Photo: Miami. Fintech LatAm Will Explore in Miami New Technologies and Trends That Are Changing the Financial Ecosystem
According to organizers of the event, which include Florida International Banking Association (FIBA), LAVCA, and media and marketing agencies Nobox and CVOX, amongst others, “Fintech Latam” in Miami will open its doors on the 24th September to hold a one day event which will bring together the largest banks in Latin America, Europe and the U.S. to discuss the changing face of the financial ecosystem and to explore new technologies, ideas, and trends that will change the financial ecosystem as we know it today.
About 200 banking managers, IT professionals, and financial technology entrepreneurs are expected to attend. The event will be held just after the FELABAN XXIX CELAES 2014 FIBA Bank Security Conference, which expects 600 attendees, amongst whom Fintech Latam will be promoted.
The following are amongst the topics to be discussed on the 2014 Fintech Latam agenda:
A world withoutbanks – Will technology render banks obsolete?
Bitcoinand More – Are we facing a new era of digital currencies?
Regulation and digital frontiers – Promoting innovation while ensuring stability
Bankingon social networks? Is Facebook about to take over with e.social banking?
The conference will be held at The Light Box in Miami’s Wynwood district, the city’s most innovative quarter and home to Miami’s emerging technological community.
For further information or to attend the event please visit the following link.
Mark Carney (BoE) and Janet Yellen (FED). Financial Markets are Priced for US Interest Rates to Remain Below UK Rates
John Stopford Co-Head of Multi-Asset in Investec Asset Management shares its thoughts about one of the most crucial developments for the global markets in the months to come:
UK increases likely to be limited and gradual
The Governor of the Bank of England has put the market on notice that interest rates could start to rise as soon as the fourth quarter of this year. This is rather earlier than he had suggested previously. The Governor has been very consistent, however, in saying that rate increases will be, “limited” and “gradual”.
So, should we believe him? We tend to think so. As he says, “Households have a lot of debt.” The UK economy, especially the housing market, tends to be very sensitive to the cost of borrowing. While the UK’s sensitivity to higher rates is not new, it does appear to have increased as debt levels and house prices have gone up.
In the five prior tightening periods since 1994, the bank rate has never risen by more than 1.6 percentage points before being cut again. The Governor suggested that this cycle could see rates that are “slightly lower”, or, “slightly higher”, than the market’s pricing of the 2.5 percent in three years’ time. We may not even get that high. In addition, to mortgage concerns, the UK has to contend with fiscal tightening, higher bank lending margins, a stronger pound, and macro-prudential constraints.
The US Federal Reserve may have to raise rates by more than the Bank of England
The US Federal Reserve, by contrast, is in less of a hurry to tighten monetary policy, but may have to raise rates by more than the Bank of England when the time comes. Broad measures of labor market slack suggest that the US cycle is at a similar stage to when the Federal Open Market Committee (FOMC) began to raise interest rates in 1994 and 2004. Unlike the UK, in those two prior cycles US interest rates were increased by 3 and 4 percentage points respectively, before any pause. This time may not be so different. Yes, the trend rate of nominal growth is lower, but so is the federal funds rate. Indeed, FOMC members expect to raise interest rates by around 3.5 percentage points in the long run.
Financial markets are priced for US interest rates to remain below UK rates
The US economy is much less sensitive to changes in short-term borrowing costs because its mortgage market is more reliant on fixed rate financing. A recent McKinsey study estimated that UK household debt burdens are about 2.5x more sensitive to interest rates than they are in the US. Furthermore, the US economy has less need to implement macro prudential policies because the housing market is less extended. Also, the dollar is fairly soft, fiscal tighteningis limited, and unlike the UK, inflation and wage costs are already rising, albeit slowly. Financial markets, however, are priced for US interest rates to remain below UK rates as far as the eye can see.
We expect markets to start repricing within the next 6-12 months. This should see UK yields top out below those in the US and sterling fall back against the US dollar. This in turn should help the FTSE 100 Index to break its all-time highs and outperform the S&P 500 Index.
