Garanti Asset Management, the leading and the first asset management firm in Turkey, has announced its appointment as the manager of two Turkey specific UCITS funds established on global banking group BBVA’s Luxembourg SICAV platform. Actively managed Turkish Equity and Turkish Fixed Income Funds are open-ended, offering daily liquidity. Funds’ reference currency is TL and available in US Dollar and Euro denominated share classes.
“We are proud of Garanti Asset Management’s international recognition. During the fund approval process, the team went through a very detailed due diligence, conducted by BBVA and CSSF authorities” stated Gökhan Erun, Executive VP at Garanti Bank. He added “We have full confidence on the portfolio managers who have been successfully running similar strategies for our local pension funds. To show our commitment, we are seeding both funds with a total of 15 million Euros.”
Manuel Galatas, Head of BBVA Turkey added saying “We are glad to witness yet another global collaboration with our partner, Garanti; in line with BBVA’s international expansion strategy of teaming up with the leading local players. With its robust banking system, strong budget and primary balance and sustainable growth, Turkey has become one of the key players among the emerging economies. Hence we saw the necessity to enhance BBVA’s platform by adding two new products.”
Chief Investment Officer of Garanti Asset Management, Mahmut Kaya explained their investment approach as “A top-down macro analysis of the global and local markets to generate a house-view and bottom-up fundamental analysis to identify attractive risk-reward opportunities.” He added “Our teams’ strong local expertise is leveraged significantly by our extensive network of industry contacts, key decision and policy makers. We apply defined guidelines for portfolio construction and monitor exposures by an independent risk team using a robust infrastructure.”
At a time when being truly local is essential to maneuver country specific events while fully exploiting return opportunities, BBVA and Garanti Asset Management aim to accommodate the investor demand to Turkey by these two UCITS funds.
Cantor Fitzgerald Wealth Partners, an affiliate of Cantor Fitzgerald & Co. serving the private wealth management market, has announced the expansion of its wealth management team with the appointment of two registered financial advisors, Jeff Schulte and Jim Hiles, previously of Mariner Wealth Advisors. Messrs Schulte and Hiles bring decades of experience to Cantor Fitzgerald Wealth Partners and will be instrumental in further developing Cantor’s private client group. They will report to Stan Gregor, President and Chief Executive Officer of Cantor Fitzgerald Wealth Partners.
“We believe in listening to the marketplace, and we’ve heard consistently that sophisticated investors are interested in capitalizing on the expertise that Cantor Fitzgerald has long delivered to our institutional clients. The expansion of Cantor’s Wealth Partners platform demonstrates our commitment to providing existing and new clients with best-in class services and offerings, and building our global franchise,” said Shawn P. Matthews, Chief Executive Officer of Cantor Fitzgerald & Co. “Jim and Jeff’s extensive industry experience and breadth of contacts further supports our ability to provide exceptional investment advice to current and future high net worth clients.”
“The focus at Cantor Fitzgerald Wealth Partners is on developing a private wealth management business structured as a true partnership model in which our advisors are equity owners. We provide our private clients access to the same customized services typically reserved for Cantor’s institutional clients,” added Mr. Gregor. “We will continue to expand the business by adding experienced wealth advisory teams in the coming months.”
Mr. Schulte and Mr. Hiles said in a joint statement, “We are extremely pleased to join such a highly regarded firm as Cantor, and strongly believe that this will be a significant upgrade for our business and our clients. We are confident that Cantor Fitzgerald’s client-focused culture and broad array of resources will enable us to maximize value to our clients.”
Mr. Schulte served as a Senior Financial Consultant for high net worth clients at Mariner Wealth Advisors. Earlier, he held senior positions at CBIZ Wealth Management and Prudential Securities. He was also a co-founder of eMoney Advisors and Wharton Business Group, an investment advisory firm. Mr. Schulte holds a B.A. in Economics from the Wharton School of the University of Pennsylvania, and is a Chartered Financial Consultant.
Mr. Hiles served as Senior Wealth Advisor at Mariner Wealth Advisors, and he held a senior position at CBIZ Wealth Management. Mr. Hiles holds a B.A. in Economics from Bucknell University, and is a Chartered Financial Consultant.
Cantor Fitzgerald Wealth Partners, an affiliate of Cantor Fitzgerald & Co., serves the private wealth market. In addition to its partnership structure, Cantor Fitzgerald Wealth Partners provides its advisors with an expansive suite of products and services, as well as access to Cantor Fitzgerald’s services reserved for Cantor’s large institutional clients.
