. To evaluate the evolution of inequality in Latin America, Itaú decided to use two indicators: the income share of the top 10% income-earners of the population and the Gini coefficient. The first one reflects the degree of income concentration held by the most affluent. The second one is the most widely used inequality metric. Below, they present the results obtained with the first of the abovementioned indicators.
Results using the income share of the top 10% income-earners of the population
Probably, the most common and intuitive way to assess inequality is to look at the share of income held by the most favored. In this case, Itaú evaluates the evolution of the income share held by the top 10% income-earners of the population. Chart 1 shows this income distribution indicator at two points in time: 2002 and 2012. The chart clearly shows that, for this period, there was general improvement in income distribution. The Latin American average, weighted by population, declined from 43.0% in 2002 to 29.8% in 2012. However, we also noticed that the decline in inequality was uneven: the initial conditions were differentamong countries, and the magnitude of the fall in inequality in each country was heterogeneous. Peru, Argentina and Uruguay posted the largest falls in our indicator of inequality, while Mexico posted the lowest drop.
This heterogeneity makes it interesting to analyze each case separately. Chart 2 shows the evolution of the income share of the top 10% income-earners in the population for the four countries (Argentina, Brazil, Chile and Mexico) for which we have information covering a longer horizon (1987-2012).
The distribution of income in Brazil became more concentrated between 1987 and 1992 and it has become increasingly less concentrated since then. The recovery is slow at first, but picks up in later years. Chile shows stability in the income distribution indicator between 1987and 2002, improvement between 2002 and 2007 and stability thereafter. The income distribution in Mexico became less concentrated between 1987 and 1992, remained stable between 1992 and 1997 and became more concentrated between 1997 and 2007, and stabilized again between 2007 and 2012. Finally, we see a very peculiar behavior of income distribution in Argentina. Starting from a less concentrated level, the income distribution indicator retreated (worsened) between 1992 and 2002 (particularly between 1997 and 2002), but started improving from then on, reaching a less concentrated income distribution in 2012 than that observed at the beginning of the period under review. Incidentally, this is a common feature for the four countries: in 2012, they all posted the best number in the period under review.
Chart 3 shows the evolution of the income share held by the top 10% income-earners in Colombia,Peru,Paraguay and Uruguay for the period 1997-2012. In Paraguay, inequality rose between 1997 and 2002. The trend reversed between 2002 and 2007, with inequality returning to the 1997 level and remaining stable since then. In Peru, income concentration increased slightly between 1997 and 2002, but from then on has shown significant and continued decline. In Colombia, the information is only available since 2002 and shows high inequality that decreases over time, but not enough to save the country from posting theworst performance.
Finally, Uruguay – the least unequal country in our sample – shows a trajectory of rising inequality between 1997 and 2007 followed by a sharp drop in the later period (2007-2012), reaching a lower level in 2012 than posted in 1997. Out of the four countries, three (Colombia, Peru and Uruguay) posted the lowest level of inequality for the analyzed period in 2012.
Summarizing our results, the eight countries in our sample posted falls in inequality. The trend becomes widespread only since the early years of the twenty-first century. Despite their improvement in income distribution, the four countries (Colombia, Brazil, Paraguay and Chile) that historically posted the worst indicators maintained that condition. At the other extreme, historically less unequal countries (Argentina and Uruguay) posted worsening inequality, but managed to reverse this situation, ending the period with inequality levels below those initially observed. Between these two groups, it is also worth highlighting the significant reduction in inequality in Peru. Finally, during the Global Financial Crisis (2007-2012) there was no worsening in inequality for our sample: inequality actually fell in six countries (Argentina, Brazil, Chile, Colombia, Peru and Uruguay) and remained stable in the other two (Mexico and Paraguay).
Another dimension: poverty
The analysis has shown so far the fall in the income held by the most favored in recent years and, consequently, improvement in income distribution. In order to complement the study this section focuses on the poor. Defining poverty is not a trivial matter. In this article Itaú applies SEDLAC’s definition, of inability to reach a certain minimum level of income, known as the poverty line. They used a poverty line defined at US$ 2.5 per day in purchasing-power parity (PPP), which, according to SEDLAC, coincides with the median of the official extreme poverty lines fixed by Latin American governments.
