PwC UShas announced that the firm has made a major commitment to the region by signing a 13-year lease with MetLife, Inc. for 43,277 square feet at the Wells Fargo Center in downtown Miami. Approximately 300 PwC partners and professionals will make their move into the Gold LEED-certified building located at 333 SE 2nd Avenue in February 2015.
In addition to signaling its faith in an exciting and thriving part of downtown Miami, PwC sought out the building to accommodate its future growth plans. The professional services firm is optimistic about its long-term growth prospects in the market and intends to increase its employment in order to continue its strong growth trajectory in South Florida.
“PwC has a longstanding history of serving companies in the greater Miami area, and we’re looking forward to continuing that legacy,” said Mario de Armas, managing partner for PwC’s Florida market. “We continue to see an increased demand for our assurance, tax and consulting services, and we’re optimistic about our future employment and the growth of our business here. We also plan to continue our work in the community, with a focus on helping local schools and organizations improve education and financial literacy.”
The office will be equipped with state-of-the-art technology, including the latest media sharing and collaboration tools. De Armas noted that the layout of the new space will enhance team collaboration and knowledge sharing, cater to the mobile worker and aid in client service delivery.
“As our business and the businesses of our clients continue to evolve, we recognize that technology and the workforce of the future will change the way we work,” added de Armas. “The new office design reflects this, emphasizing teaming, personal flexibility and efficiency.”
The firm is committed to reducing its carbon footprint and will have the new space built with energy efficiency in mind. Sustainable materials and furnishings will be utilized throughout the space and PwC will strive for LEED certification when the build-out is complete.
“MetLife is excited to welcome such a high caliber firm as PwC to Wells Fargo Center. As one of MetLife’s premier developments and long-term investments, the Wells Fargo Center continues to attract many of the country’s most prominent companies,” stated Chuck Davis, Director and Head of the MetLife Southeast Regional Office.
The 47-story Wells Fargo Center features scenic views of Biscayne Bay and Miami‘s skyline and offers PwC a number of significant benefits, including a fitness center and restaurants. The center is also adjacent to a four-star hotel, which includes an entertainment complex, salon and spa, and shopping.
Foto: Kirainet, Flick, Creative Commons. Renta fija a corto a plazo, una solución para refugiarse de los tipos cero
Natural-resource equities could provide a better hedge against inflation than commodities themselves, according to a white paper from The Boston Company Asset Management, LLC (TBCAM), the Boston-based equity investment boutique of BNY Mellon.
This could be a particularly appropriate time to consider strategies that hedge against a rise in inflation as interest rates appear to have bottomed, the report said. It notes that an increase in the federal funds rate could come as early as the spring of 2015, which could spark a rise in inflation.
TBCAM warns that investors may wish to prepare for inflation despite concerns from the International Monetary Fund and U.S. Federal Reserve that inflation is too low. Such concerns may prompt central banks to add even more stimulus through quantitative easing and negative real rates, said Robin Wehbe, author of the report and portfolio manager for TBCAM.
“Preparing for the eventual transformation of stimulus into excess liquidity is paramount,” Wehbe said. The report, Inflation Investment Guide: The Advantage of Natural-Resource Equities Allocation, posits that natural-resource equities may provide inflation-hedging benefits without significantly reducing the performance of an investment portfolio in pre-inflationary time periods. Equities, natural resource equities and commodities perform differently across different inflation regimes, the report said.
“In times of low to moderate inflation, equities typically are the clear outperformer,” said Wehbe. “However, natural-resource equities have historically caught up and eventually overtaken the broader stock market to turn in the best returns as inflation begins to rise. Commodities tend to lag all equities in almost every inflationary environment, only outperforming the broad market in times of very high inflation.”
Rising U.S. interest rates contribute to a strengthening U.S. dollar and could drive inflationary pressures around the world, the report said. Countries with current account deficits will feel these pressures the most, according to TBCAM. The report notes that concerns about inflation have been blamed for the sell-off in emerging markets over the last year.