Photo: Daniel Schwen. Cartica Capital Calls on CorpBanca’s Board to Focus on Fundamental Issues of Value and Fairness in the Merger with Itaú
Cartica Capital, one of the largest minority shareholders of CorpBanca S.A., has sent a letter to the Board of Directors of CorpBanca calling on the Board to focus on the fundamental issues of the value of CorpBanca and the fairness of any transaction to all CorpBanca shareholders, not statements made by CorpGroup and CorpBanca’s management that appear intended to deflect attention from the fundamental issues of value and fairness.
In reiterating its commitment to pursuing this matter, Cartica’s letter also calls the Board’s attention to yet another valuable exclusive benefit for CorpGroup, and highlights why the protection of minority shareholders’ rights is important to the health of Chile’s markets and its economy.
We firmly believe the Board erred in approving a transaction that provides a series of valuable benefits to Álvaro Saieh and CorpGroup at the expense of the minority investors.
The full text of the letter follows:
March 10, 2014
Dear Members of the Board:
We are writing you again to ensure that statements made by CorpGroup and CorpBanca do not divert your attention from the fundamental issues of value and fairness we have raised concerning the proposed CorpBanca – Itaú transaction. Over the past week, CorpGroup and certain members of CorpBanca management have endeavored to focus public discussion on false issues of whether a merger combination without a tender offer is lawful under Chilean law, and whether a combination of CorpBanca and Itaú would result in a stronger bank. These are not the issues we dispute. In fact, we do believe that CorpBanca would be a significantly stronger bank with Itaú or any other respected financial institution in control rather than Álvaro Saieh and CorpGroup, particularly in light of the financial difficulties CorpGroup has reportedly experienced. Similarly, we do not insist that a tender offer is the only way to be fair to all shareholders. There should be no further time lost and no further CorpBanca resources wasted engaging in these false debates.
To be perfectly clear: the fundamental issues the minority shareholders want you to address are value and fairness.
We firmly believe the Board erred in approving a transaction that provides a series of valuable benefits to Álvaro Saieh and CorpGroup at the expense of the minority investors. In addition to the six exclusive and highly valuable benefits cited in our March 3rd letter that will be provided solely to CorpGroup in connection with the transaction, it has been brought to our attention by Chilean minority investors that the limited information included in the hecho esencial and Form 6-K filed by CorpBanca reveal yet another: “a right to sell will be granted to CorpGroup as a way out for its interest in the merged bank”. If this in fact refers to a valuable put option, why wasn’t this benefit extended to all CorpBanca shareholders?
It is incumbent on the Board of CorpBanca to fulfill its legal responsibilities as directors, not shrink from them. Shareholders have every reason to insist that you take immediate action to ensure that the terms of any merger combination: (1) capture the true value of CorpBanca for its shareholders and (2) treat all shareholders equally without providing special private benefits to Álvaro Saieh and CorpGroup.
Everyone with a stake in the Chilean capital markets should fully recognize the broader implications that shareholders’ rights has for a nation’s economy. The members of Cartica’s senior management team have been active in the development of Chile’s capital markets since the late 1980s, both in the private sector and as senior executives of the World Bank’s International Finance Corporation. With this perspective, Cartica believes that all Chileans, not only CorpBanca’s minority shareholders, have a stake in whether the CorpBanca – Itaú transaction is consummated on its current terms. Any transaction, such as the proposed CorpBanca – Itaú merger, that brazenly and unfairly benefits a majority shareholder at the expense of minority investors, damages Chile’s reputation as a safe environment for investment, raising the cost of capital for all issuers, which in turn has consequences for the domestic economy. Accordingly, we fully expect this transaction as currently structured will be the subject of very careful scrutiny by the securities and banking regulators, both locally and internationally.
Just as you should not be confused over what the fundamental issues are, no one should have any doubt about Cartica’s commitment to pursuing this matter. We reiterate that in the absence of prompt actions by the Board of CorpBanca to fully address and satisfy the concerns of minority shareholders, we will act to defend our interests. We will hold CorpBanca’s directors, who are fiduciaries of all shareholders, accountable for any destruction in the value of our investment and that of all minority shareholders.
Photo: I.Barrios & J.Ligero. Oyster Launches an Increased Leverage Version of its Market Neutral Fund
The Swiss banking group SYZ & CO has announced the launch of Oyster Market Neutral Plus, a new sub-fund of Oyster, its Luxembourg UCITS SICAV. The fund is an increased leverage version of the Oyster Market Neutral fund, whose neutral beta long/short strategy has proved itself since it was launched four years ago. Managed by SYZ Asset Management according to the same investment process and with the same diversification and non-correlation objectives as the original fund, Oyster Market Neutral Plus offers 2x leverage and targets a return of LIBOR +10%.