Chart 4 shows the percentage of the population below the poverty line for each country in the sample in 2002 and 2012. Again, they notice two characteristics that were also present in the results using the income share of the top 10% income-earners of the population: the fall in poverty is widespread, but heterogeneous. Argentina, Peru, Paraguay, Brazil and Colombia (in that order) posted the largest decline (in percentage points). The other three countries (Mexico, Chile and Uruguay) posted lower drops, but in the case of the latter two, from already very low levels.
As was the case in the study of the income share held by the top 10% income-earners, the heterogeneity observed in poverty makes it relevant to analyze the evolution of the indicator for each country. Chart 5 shows the evolution of the poverty indicator for the four countries (Argentina, Brazil, Chile and Mexico) for which there is information covering a longer horizon (1987-2012).
Chile is the country that posted the highest percentage (39.4%) of the population below the poverty line in 1987, but five years later, in 1992, this number had already been reduced to less than half of that. One possible explanation for this decline is the country’s strong economic growth. During this period, the country grew at an average annual rate of 8.3%. In later years, poverty continued to decline, reaching 2.9% by the end of the reviewed period.
Brazil showed an increase in the percentage of people in poverty between 1987 and 1992, but a considerable decrease in the following five years. Between 1997 and 2002, the decline in the percentage of people in poverty continued, but at a slower pace. The fall in poverty accelerated again in the following years.
Mexico shows the opposite behavior to Brazil between 1987 and 1997, falling between 1987 and 1992 and rising significantly between 1992 and 1997. The deterioration observed between 1992 and 1997 is likely related to the 1995 crisis, although it was completely reversed in the next five years. The decline continued in the following years, though at a slower pace. Between 2007 and 2012 the percentage of people in poverty remained fairly stable.
The evolution of the percentage of people in poverty in Argentina followed the same pattern observed in the first indicator of inequality: having started at a very low level (2.9%), it rose significantly, reaching its peak (29.2%) in 2002, certainly due to the economic crisis that the country experienced during those years. In the following years, the percentage declined sharply, reaching a low value (4.7%) in 2012; however, this is still higher than the percentage at the beginning.
Chart 6 shows the evolution of the percentage of people in poverty in Colombia, Peru, Paraguay and Uruguay for the period 1997- 2012.
Peru presents a continuously decreasing percentage of people in poverty, but it is possible to identify two different periods. Between 1997 and 2002, the fall is relatively modest, but from 2002 onwards the pace of decline accelerates. Colombia, whose information is only available from 2002, posted the same percentage of people in poverty as Peru for this year. The country also managed toreduce this percentage in subsequent years, but to a lesser magnitude than Peru. Paraguay experienced an increase in its percentage of people in poverty between 1997 and 2002, but since then the percentage has dropped significantly, reaching a lower value (14.4%) that that posted at the beginning of the period. Finally, poverty statistics confirmed Uruguay as the country with the lowest level of poverty in our sample throughout the period, despite the increase in the percentage of people in poverty posted between 1997 and 2002, which was more than offset by the subsequent decline.
The analysis of poverty in the sample countries brought results similar to those observed in the analysis of our inequality indicator: poverty decline is widespread and becomes more prominent in the early years of the twenty-first century. The five countries that historicallyposted the highest poverty percentages (Brazil, Chile, Colombia, Paraguay and Peru) were able to significantly reduce these percentages, with Chile as the absolute highlight. Mexico has also reduced its poverty, although to a lesser extent than the others. Argentina, during the second half of the reviewed period, managed to reverse the serious deterioration of the first half. Uruguay stood out, posting the best performance, and was confirmed as the one with lower poverty in the sample. Finally, it is important to note that all countries maintained the downward trend in poverty during the Global Financial Crisis (2007-2012).
Conclusions
The results show that in the last two decades there was widespread, although heterogeneous, improvement in income inequality and poverty in Latin America. There are several reasons for these movements. Itaú highlights reforms, macroeconomic stability, a favorable international scenario (despite the crisis after 2007), several years of strong GDP growth, a significant reduction in unemployment and income-transfer policies.