“It’s important to remember that commodities have an expected return of zero,” said Wehbe. “If you look at the historical return of commodities against other asset classes, such as equities, you’ll see that they have significantly underperformed.”
Rogerio Poppe, de ARX (BNY Mellon). Foto cedida. Los principales retos a los que se enfrenta la renta variable brasileña
With elections looming in October, approval ratings for President Dilma Rousseff’s government have been touching new lows. At 36 per cent in March – down from 43 per cent at the end of 2013[1] – it is reaching a critical level. However, with an opposition lacking in substance, Rogerio Poppe, portfolio manager at BNY Mellon’s investment boutique, ARX Investimentos, explains why there is a high chance re-election could be achieved. What’s more, he says there’s a great risk of much-needed economic reform being dodged.
All is not rosy in Brazil. Inflation is high and vast swathes of the electorate feel out of touch and ignored. Much of Dilma’s focus during her time in office has been on social assistance through programmes such as Bolsa Família, a social welfare platform implemented by her predecessor, President Luiz Inácio Lula da Silva, which provides financial aid to poor Brazilian families.
While the success of Bolsa Família can’t be ignored – around 11 million Brazilian families benefit[2] – it has had its fair share of critics who cite the problems of benefit addiction and the programme acting as a source of discouragement from work. The programme may well help around a quarter of the population but for the remaining 75 per cent, the overriding concern is inflation and the rising cost of living in the country’s major cities. Some 85 per cent of the population lives in urban areas[3].
Meanwhile, there are significant public transport limitations and Brazil remains some way behind the rest of the world when it comes to infrastructure spending. According to The Economist, Brazil invests just 2.2 per cent of its GDP in infrastructure, well below the developing-world average of 5.1 per cent.
The global stage
The Brazilian people grabbed the attention of the developed world during last year’s Confederations Cup, the traditional pre-cursor to the soccer World Cup, as millions took to the streets of Brazil’s cities to demonstrate against the government’s failures.
“This year’s World Cup is likely to prompt further unrest but we don’t expect it to be on the same scale as 2013,” said Poppe, who runs the BNY Mellon Brazil Equity Fund.
“Last year’s troubles were caused by a minority; peaceful protest had been the general intention.”
“What’s more, let’s not forget that this is Brazil and the World Cup we are talking about – never underestimate the draw and importance of football to the Brazilian psyche. Righting the wrongs of 1950 – the last time Brazil hosted the World Cup it lost the final to Uruguay – will do much to preoccupy the electorate,” he added.
Regardless of the widespread protests, Dilma has done little, if anything, to address the underlying concerns of the Brazilian people, according to Poppe; indeed, inflation continues to exasperate these problems.
“The effects of inflation will only get worse as areas in which the government has frozen prices, such as fuel, are unfrozen,” he explained.
“At the same time, fuel price freezes have severely hampered the ability of largely state-owned companies, such as Petrobras, to thrive. That the weakness in her approval ratings has corresponded with strength in the domestic stock market is no coincidence.”
“Dilma’s administration has limited the value of these companies by using them as a political lever. It is a similar story with the state-owned banks; used as a tool for cheaper credit availability, there is a need for significant capital raising within the banking system over the next five years.”
A period of sustained economic stagnation is the likely result, he says.
Challenged challengers
But what of the opposition to Dilma’s Workers’ Party?
“This is the crux of the problem – there is little opposition of substance,” said Poppe.
The major opposition party, the Party of Brazilian Social Democracy (PSDB), is yet to announce its candidate to run against Dilma. Aécio Neves is widely expected to be PSDB’s ‘man’ but uncertainty prevails.
What’s more, the party has long been dogged by internal wrangling and has also recently been the subject of an investigation into alleged corruption in the São Paulo state government, which it has run since the mid-1990s.
“Uncertainty abounds when it comes to the major opposition’s policies, too; inflation aside, there has been little detail forthcoming,” Poppe added.
A change of government seems a long shot but, at the very least, Brazil needs a change in government. Poppe says this seems unlikely, however.
“We believe Dilma’s re-election would be a negative for the Brazilian economy over the next decade,” he warned.