With a target return of LIBOR +10% a year over a full cycle, Oyster Market Neutral Plus aims to achieve a performance twice as high as the original strategy. To do so, it uses twice as much leverage, which means that the portfolio’s exposure may vary from 100% to 400%. Volatility target limits will be 12%, instead of 6% for the original fund. Managed according to the same process and by the same team at SYZ Asset Management (Giacomo Picchetto and Stefano Girola), the fund also retains the same portfolio diversification and non-correlation objectives as Oyster Market Neutral. Since it was launched in August 2009, this fund has obtained some very good results, and ranks in the Top 25% of its category over 3 years and since the beginning of 2014, and in the Top 10% over two years.
Apart from Luxembourg, the sub-fund is already registered in the United Kingdom, Belgium, the Netherlands, Germany, Austria, Spain, Italy and Sweden. It should soon be registered in France and Switzerland. “With interest rates in Europe offering mediocre returns, the original fund is aimed mainly at conservative investors looking for a substitute for their bond investments. The double-leverage version will be attractive to investors wishing to invest in the equity market while limiting directional bias,” explained Xavier Guillon, CEO of Oyster Funds.
A strategy centred on anticipating revisions to corporate earnings
The strategy developed by SYZ Asset Management aims at taking advantage – in both rising and falling markets – of price inefficiencies in European equities, while maintaining equity market exposure as near as possible to zero. Alpha generation is extracted by anticipating revisions to corporate earnings forecasts since consensus estimates suffer from structural biases that can be exploited. Indeed, analysts have a tendency to “fall in love” with the companies they monitor and, what is more, are afraid of harming their relationship with company management by being too aggressive. They therefore tend to adjust their figures after publication of earnings results instead of genuinely anticipating them.
In addition, even in the case of a reversal in the economic cycle, companies tend to remain set in their tracks until their budgets are next reviewed. Finally, the reduction in the number of analysts for economic reasons has led to under-coverage of companies, in particular among small and mid caps, which increases inefficiencies. A sound network of contacts within companies together with proprietary, multi-factor filters then serve as a basis for a bottom-up investment approach and genuine fundamental analysis. The fund does not use complex structured products and restricts itself to long/short positions in European equities.
Photo: Fcb981. MexDer Announces the Launch of a New 10-Year M Bono Future Contract
The Mexican Derivatives Exchange (MexDer) has announced the launch of a new instrument, the 10-Year Federal Government Bonds Futures (Bond M241205). The Specific Bond Future is an innovative product that has the most liquid Bond in the Mexican fixed income market as underlying, with approximately 25% of the total daily volumen.
This Futures contract is an ideal instrument for institutional investors to optimize portfolios that are looking for exposure in the attractive Mexican Bond market. Among other key benefits the investors will know at any time which bond will be received upon delivery at maturity.
In addition it complements the hedging alternatives that the Mexican and foreign investors can find in MexDer; it is the perfect hedging tool for the Bonds traded in the spot market -both have the same sensitivity- plus the arbitrage opportunity it provides against the Treasury Bond Market. Furthermore this contract allows high leverage, creation of short positions and an efficient capital use, a relevant factor worldwide to maximize returns with less market and counterpart risks, since all the trades are cleared in Asigna, the “AAA” Central Counterpart of MexDer.
“Besides the benefits for the local market: Banks, Brokerage Houses, Pension Funds (Afores), Mutual Funds and other institutional investors, the launch of this product is quite attractive for the International participants as well”, said Jorge Alegria, CEO of MexDer, “since 50% of the underlying asset is in foreign hands. Therefore the 10-year M Bond Future will be a very useful hedging and investment tool for them, which will attract new participants to MexDer”, he added.
This contract will be available through MexDer Trading Members, through Clearing Members and through the order routing agreement with CME Group via Globex.
Photo: Diego Delso. Avenida Capital Closes Fundraising of Avenida Colombia Real Estate Fund I
Avenida Capital, the Latin American real estate investment firm with offices in Bogota and New York, has announced that it successfully completed its inaugural fundraising effort for its Avenida Colombia Real Estate Fund I.
A total of USD $140 million was raised from pension funds, foundations and institutions in the United States, Canada, Europe and Latin America, with the fund closing above its initial target amount. The fund primarily invests in the development of retail and residential projects across Colombia.