In a world that looks increasingly unequal, Latin America was able to move in the opposite direction in the last decades. The challenge is to maintain this trend.
This report is authored by Gino Olivares and Ilan Goldfajn, Itaú BBA
Tristan Thomas has joined Northern Trust Alternatives Group as Director of Portfolio Strategy for hedge funds and Greg Jones has joined as a Hedge Fund Analyst, strengthening the group that provides funds-of-funds and custom solutions for sophisticated investors.
As Director of Portfolio Strategy, Thomas is responsible for portfolio construction and monitoring of funds-of-funds and custom programs and is a member of the team’s Senior Investment Committee. He joins from Mesirow Financial in Chicago, where he was responsible for the monitoring and sourcing of hedge fund strategies. Jones is responsible for the sourcing, due diligence, and monitoring of macro, relative value, and commodity strategies across Northern Trust’s hedge fund program, and joins from Cliffwater LLC.
“We are excited to add two talented and experienced members to our team in Chicago, building on our culture of strong collegiality and consensus-driven decision making for manager selection and portfolio construction,” said Robert Morgan, Managing Director of the Northern Trust Alternatives Group. “We seek to invest with managers who are able to provide strong performance through differentiated trade opportunities, and Tristan and Greg will play key roles in our process.”
Thomas brings 16 years of financial experience to Northern Trust. At Mesirow Advanced Strategies, Thomas was a member of the senior investment group focused on macro, commodities, relative value, multi-strategy, volatility and other strategies. He was previously a senior analyst at Mesirow, covering hedge fund strategies in Asia, and began his career in the fixed income unit at Lehman Brothers. Thomas is a Chartered Financial Analyst and a member of the CFA Institute. He has a bachelor’s degree from the University of Wisconsin and an MBA from the Stern School of Business at New York University.
Jones comes to Northern Trust from the research team at Cliffwater, where he was focused on the global macro family of strategies, including discretionary global macro, systematic global macro, currency and commodity hedge fund strategies. He has a bachelor’s degree in decision and information sciences from the University of Florida and an MBA from the University of Southern California.
Northern Trust’s Alternatives Group has approximately $3.7 billion in assets, bringing together portfolio construction and management, product, sales and service teams to build on the private solutions offered by Northern Trust’s multi-manager business.
Asset Management at Northern Trust comprises Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc. and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
Foto: Claudio.Ar, Flickr, Creative Commons. Renta fija: Por qué la rentabilidad absoluta cobra sentido ahora
GrowFL, the Economic Gardening Institute, presents “Innovation, Entrepreneurship and Crowdfunding Today,” a knowledge-sharing event designed to provide valuable insights into fostering innovation and entrepreneurship, and shed light onto the latest crowdfunding strategies and trends. Geared for area entrepreneurs, the special event is scheduled for September 2, from 8 – 10:30 am at the Werner Auditorium at Florida Hospital, Orlando, 601 East Rollins Street.
Registration to attend is $15 per person (breakfast is included). For more information and to register, visit this link.
Unlike traditional fundraising for a venture, crowdfunding refers to the process of funding a venture by raising smaller amounts of individual contributions, but from a larger pool of people, often through the Internet.
“The Central Florida area is really becoming a hotbed for innovation and entrepreneurship,” said Tammie Nemecek, Director, GrowFL. “Funding plays such a key role in the entrepreneurial ecosystem that we knew this event would provide significant value and resonate within this region.”
Innovation, Entrepreneurship and Crowdfunding Today brings together leading venture growth and crowdfunding experts to share their insights into the latest opportunities, strategies and trends in these areas, including accredited investor equity crowdfunding, which the U.S. Securities and Exchange Commission has recently allowed.
The event will be moderated by Seth Joseph, a shareholder with the law firm Carlton Fields Jorden Burt. Joseph has extensive experience in capital formation for growth companies.
Equity crowdfunding was recently made possible by the SEC’s reversal last year of a regulation that barred companies from soliciting investment funds absent a pre-existing relationship with the prospective investor.
“This change has made more than $1 trillion of sidelined investment capital accessible to earlier stage companies that weren’t ready to go public and trade on a securities exchange,” said Joseph. “Companies tapping into the power of social media have had great success and are fueling crowdfunding’s growth.”