“The economic fundamentals are still very good, despite the recent Standard and Poor’s downgrade; indeed, the country is in ruder health than many European economies. Yet the problem remains the direction taken by the incumbent government – the current economic policy is a limiter on growth.”
“Ultimately, Brazil needs to follow the trail blazed by Mexico and implement far-reaching and achievable reforms. Given the scale of the Brazilian market, it too should be attracting huge investment – sadly, though, this is no longer the case.”
A Dilma re-election would usher in no change, according to Poppe.
“She vehemently believes in what she is doing – she is a lady not for turning.”
The result? An economy saddled with inflation, a depreciating currency, an inability to attract external investment and the prospect of low growth over the coming years.
Latin America’s great hope is facing a tough near-term future. Seleção glory this summer might prompt a short-term bounce but once the celebrations die down, the bleak reality will be felt once again.
Left to right, Álvarez-Demalde, Serebrisky, Velarde and Oliveira. Which Sectors are Focal to the Private Equity Industry in Latin America?
Technology, the consumer goods and services sector, financial services, infrastructure, and natural resources, were some of the sectors mentioned at a Terrapinn conference in Miami on Tuesday by experts in Latin American private equity.
The topic of the discussion at the Private Equity World Latin America Forum was “The flow of operations in LatAm: hot sectors, high risks and exit strategies”; it was moderated by Luis Octavio Nuñez Greenberg Tauring, and attended by Robert Velarde, managing director of Darby Private Equity, as well as by Diego Serebrisky, managing director of Alta Ventures, Francisco Álvarez-Demalde, founding partner of Riverwood Capital, and Fernando Oliveira, partner in charge of HIG for Latin America.
Although not all the experts shared the same industries as those which govern their strategies at the moment, they did all advocate for and share the same thoughts and ideas about a region which, even though it is always put under the same roof, is undoubtedly a region which requires very different strategies.
For example, Velarde de Darby, a company which has conducted 55 operations during its 20 year history, pointed out that they currently lean towards the consumer products and services sector. The reason is clear, as the middle class continues to grow in most countries. For the same reason, they are also focusing on financial services, infrastructure, and natural resources. In fact, during the last six months, Darby has made six investments in the region within the above sectors.
For Serebrisky of Alta Ventures, the options are wide and they are interested in considering investments in all countries excluding Brazil. Mexico, Colombia and Chile offer opportunities for Alta Ventures in companies during the early-stages, because in countries like Chile and Mexico their governments are devoting much effort to raise capital to support enterprises. “Although we are talking about early stage investment, significant opportunities will be created,” he added.
Serebrisky also referred to Mexico and to its energy sector, an industry in which the entrance of private companies will help change a market that has always been in the hands of the State. “The regulation is there, but as yet it has not been implemented. The situation will vary greatly once the oil industry begins to receive foreign inflows,” the manager added, while he wondered whether the investment opportunity will be immediate once the market opens.
In this regard, Velarde said that for Darby, the Mexican oil sector is an interesting market in which to invest, either directly or through companies which provide services such as, for example, companies engaged in prospecting. “It’s an area in which we expect private capital to flow,” he added.
Meanwhile, Alvarez-Demalde said that Riverwood Capital invests predominantly in technology, but not in the early stages. When entering into companies in the region, they look for good management teams and companies positioned in their respective markets, while one of their main concerns is in the macroeconomic data. Not only are they concerned by this data, but also by the regulatory environment and the judicial system, “since most countries within this region have unclear regulations and difficult judicial systems. It is currently impossible in Latin America to enjoy an environment like the one available in the U.S.,” he stressed.
The experts agreed that the technology sector is a key industry in the current economy. Likewise, they recalled that large U.S. companies have plenty of cash abroad which they don’t take back into the country to avoid paying taxes, leading them to seek opportunities, and the technological sector is one in which they can be found. “These companies are open to investment because they have to do something with the cash,” said Serebrisky.