“We are very pleased with the quality of the global real estate investors that chose to invest with us in CREF I. I believe they recognized the strength of our team and valued our ability to select attractive investment opportunities in the main and secondary cities,” said Alexander Chalmers, Managing Director at Avenida, who led the fundraising effort. “Colombia’s economy continues to grow at a steady pace, and we believe we are well positioned to capture the market opportunity with our local partner relationships.”
“With five cities over one million people and over 25 cities with a population greater than 250,000, we believe the country has capacity for investment well into the future,” said Michael Teich, Managing Director and Founder of Avenida. “The emerging middle class is driving increased consumption for retail goods as well as demand for new housing and we are seeing great opportunities for investment as a result.”
To date, the fund has invested in ten projects in nine different cities across the country. The closing makes Avenida one of the largest independent real estate fund managers in Colombia.
Wikimedia CommonsPhoto: Elyyo. The Renminbi's New Normal
The gyrations in Chinese money markets in the last few weeks have caused much alarm in the financial press. The moves in these markets are not only inline, but healthy for an economy looking to increase the role of the market in allocating resources. Those who believe these moves indicate financial stress, or draw parallels between the recent volatility and that which preceded the subprime crisis in the U.S., might be looking through the wrong end of the telescope.
First, let’s put the recent volatility in context. The renminbi (RMB) depreciated 1.4% relative to the U.S. dollar (USD) in February, making it the worst performing currency in Asia. The recent weeks have certainly been one of only a handful of periods of sustained depreciation. Such a historical comparison seems inappropriate, however, especially since the RMB is shifting to a more flexible exchange rate regime. Shouldn’t China’s central bank be managing the currency with an eye toward the future, rather than toward the past? Indeed, the experience of countries that have successfully transitioned from a fixed to a flexible exchange rate regime suggests that it is the job of authorities to foster a sense of two-way risk—meaning the currency could appreciate or depreciate to encourage investors to take both long and short positions. In other words, a successful evolution from a tightly managed currency to a more flexible regime actually seems to necessitate a rise in volatility. Even after the gyrations of recent weeks, the implied volatility of the RMB is still only at about half that of the Singaporean dollar, another managed currency; and about a quarter that of the Japanese yen, which is one of the most freely traded currencies in the world. Again, I believe this is healthy and also necessary in achieving China’s goal of further liberalizing its capital markets. Consider it the new normal.
So why are market participants so surprised? Because being long the RMB—expecting that the currency should appreciate—has been the “no brainer” trade for many years. And for the past few years, people have not been using their brains when buying the RMB. They seem to be forgetting cause and effect. Currency appreciation, in and of itself, is neither a noble nor desirable goal. Managing the value of the currency is merely a means to an end. What might that “end” be?
One such “end” might have been to rein in inflation. An appreciating currency is a handy tool to slow inflation through lower import prices. Assume for a moment that the price of oil is constant at US$100 per barrel. That same barrel of oil would be 20% cheaper with an exchange rate of 6 RMB to the US$1 than 8 RMB/USD. In fact, there is an uncanny correlation between inflation and RMB appreciation ever since Chinese authorities transitioned from a fixed exchange rate to a managed band in 2005:
When wages could not keep pace with inflation, an ever-appreciating currency was necessary to help make imports cheaper, keeping inflation in check. But now that wage growth is surpassing inflation, there is less of a need to appreciate the currency. Indeed, the Chinese economy has arrived at a point where a continually rising RMB is not desirable. Consider the position of Chinese exporters. While the RMB has appreciated 9% relative to the USD in the last three years, it has appreciated an astounding 14% on a trade-weighted basis. In a world of quantitative easing, whereby three of the world’s four largest currency blocks are racing to debase their currencies, the RMB stands at a competitive disadvantage.
And last, but certainly not least, the one-way appreciation of the currency has encouraged risky behavior, which together has heightened systematic risk in the Chinese economy. Among those engaged in one-sided bets are the global hedge funds that have raked in profits by being systematically short on the USD versus the RMB. Chinese companies also need to be weaned from the notion of a one-way appreciation that use offshore subsidiaries to borrow USD at low rates and then repatriate the proceeds disguised as RMB payment for goods that its parent firm invoices. The cash then gets invested in cash wealth management products yielding double digits. As we know, any product that offers a yield substantially higher than prevailing money market rates are neither cash equivalents nor risk-free. Then there are numerous chief financial officers who have told me that they believe issuing a five-year bond at 10% in USD is really only costing them 5% because they think the RMB is going to continue to rise 5% every year. These represent just a sample of individuals and companies with deeply vested interests in a rising RMB. By letting volatility creep into the currency movements, Chinese authorities are sending a wake-up call to those vested interests.