Authored by John Stopford, Co-Head of Multi-Asset in Investec Asset Management
Guggenheim Partners, a global investment and advisory firm, announced the official opening of its representative office in Tokyo, Japan.
Guggenheim Partners Japan Representative Office has been established in Tokyo, and will initially conduct market research activities.
“We are honored to open our first office in Japan,” said Mark Walter, Chief Executive Officer. “We look forward to delivering innovative solutions and providing exceptional value to Japanese institutions and investors.”
Guggenheim also announced the hiring of Atsuhito Sakai as Senior Managing Director and Guggenheim’s Representative in Japan. Prior to joining Guggenheim, Mr. Sakai was Managing Director and Senior Banker for Corporate and Investment Banking at Societe Generale. He brings a wealth of experience in asset management, insurance, and capital markets.
“Guggenheim’s history of performance across market cycles should resonate with many Japanese institutional investors including banks, insurance companies, pensions, and financial intermediaries,” said Mr. Sakai. “I am very pleased to join Guggenheim Partners and to lead our efforts in establishing Guggenheim’s presence in Japan.”
Added Scott Minerd, Global Chief Investment Officer, “Guggenheim has been very deliberate in how we approach our global expansion. In this regard, we believe our full complement of investment capabilities is ideally suited for a Japanese market. Guggenheim is committed to Japan and to delivering long-term value to all of our clients.”
Foto: JimmyReu, Flickr, Creative Commons. El principio de la segregación de activos en la legislación de Luxemburgo: qué es y cómo afecta a los tomadores de seguros
BLI – Banque de Luxembourg Investments S.A., Banque de Luxembourg’s asset management company, strengthens its fund management by recruiting 3 analysts.
After the restructuring of its sales distribution team, BLI – Banque de Luxembourg Investments has also strengthened its fund management with the appointment of three new analysts: Inès Buttet, Fund Analyst in Fund Selection team; Henrik Blohm, US Equity Analyst; and Tom Michels, Junior European Equity Analyst.
“After having restructured our distribution, we decided to strengthen our fund management, with a particular focus on the equities team”, saysGuy Wagner, BLI’s managing director. “Inès, Henrik and Tom are young professionals or have gained first professional experience in other companies before joining us. We are delighted to welcome them to the team!”
Inès Buttet (33) replaces Matthieu Boachon who was appointed sales manager for Benelux in BLI’s distribution team. She worked 3 years in the fund selection of ING Investment Management in Luxembourg. Inès holds a Master of Science in International Business Administration of the University of Sherbrooke, Canada and ESCEM, France and a Master in Financial Markets and Portfolio Management from the I.E.B. – Instituto of Estudios Bursátiles, Spain.
Henrik Blohm (30) will support Luc Bauler for the equities selection of the fund BL-Equities America. Henrik worked 3 years as fund manager at BCEE Asset Management in Luxembourg. After a two-year apprenticeship at a German bank in Luxembourg, he graduated from the University of Innsbruck and the San Diego State University, with a specialisation in Banking and Finance.
Tom Michels (24) will assist Ivan Bouillot in equities selection for the fund BL-Equities Europe. Tom has a Bachelor of Science in Management from the HEC business school in Lausanne and a Master of Science in Accounting, Control and Finance.
Santander Asset Management has strengthened its board of directors with the appointment of Robert Noach as non-exec director.
Noach has been head of Global Financial Institutions Group at Schroders from 2008 until March 2014. Prior to that, he has worked as head of UK Financial Institutions Group of the company since 2001.
“We are delighted that we will be able to benefit from Robert’s extensive experience of the UK investment landscape, and look forward to a long and productive working relationship,” said Jeff Scott, chief executive of Santander Asset Management UK.
At present, Santander Asset Management UK has £19bn AUM.