Finally, the speakers referred to their exit strategies and the best time to dispose of the position in a company as well as the main reasons that drive them to enter into a transaction. Velarde said that in this regard, it is definitely essential to choose the right partner in the middle market, this decision represents 50% of the weight of the operation; Alvarez-Demalde agrees with this, adding that the management team also plays an important role. He added that, therefore and in order to support their operations, they work with a large network of executives within the region.
Fibra Inn, a Mexican real estate investment trust specializing in the hotel industry serving the business traveler, announced the acquisition of Hotel Mexico Plaza Silao, in the state of Guanajuato, which will be the fourth hotel to be converted to Wyndham Garden.
The acquisition price, was Ps. 80 million, plus Ps. 11.2 million in order to pay taxes and expenses related to the acquisition. Fibra Inn’s internal committees approved the purchase of this property, at a projected cap rate of 10%. The acquisition was paid with a second temporary credit line contracted with Banorte, which is expected to be refinanced once the Company formalizes the contract, currently under negotiation. This is a temporary credit line of Ps. 500 million, at a TIIE rate of 2.5 points, for 180 days and without commission.
The conversion to the Wyndham Garden Brand is expected to conclude by the last quarter of 2014. This property has 143 rooms, will operate under the limited service segment; and will be supervised by Fibra Inn under a sub-management structure with the current Hotel Operator.
During 2013, occupancy was 31%, with and average daily rate of Ps. 586.2 and RevPar of Ps. 181.7.
Fibra Inn opted to purchase this hotel for the following reasons, according to the company:
The Bajio region is a strategic area with high growth, and great lodging demand, mainly driven by the automotive industry along with the economic activity that this region generates. Foreign investment has benefited occupancy and room rates, as well as demand for group rates and events.
This city only has 3 chain hotels: one Holiday Inn Express, one México Plaza and one Citi Express.
This hotel is under an improvement phase, which will be accelerated once the conversion to Wyndham Garden takes place.
This hotel is strategically located in front of the Bajio Airport and within 4 kilometers distance from the Puerto Interior complex, which is an industrial park with specialized terminals in train cargo with internal customs.
This hotel is located at Carretera 45 León a Silao en el Km 156 + 400 s/n, Col. Nuevo México, Silao, Guanajuato, near to the Colinas and Fipasi industrial parks.
With this acquisition, Fibra Inn has 23 hotels in its portfolio, plus three under development, with a total of 4,644 rooms, of which 3,746 are currently in operation.
While last year we seemed to move to a more growth oriented environment with investors moving out of bonds and bond-like equities into more cyclical equities, the search for yield is still very much alive this year. Besides position squaring behaviour, fundamental drivers firmly underpin this investment theme.
Despite a sharp shift in investor behaviour in many parts of the market, ING IM considerate that the appetite for assets that generate some sort of income has persisted.
Key beneficiaries of the search for yield this year
Theme is driven by long-term trends in growth and inflation
Different from the position-squaring behaviour that seems to drive many of the recent changes in market dynamics, the robustness in the search for yield theme might be more fundamentally driven. Not only have the recent couple of years been crisis-packed for investors, it is also becoming increasingly obvious that underlying trends in growth and inflation are still tilted down rather than up.
Especially in developed markets it is clear that the long-term trends in growth and inflation are at multi-decade lows and have yet to show convincing signs of bottoming.
Given that the combination of these two variables adds up to the total (nominal) income stream that ultimately underpins all financial assets, the intensification of the search by investors for increasingly scarce income sources can be well understood.
What is more, the need for income from an aging population is also increasing. Demand will remain strong for income producing securities including those that pay dividends as well as interest.
To view the complete story, click on the attached document.
S&P Dow Jones Indices has announced the launch of the S&P Colombia Select Index.
The S&P Colombia Select Index is designed to provide investors with a means of measuring the largest and most liquid stocks domiciled in Colombia. The Index uses a modified market capitalization weighting scheme, providing investors with a broad, yet replicable index covering the Colombian equity market.
S&P Dow Jones Indices has licensed the S&P Colombia Select Index to an affiliate of Horizons ETFs Management (LATAM) LLC to serve as the basis for a forthcoming Exchange Traded Fund based upon the Index.