In addition to Joseph, other guest speakers will include Rick Wassel, Executive Director and General Manager for Florida Hospital’s Health Village and International Development initiatives; Elton Rivas, Co-founder, One Spark, The World’s Crowdfunding Festival, based in Jacksonville, Fla.; Heather Schwarz-Lopes, Chief Strategy Officer and Co-founder of EarlyShares, a crowdfunding platform; and Robert Tatum, a Sr. Partner with Financial Partners Network in Fort Lauderdale.
This program is made possible in part by the Economic Development Commission of Florida’s Space Coast, Florida High Tech Corridor, Titusville Area Chamber of Commerce, and The Greater Palm Bay Chamber of Commerce. This is in addition to the many stakeholders, sponsors and supporters of GrowFL.
Photo: TonnyB. Switzerland's Private Banks Go Through Its “Annus Horribilis”
Declining profitability and simultaneously low growth in assets over the past year have negatively impacted the performance of private banks in Switzerland. More than a third of them posted losses during the 2013 business year. Another equally significant factor behind private banks’ poor performance is the influence of the US tax program which prompted a total of CHF 900 million in provisions to be created in 2013 at the banks analyzed. Moreover, half of the smaller and medium-sized banks are reporting an outflow of assets. These insights were revealed by a study performed by KPMG and the University of St. Gallen (HSG).
Pressure on Switzerland’s private banks remains high, a fact that will encourage continued consolidation at the accelerated pace which already set in, noticeably, in 2014. Banks must ask themselves whether the time has come to make lasting changes to their business model or whether they would prefer to pull out of Switzerland’s private banking market. Private banks also need to reduce their cost base and try to exploit their growth opportunities despite the difficult conditions and stagnating assets under management. The financial performance of 94 Swiss private banks between 2006 and 2013 was assessed based on an analysis of their annual reports within the scope of the “Performance of Swiss Private Banks” study.
Among otherfindings of the study, one in three private banks is operating at a loss: The results of the study clearly show that more than one third of private banks in Switzerland reported losses during the last business year whereas this only held true for around a fifth of those banks in 2012. Not only that, but 59 of the 94 banks analyzed saw continued declines in terms of performance or merely succeeded in stabilizing their downward trend in 2013.
Return on equity declining at most banks: 36% of private banks report continuous drops with an average return on equity of 4.5% between 2006 and 2013. Most of these banks reported negative returns on equity in 2013. Another 28% of private banks also suffered a decrease in their return on equity yet still succeeded in stabilizing it at around 4% over the course of the past four years. There are also some banks that show greater potential. 16% of private banks boasted strong performance during the entire post-crisis period with an average return on equity of 14.9%. The remaining 20% of banks managed the turnaround with low yet rising returns.
Outflow of assets under management at small and medium-sized banks: Assets under management have remained relatively stable over the past six years. The underlying figures, however, reveal vast differences in the performance of individual private banks. 54% of small banks and 50% of medium-sized banks experienced net outflows of their assets under management during the 2013 business year. Net new money (NNM) for all of the banks analyzed only amounted to CHF 18.6 billion last year. The vast majority of this positive net new money was deposited at the big banks.
US tax program leads to drop in return on equity: Provisions for the US tax program came to a grand total of CHF 0.9 billion at the end of 2013. In their 2013 financial statements, 21 of the 94 private banks analyzed had created provisions for potential fines and consultancy fees while another 11 banks only created provisions to cover consultancy fees. The analysis revealed that the remaining two thirds of those banks have only created small provisions or none at all. In the near future, continued increases can be expected in terms of both provisions and expenditures.
Personnel expenses remain high: Over the past few years, average personnel expenses have remained stable at around CHF 213,000 per employee and have even risen further at the large banks. Despite the fact that personnel expenses account for about two thirds of a private bank’s typical cost base, there are hardly any indications that efforts might be made to cut these costs. This reluctance severely limits opportunities to boost profitability.