According to a Confucian proverb, bamboo does not break because it bends with the wind. Similarly, more volatility in China’s currency should be welcomed instead of shunned if the country is to fulfill its ambition toward a liberalized economy.
Teresa Kong, CFA, Portfolio Manager at 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.
Despite the impressive tightening of peripheral government bond spreads, ING IM still like this asset class. Thay have even added to their overweight position recently. They also have a preference for peripheral equity markets, as they expect them to outperform the broader market as peripheral economic data improve further.
The market correction in January has already shown that EM turmoil itself is not enough to create significant uncertainty in the periphery, even though some countries have both a trade and financial exposure to the emerging world. Spain for instance is particularly vulnerable to shocks in Latin America.
Italian and Spanish spreads hardly affected during sell-off
Peripheral government bonds have held up well
During the emerging market (EM)-driven financial market turmoil of a few weeks ago, not only EM assets came under pressure. Also risky assets in developed market (DM) space were confronted with a sell-off. For instance, spreads of High Yield credits widened. One category that held up quite well during the correction were government bonds of the peripheral Eurozone countries. The chart shows the very limited spread widening that took place for Italian and Spanish 10-year bonds (over German 10-year bonds) during this phase of increased market volatility.
Peripheral equities expected to catch up
Next to peripheral debt, ING IM also has a positive view on peripheral equity markets. “Despite strong performances in the past twelve months, peripheral equity markets have not yet caught up with the rapid spread tightening of peripheral bond markets. We expect equity markets to catch up further as peripheral economic data improve. Peripheral equities versus core equities is one of our preferred regional trades for this year”.
It was striking to see – and a nice example of the turnaround in sentiment towards the peripheral countries – that during the recent correction, stock markets of countries like Spain and Portugal acted as defensive ones, while markets of core countries such as Germany, France and the Netherlands suffered bigger losses. One explanation for this could be that big German and Dutch companies with a relatively large share of revenues derived from emerging markets are seen as more vulnerable to turmoil and slowing economic growth in emerging markets.
“In our tactical asset allocation we have an overweight position in European equities, with a preference for the peripheral countries”.
To view the complete story, click the on the attached document.
Photo: NASA. Banco Santander Chile, First Latin American Bank to Access the Australian Debt Market
Banco Santander Chile issued its first “Kangaroo Bond” (bonds issued by a foreign-denominated Australian dollars under Australian Law), which is in turn, the first of a Latin American bank in that format. The issuance was for AUD 125 million, which is equivalent to about US$ 115 million, with a maturity of 3 years and a coupon rate of 4.5%.
According to Pedro Murua, Manager of Financial Analysis and Structuring at Banco Santander Chile: ” This transactions allows us to continue diversifying our funding base and reflects the fact that investors recognize Chile and Banco Santander Chile, as a safe and reliable place where to invest .”
The joint book runners were Deutsche Bank and Bank of America Merrill Lynch.
The addition of Christoph Schaer brings to 41 the total number of financial advisors at Biscayne Capital. Biscayne Capital Hires Former UBS Senior Banker as Managing Director in Its Zurich Office
Biscayne Capital has announced the addition of another experienced banker to its burgeoning team of financial advisors. Christoph F. Schaer, a 15-year veteran of the private banking industry in Switzerland and Brazil, joins Biscayne Capital as Managing Director of Biscayne Capital (Switzerland) AG in Zurich.
Prior to joining Biscayne Capital, Christoph was a Managing Director for ultra-high net worth clients at UBS AG for theBrazilian market, where he also served as a member of the Regional Management Committee. Previously, Christoph worked for Credit SuisseGroup in Brazil, where for six years he represented Credit Suisse Group companies vis-à-vis the Brazilian Central Bank. Prior to that, he held positions at JFE Hottinger & Co. and worked for four years at Goldman, Sachs & Co.
“We are excited to have Christoph joiningour team,” said Roberto Cortes, co-founder and CEO of Biscayne Capital. “He exemplifies the kind of in-depth market knowledge and independent thinking that sets Biscayne Capital apart.”
The addition of Christoph Schaer brings to 41 the total number of financial advisors at Biscayne Capital, which is headquartered in Montevideo, Uruguay and has offices in Zurich, Switzerland and Nassau, Bahamas. Biscayne Capital currently has over $1 billion in assets under management. It is one of the fastest growing, independent private banking firms in Latin America.
Christoph is a graduate of the Wharton Business School. He holds a Master of Law from the University of Pennsylvania Law School and a business/law degree from the University of St. Gallen. Christoph speaks German, French, English, Spanish and Portuguese.