“The S&P Colombia Select Index employs many of the traits commonly associated with our leading indices. It also provides investors with a means of measuring the largest and most liquid stocks headquartered in Colombia while reducing single stock and sector concentration within the Index”, says says Alka Banerjee, Managing Director and Head of Global Equity Indices at S&P Dow Jones Indices.
“We have a strong business relationship globally with S&P Dow Jones Indices and are pleased to be able to offer their top-tier index strategies to Latin American investors,” says Howard Atkinson, Managing Director of Horizons ETFs Management (LATAM) LLC.
The underlying universe for the S&P Colombia Select Index is all stocks in the S&P Colombia BMI that trade on the Colombia Stock Exchange (the Bolsa de Valores de Colombia or BVC) as domestic stocks. Among other criteria, stocks must also have a float adjusted market capitalization equal to or greater than US$ 200 million as of the rebalancing reference date.
Aquiline Capital Partners, a New York-based private equity firm investing in financial services, has announced that banking industry veteran Reinhard Koester has joined the firm as an investment professional. Mr. Koester joins Aquiline from J.P. Morgan and will focus on banking and credit investments.
“We have known Reinhard for many years and have been impressed by the quality of his work and industry expertise,” said Jeff Greenberg, Chief Executive of Aquiline. “Reinhard will share his expertise across the firm and play a major role on our banking and credit team, which has become one of our most active areas with a range of attractive investment opportunities.”
With over 20 years of financial services experience, Mr. Koester joins Aquiline from J.P. Morgan where he was a Managing Director and Co-head of Specialty Finance and Alternative Asset Managers in New York. Previously, he was with Goldman Sachs as a Managing Director and Co-head of Specialty Finance in New York and a Managing Director in London. He also served as Executive Vice President and Chief Risk Officer for The PMI Group in San Francisco and practiced law as an Associate with Davis, Polk & Wardwell in New York and London. He began his career as a consultant with McKinsey.
Mr. Koester has a J.D. from Yale Law School, an M.B.A. from the University of Michigan and a B.S. from Arizona State University.
“Aquiline has an excellent record of building companies and making successful investments across a range of financial services. I look forward to contributing to the success of the firm and its portfolio companies,” commented Mr. Koester.
Aquiline is a private equity firm based in New York investing globally in financial services enterprises in industries such as banking and credit, insurance, investment management and markets, and financial technology. Aquiline seeks to add value to its portfolio companies through strategic, operational and financial guidance.
Switzerland, one of the world’s largest offshore financial centers, agreed on Tuesday to exchange tax information with other countries automatically, representing a major breakthrough in the international crackdown on tax evasion. Switzerland joins the growing number of nations that have agreed to share tax information, helping to lift the veil of tax secrecy in almost everyone.
The agreement, which was signed on Tuesday at the OECD headquarters in Paris by a total of 47 countries, provides that the tax information will be shared automatically on an annual basis between governments, including taxpayers’ bank balances, dividends, income from interest, and proceeds from sales used to calculate tax on capital gains, Reuters reported.
The signatories are: Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States and the European Union.
Pascal Saint-Amans, Taxation Director of the Organization for Economic Cooperation and Development (OECD), told reporters at a meeting of the group of international experts in Paris that the agreement “clearly puts an end to bank secrecy abuse for tax purposes. This means that governments can actually determine the tax payable by people who thought they could hide in other jurisdictions.”
While most of the signatories were already committed to sharing tax information automatically, the fact that Switzerland signed on Tuesday is a big step in the fight against tax evasion, a struggle which has been intensified by governments since the global financial crisis began and following a series of tax evasion scandals.
As explained by Reuters, financial companies must also identify the ultimate beneficiaries of shell companies, trusts and similar legal entities which can currently be used to evade taxes.
Swiss Banking Reaction
The Swiss Bankers Association reacted quickly and issued a statement stressing that the measure had already been planned for a year, so it does not come as a surprise to the Swiss banks. “Banks in Switzerland are willing to adopt the automatic exchange of information, along with other financial institutions, provided that the information exchanged applies exclusively for tax purposes.”