Foto: AidaNeus, Flickr, Creative Commons. MetLife y el fondo soberano noruego compran la torre de One Beacon Street en Boston
MetLife and Norway’s sovereign wealth fund Norges Bank Investment Management (NBIM) have announced that they have bought the One Beacon Street office building in Boston for approximately $561 million. This is the second property investment in Boston and the fourth overall for the joint venture, which now has a real estate portfolio with a gross value of approximately $2.4 billion.
MetLife and Norges Bank Investment Management bought the 34-story office tower from a joint venture of Beacon Capital Partners and insurer Allianz. MetLife will own 52.5 percent of One Beacon Street and be the managing member, while Norges Bank Investment Management will own the remaining 47.5 percent.
Located in Boston’s financial district, One Beacon Street is LEED Platinum certified and offers more than one million square feet of office space. Built in 1973, One Beacon Street is currently about 85 percent leased, with current tenants including the Massachusetts Housing Finance Agency, the University of Massachusetts, the University of Massachusetts Building Authority, Standard Life Investments (USA) Limited and JPMorgan Chase Bank, National Association.
“One Beacon Street in Boston adds a high-quality asset in a core market to our joint portfolio with Norges Bank Investment Management,” said Robert Merck, senior managing director and global head of real estate investments for MetLife. “Our partnership with the world’s largest sovereign wealth fund is built on a strategy of providing first-rate asset management and of investing for the long-term to bring strong returns to our stakeholders.”
The three other properties in the joint venture’s portfolio are: One Financial Center in Boston; District Center (formerly the Thurman Arnold Building) at 555 12th Street, NW, in Washington, D.C.; and 425 Market Street in San Francisco.
Photo: Gabriel Cabral www.selvasp.com
. World Cup Economics – A Latin American Take
With the dust settling on the 2014 World Cup, we thought it would be an opportune time to contrast the performances of some of the teams in South America with the outlook for their stock markets.
Starting with the host nation Brazil, in the run-up to the World Cup there was much concern regarding Brazil’s ability to stage such a big event, with numerous headlines about infrastructure failures and stadium delays. In contrast, there was much hope and expectation that the host nation would cement its footballing supremacy over the rest of the world by winning on home turf. The reality was quite the opposite. The country has been praised for the smooth running of the tournament but the football team’s humbling at the hands of the Germans highlighted that Brazil is no longer the dominant force that it once was in world football. Similarly, an economy that was once touted as one of the most dynamic in the world has been stuck in a rut.
Much of the blame for the football team’s performance has fallen on the team’s manager, who has already been forced to resign, and many point the finger at President Dilma Rousseff for the weak economy and hope that she could receive a red card at the presidential elections that are due in October. A decline in the president’s approval ratings in recent months has coincided with a rally in the stock market as both alternative candidates are favoured by investors. Indeed such is the love of the beautiful game in Brazil that many believe the failure of the football team will have a direct impact on Dilma Rousseff’s election prospects. Although it is a fool’s game to predict the final outcome, the pressure is clearly mounting on the current government and hence whatever the final result, a shift towards more market-friendly policies appears inevitable. Having consistently underperformed for the last four years, this will give further momentum to Brazil’s recent rally.
The Mexican football team struggled in qualifying for the tournament and although they were knocked out in the second round, their performances were that of a team on the rise. The economy itself has also struggled in the past year, as the change in government led to a slowdown in state spending and tax increases held back the consumer. In the second half of the year, growth should accelerate and with President Enrique Peña Nieto having made huge progress in implementing wide-ranging reforms, the long-term outlook for the economy and the equity market is clearly on the right trajectory as well.
One of the surprise packages of this year’s World Cup was Colombia. Los cafeteros won many fans with their exciting brand of football and there are many reasons to be excited about the outlook for the Colombian stock market too. The recent presidential election was won by the incumbent, giving him a mandate to continue his pursuit of a peace agreement with the FARC guerrillas. Easing security concerns and greater integration with the world economy has already led to accelerating growth for the regions’ third most populous country. Infrastructure investment is poised to augment this and could make the Colombian stock market the surprise package of Latin America.