Consolidation is accelerating: A significant rise in M&A activities was observed in mid-2014. Some CHF 125 billion in assets under management were sold in nine M&A deals in the private banking sector during the first seven months of this year. While the number of transactions still hasn’t quite reached the level seen in 2013 as a whole (12 deals), the volume of assets under management sold within the scope of M&A transactions is already five times as high. The pace of M&A activities will probably continue to pick up since shareholders of private banks are increasingly asking themselves whether they really want to keep investing in their unprofitable banks. Clarity is expected regarding the fines related to the US tax program and this is also likely to prompt an increase in deals during the second half of the year.
Market share of big banks growing rapidly: In 2013, a combination of organic growth and M&A transactions allowed big banks (with assets under management of over CHF 25 billion) to boost their market share by a third over 2006. At present, they command 78% of total assets under management. The 58 small banks (assets under management of under CHF 5 billion), however, account for less than 8% of assets under management.
For those banks that failed to achieve their goals during the past year, the question is: Which of them will be in a position to return to a growth trajectory and which will withdraw from the market? “All in all, larger banks seem more likely to be on the winning side of things. They’re earning the highest returns on equity and continuing to expand their market dominance. Within this new reality of low asset growth and declining returns on equity, successful private banks certainly include those that are able to cut their average personnel expenses and simultaneously expand the business area – regardless of their size,” says Christian Hintermann, Head of Transactions & Restructuring Financial Services at KPMG Switzerland.
Foto cedidaItaú patrocinará el torneo durante los próximos cinco años en el Crandon Park Tennis Center de Key Biscayne. Itaú apadrina el Open de Tenis de Miami
Itaú, a privately owned bank based in Brazil, is the new lead sponsor of the tennis tournament formerly known as the Sony Open. Sony served its last year as sponsor this year. The tournament will now be known as the Miami Open presented by Itaú.
“We decided to change the name in order to leverage the history of the tournament, the partnership with the bank and our place in one of the greatest cities of the world,” said Adam Barrett, the Miami Open’s executive vice president and tournament director.
Itaú will present the tournament for the next five years at the Crandon Park Tennis Center on Key Biscayne. But representatives from Itaú say they hope the partnership will extend beyond 2019.
“Being a presenting sponsor for the Open will strengthen our brand and we’re looking for a continuing relationship,” said Andréa Matteucci Pinotti Cordeiro, managing director at Itaú Unibanco. The economic impact of the tournament is estimated at $386 million for Miami-Dade County because more than 300,000 visitors are expected to attend.
The bank, which has been sponsoring sports events since the 70s, was the official bank of the 2014 FIFA World Cup and is the sponsor of the Brazilian National Football Team.
Other major sponsors of the Miami Open include Fed Ex, Bacardi and MasterCard.
The tournament will be March 23-April 5, 2015 and tickets go on sale Aug. 25 at MiamiOpen.com. The event will be broadcast in 193 countries and will feature top-ranked professionals: 96 men and 96 women in singles competition and 32 men’s teams and 32 women’s teams in doubles games.
Foto: Antonio Morales García. La buena temporada de resultados en EE.UU. es el mejor soporte para la bolsa
A strong first half for US company earnings bodes well for stocks over the rest of the year, as the country continues to set the tone for global growth, says Robeco strategist Peter van der Welle.
Investors may increasingly look to the US for equity market returns later this year as the European economy remains sluggish, the end of tapering potentially threatens momentum in emerging markets, and the jury is out over whether ‘Abenomics’ is still working in Japan.
Two in three of the S&P 500 members that have so far reported first-half earnings have announced profit figures that were higher than expected, and US earnings are now at an all-time high. Their 3-month forward earnings forecasts for the next 12 months are also positive.
Earnings growth has averaged 10% on an annualized basis, thanks to record profit margin levels of 9.4% and increased sales. Profit margins have been sustained at record levels, helped by declining capital market interest rates since the start of the year, and by subdued wage rises.
“Sales growth is increasing as real US GDP growth rises and that should keep profit growth close to 10% for all of this year,” says Van der Welle. “The main component has been sales growth and very high profit margins, and the fundamentals remain healthy.”