Switzerland joins the group signing the agreement, which includes other members of the OECD, the G-20 countries and other leading offshore financial centers like the Cayman Islands and Jersey. The overall standard has been developed by the OECD and endorsed by the G20 group, says the Financial Times.
Some offshore account holders have transferred their money to a handful of offshore centers such as Panama and Dubai, which have resisted this transparency initiative. Asian centers like Hong Kong and Singapore, which have clients predominantly from Asia Pacific and Middle East, have been less affected by far by the demands for greater transparency, although Singapore has already signaled its willingness to assist other governments to clamp down on tax evasion.
This last statement does not provide a deadline for the exchange of information. However, in March almost all countries pledged to adopt the exchange of information soon, and the deadline has been set for September 2017 to inform governments of origin of investors’ taxation data, which will begin to be collected from 31st December 2015.
Should you wish to see the Declaration on Tax Information Exchange you can do so on the attachment above.
Minas de ópalos en el sur de Australia; Foto de Georgie Sharp. “Down Under”: de las materias primas al consumo
Ever since China’s demand for commodities intensified around 1999, its increased reliance on imported energy and minerals has underpinned Australia’s boom in the natural resources industry. Naturally, as China’s import growth has recently slowed, materials and energy sector firms in both Australia and New Zealand have grown cautious about their business prospects.
As a result, some mining companies are now looking into programs to reduce their operating costs such as driverless trucks to haul such resources as iron ore. Some companies are seeking to cut capital expenditure and exploration budgets by as much as 25% this year. In March, I met more than two dozen companies from Australia and New Zealand. A common theme among them all was how the economic rotation in China is impacting their economies.
But despite the potential slowdown in commodity investment, the economies of Australia and New Zealand appear well-placed given a pickup in other sectors such as housing and tourism. Trade with China is no longer just a resources story.
Big cities, such as Auckland, Melbourne and Sydney, have witnessed such a surge in demand from buyers in Asia that fears of a housing bubble have been sparked. Home prices in major Australian cities rose 9.8% in 2013, the fastest calendar-year growth since 2009, according to the RP Data-Rismark Home Value index. Home prices in Australia have reached all-time highs as measured by household income, and New Zealand also ranks high among pricey real estate markets.
Chinese vacationers have also been reinvigorating tourism Down Under. Visitors from mainland China have been growing at a double-digit pace, and some economists estimate that if the current pace of tourism continues, China could surpass neighboring New Zealand as Australia’s primary source of visitors. A growing class of more affluent travelers is emerging not only from China but all over Asia, eager to travel abroad. Apparently the lure of a pollution-free holiday spent in the lush, unspoiled outdoor beauty of Australia and New Zealand is a strong one for Chinese tourists. In a recent survey by the China Tourism Academy, Chinese tourists ranked New Zealand as the most desirable travel destination out of a survey of 22 locales (Australia placed 4). To boot, New Zealand has plans to open a world class exhibition, casino and hotel project in Auckland that is expected to draw Chinese tourists after its scheduled 2016 opening.
In addition to revenues directly tied to tourism, Australia has also benefited from investment in the hospitality sector; Hong Kong and mainland Chinese investors accounted for 18% of those investments in 2013.
Australia and New Zealand may not have traditionally been thought of as part of Asia. In the recent past, they may have been seen more as just derivatives of Asia’s demand for commodities. But to assume that their relationship to Asia depends only on the commodity-intensive growth of the past is to ignore the attractions that these two countries hold for Asia’s rising middle class. Tourism is but one example of the growth opportunities we find.
Opinion column by Tarik Jaleel, CFA. Research Analyst, Matthews Asia
The views and information discussed represent opinion and an assessment of market conditions at a specific point in time that are subject to change. It should not be relied upon as a recommendation to buy and sell particular securities or markets in general. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific geographic location. Investing in small- and mid-size companies is more risky than investing in large companies, as they may be more volatile and less liquid than large companies. This document has not been reviewed or approved by any regulatory body.