Elsewhere, Chile’s footballers surpassed expectations and were very unlucky not to knock out Brazil. However, with a new government imposing fiscal reform, the short-term outlook for Chilean equities appears challenging. Uruguay’s economy has been performing well but this is a peripheral market with little for investors to sink their teeth into. Costa Rica showed resilience on the football field and reminds us that the countries of Central America, although small, present growth opportunities for many Latin American companies.
Finally, Argentina’s team fell just short of the big prize but were the best performing South American team. Similarly, the country’s stock market has been the best performer in the region this year and with the prospect of political change in 2015 and a move to settle conflicts with sovereign debt holders, investors are re-evaluating the long-term potential of Argentina. Supported by cheap valuations, the stock market rally is likely to continue. We do caution though that the economic situation can only be described as…. Messi.
At the end of the day, although the region’s football teams experienced mixed results at the World Cup, the outlook for the region’s stock markets has significantly improved. Political change in Brazil, economic acceleration in Mexico and Colombia, a more benign than expected impact from the US Federal Reserve’s tapering policy and attractive valuations lead us to conclude that investors should be careful not to be caught offside in Latin American equities.
Authored by Nicholas Cowley, Investment Manager, Global Emerging Markets, Henderson Global Investors
Last Wednesday, the SEC approved amendments on money market fund (MMF) rules. Seth Roman, a portfolio manager at Pinoneer Investments who specializes in the sector, summarized the areas of reform as they relate to institutional and retail money market investors. Mike Temple, Senior VP, Director of Credit Research, Pioneer Investments shares the expert’s view in followPioneer.com:
The SEC’s new rules require prime institutional money market funds to float their NAVs and to use liquidity fees and gates on a discretionary basis. Meanwhile, prime retail money market funds would be able to maintain their stable NAV but would be subject to liquidity fees and gates.
Since the floating NAV issue has been in the money market universe for some time, Wednesday’s SEC vote was not a surprise. It will take time to see the full impact, because full implementation is two years away. Nonetheless, we can see money leaving institutional funds and going any number of places . . . government money market funds, ultrashort funds and bank deposits. The choice of venue obviously depends on investor preferences and risk tolerance.
Below is an outline of the SEC’s reform changes to money market funds.
*Government MMFs are exempt from liquidity fees and gates. However, they could voluntarily opt into them, if previously disclosed to investors.
The SEC changed the rules for institutional money market funds in an attempt to prevent a run – it does not want another Lehman scenario. It appears that the SEC is working to reduce the effects of “shadow banking” (i.e. money market funds) on the market and drive more assets into the hands of banks. This, in turn, allows regulators to have more control of the financial system.
Driving Investors to Change Strategies
By tightening money fund rules, the SEC is essentially driving investors to change their cash strategies. As I mentioned above, the path to take is up to the investor. They have numerous options to choose from, and it’s likely institutional money market assets will shift into a range of other strategies. Investors looking to minimize risk for safety of principal may go with bank deposits, despite their low yields. But other investors who want yield may turn to ultra-short strategies, which come with slightly higher risks but potentially higher returns.
I don’t see a reduction in liquidity. I see a change in how liquidity is distributed throughout the market.
followPioneer.com is an investment insight blog written by investment professionals at Pioneer Investments.
The latest update of the BlackRock Sovereign Risk Index (BSRI) details quarterly movers in the 50-country index and highlights Argentina’s position. Argentina’s BSRI score dipped as the IMF slashed the country’s long-term GDP forecasts, hurting its Fiscal Space score.
A history of defaults and political upheaval have been the country’s Achilles’ heel – and have dragged Argentina’s overall score lower as the country negotiates with holdout creditors who have rejected its debt restructuring. Weak Willingness to Pay is the main drag on Argentina’s overall score.
Also, revisions to the IMF’s long-term GDP growth forecasts resulted in some large ranking shifts in the quarter. Belgium (up four notches in our 50-country index), UK (up three), Israel and Netherlands (both up two) benefited from upward revisions to their GDP growth forecasts. Spain had the biggest BSRI score gain (and its ranking rose four notches to 38th) due to an improved IMF assessment of its net debt position.