US earnings are streets ahead of other regions in the world
However from this point forward the upside is more limited, as US rates eventually start to rise and amid increased concerns about rising geopolitical risk, Van der Welle says. Indeed, worldwide equity markets tanked in the first week of August as the Iraqi conflict reared its head again, leading to a resumption of US air strikes.
Much depends on how US growth translates into company profits. Over the past 20 years, a 3% rate of real growth would have generated earnings growth of around 14%, but that is no longer to be expected. This is due to the current economic environment specifics; record high profit margins are not likely to expand further with higher interest rates, and ultimately, gradual rising wage pressures will negatively impact margins as well.
End of easy money
And of these expected headwinds for US earnings, it is the end of easy money which poses the biggest challenge for companies, Van der Welle warns. “We’ve seen lower rates with Treasury rates of 2.4% since the start of the year, and this has contributed to sustained profit margins,” he says.
“Companies will have locked in current rate costs in their planning through hedging and so forth, but rate rises will eventually feed into debt costs moving forward. We still hold the view that Treasury rates will increase towards 3%”
Despite the recent stock market correction, Van der Welle thinks investors will soon go back to looking at improved corporate fundamentals. “Many investors are waiting on the sidelines to see how the current geopolitical picture plays out,” he says. “We had a 4% correction in the S&P 500 due to Iraq and Ukraine, but a technical correction had been long-awaited since the last correction in January. We still have some geopolitical risk, but eventually the market will look through it and focus on the more positive earnings picture.”
Capex rises as predicted
Van der Welle says the positive US corporate outlook bodes well for increasing capital expenditure as companies sit on billions of dollars of cash saved during the deleveraging period since the financial crisis.
“When you look at Q2 GDP figures we have seen on average a 5% rise in capex growth, which confirms our call from last March that it would rise,” he says. “The stronger than expected first-half sales figures also imply more capital expenditure (to keep up with demand), as there has traditionally been a good correlation between net sales growth surprises and capex.”
“But it’s too early to say that capex really is rebounding because we need to see a strong third and fourth quarter, so let’s not cheer too early.”
While volatility has recently increased in the high yield market, Neuberger Berman believes this has been largely driven by technicals, not a downturn in the underlying fundamentals that typically drive performance in the asset class. On a recent Whitepaper (15th August), they discuss the current fundamentals in the high yield market and its performance in different economic environments.
According to Dan Doyle, CFA, Portfolio Manager at Neuberger Berman, rate and political worries aside, conditions are supportive.
“After 10 consecutive months of posting positive returns, the high yield market experienced a setback in July 2014. Triggering this weakness, in our view, were technical factors—not a reversal in underlying fundamentals. More specifically, geopolitical issues in Ukraine, Gaza and Portugal, coupled with the Argentine bond default, negatively impacted investor sentiment. Adding fuel to the fire was robust second-quarter GDP growth that led to expectations that the U.S. Federal Reserve would tighten monetary policy sooner than previously expected. While geopolitical issues are likely to continue, we believe the high yield market experienced nothing more than a short-term correction and some profit taking—and we wouldn’t be surprised to see a fairly quick rebound”, explains.
Generally speaking, high yield performance is driven by fundamentals, such as defaults, as well as the direction of the overall economy. Against this backdrop, they believe that the high yield market remains healthy.
One of the reason is the strong corporate fundamentals. “While volatility has increased, we feel there are many reasons to remain optimistic about high yield. First, corporate fundamentals continue to be supportive, in our view, given generally healthy balance sheets, ample liquidity and cash flows that allow most issuers to handily meet their debt obligations. Against this backdrop, leverage in the overall U.S. high yield market remains modest at 4.1x (debt/EBITDA) versus 5.2x in 2009”.
Many corporations have proactively capitalized on the current low interest rate environment to reduce their borrowing costs and extend their maturities. This is evident when looking at the charts below. In 2007, more than half of new issuance was used to fund aggressive actions, such as mergers and acquisitions and leveraged buyouts. Conversely, through the first half of 2014, 60% of new issuance has been used for refinancing.
Given the large amount of refinancing, a relatively small amount of high yield debt will be maturing in 2014 and 2015, minimizing pressure on borrowers. The high yield default rate has been—and we feel will continue to be—well below its historical average of 4% over the last 25 years.