Brazil (down four to 31st) fell the most in the rankings (along with China). Brazil’s debt is becoming more front- loaded. Short-term debt rose to 21% of GDP from 12% a quarter earlier, IMF data show.
China fell four notches to 23rd on a modest decline in its BSRI score. China’s score is closely bunched together with that of countries such as UK, Poland and Israel. Russia dropped three spots due to a decline in its perceived Willingness to Pay and a downward revision to its growth prospects against a backdrop of rising tensions with Ukraine.
Drawing on a pool of financial data, surveys and political insights, the BSRI provides investors with a framework for tracking sovereign credit risk. The index uses more than 30 quantitative measures, complemented by qualitative insights from third-party sources.
The index breaks down the data into four main categories that each count toward a country’s final BSRI score and ranking: Fiscal Space (40%), Willingness to Pay (30%), External Finance Position (20%) and Financial Sector Health (10%). Fiscal Space includes metrics such as debt to gross domestic product (GDP), the debt’s term structure, tax revenues and dependency ratios. Willingness to Pay measures a government’s perceived effectiveness and stability, and factors such as perceived corruption. External Finance Position includes exposure to foreign currency debt and the state of the current account balance. Financial Sector Health gauges the banking system’s strength.
Morningstar has announced the speakers and agenda for its fifth annual ETF Conference Sept. 17-19 at the Sheraton Chicago Hotel and Towers. The conference features experts from across the exchange-traded fund (ETF) industry along with Morningstar’s analysts to provide in-depth knowledge and perspective for advisors, asset managers, and fund providers.
“We’re bringing together some of the sharpest minds in the industry for our fifth annual ETF conference this fall. We shape each year’s agenda with investors in mind and focus on the tactics, strategies, and portfolio management tools to help financial professionals successfully incorporate ETFs into their portfolios and achieve better investing outcomes,” Ben Johnson, Morningstar’s director of manager research for global passive strategies, said. “The ETF industry continues to witness significant asset growth, and at the same time is increasingly more complex. Strategic beta, ETF managed portfolios, and active ETFs are growing in popularity, and our goal is to shine a light on these strategies to help investors understand and apply them effectively.”
Russ Koesterich, chief investment strategist for BlackRock and chief global strategist for iShares, will deliver the keynote opening address on Wednesday, Sept. 17. Eugene Fama, Robert R. McCormick Distinguished Service Professor of Finance at The University of Chicago Booth School of Business, will present the keynote luncheon address on Thursday, Sept. 18.
General session speakers include Dr. David Kelly, JP Morgan; Jerome Schneider, PIMCO; and Ronen Israel, AQR; who will speak on Thursday, Sept. 18, and Wesley Gray, Drexel University, who will speak on Friday, Sept. 19.
The ever-popular “Meet the Pundits” panel will close the conference on Friday, Sept. 19. Moderated by Brendan Conway, Barron’s, Morningstar’s Johnson; Matt Hougan, ETF.com; and Tom Lydon, ETF Trends, will provide a no-holds-barred discussion of the current and future state of the ETF industry.
The conference includes 15 breakout sessions focusing on three key areas: strategic, tactical, and managed portfolio solutions. Featuring speakers from Blackstone/GSO, Envestnet, Fidelity, Guggenheim, MSCI, Nuveen Investments, State Street Global Advisors, S&P Dow Jones Indices, Vanguard, and WisdomTree, among other firms, the sessions will cover a wealth of timely topics, including:
Strategic beta;
Best practices in ETF trading;
ETF managed portfolio strategies;
Opportunities and dangers in reaching for yield;
Re-thinking exposure to emerging markets;
Equity income strategies among ETFs;
Accessing alternative strategies and asset classes through ETFs; and
Managing interest-rate risk and the role of fixed income.
More information about the 2014 Morningstar ETF Conference, including the full agenda, hotel accommodations, and complete registration information, is available at this link.
