Wikimedia CommonsPortfolio Manager Jean-Daniel Malan. Lazard launches UCITS fund for the Global Hexagon strategy
Lazard Asset Management launched a UCITS fund for the Lazard Global Hexagon strategy.
The Lazard Global Hexagon Equity Fund is a long/short equity strategy that seeks to achieve long-term capital appreciation by investing in attractive opportunities around the world, including emerging markets. It utilizes bottom-up fundamental stock selection based on Lazard’s global research and adheres to an investment philosophy with risk management and capital preservation at its core.
Mike Wariebi, Head of Business Development for Alternative Investments in Europe and the Middle East, commented: “Since the inception of the strategy, in June 2010, we have employed an investment approach with a strong focus on capital preservation and an investment discipline which allows the quality of our ideas to be the real driver of returns. With this launch we are delighted to be able to now offer our clients this global long/short equity offering within a UCITS vehicle”.
The Fund is managed by a team led by Portfolio Manager Jean-Daniel Malan, who has over 15 years of industry experience. The investment team also draws upon the firm’s fundamental equity research capabilities through the global research platform.
Jean-Daniel Malan said: “We continuously screen globally for undervalued companies that have improving or high and sustainable financial productivity. Our aim is to give our clients exposure to differentiated and often under-researched investments that offer the best asymmetric risk/reward outcomes. Yet we also have to be attuned to exogenous developments and changes in market sentiment which often present as many opportunities as they do challenges.”
Jose Gurvich, La Creación, 1968, Témpera sobre papel, 35 x 53 cm, imagen cedida por el Museo Gurvich, Montevideo.. Arte en América Latina: demanda y perspectivas
In 2012, Latin American auction sales saw massive growth- increasing by 25% to $84.8 million. Although the latest round of auction sales (in May 2013) showed just a modest 2% increase (from November 2012 sales) auction sales continue to be robust and steadily grow in the Latin American market since the 2008 crisis.
There is broad consensus amongst art experts that the Latin American market will experience growth. ArtTactic, the leading art market analysis and research firm, published in its 2013 outlook that 67% of art buyers expect the Latin American art market to expand in 2013. Also significant is Latin America’s distinction as the regional market which art collectors and professionals have the most confidence in: 59% believe that the market will be positive- by far the most of any of region.
Latin American art is often characterized as undervalued, as there has not been an “explosion” in prices as there have been in other 20th century art categories. Alejandro Zaia, chairman of the London Latin American art fair PINTA, characterizes the market: “slowly, but steadily, prices are heading up,” and “you still have undervalued artists, you have opportunities, but it is not the same as 10 to 20 years ago.”
In 2012, there was strong demand from regional buyers- which may be a consequence of positive economic conditions in markets such as Chile, Brazil and Colombia. According to the Fine Art Fund Group, there has also been a strong demand for modern art work outside of Mexico (which has played a dominant role). Now art works from Brazil, Chile, Venezuela, Colombia and Cuba are also facing strong demand, signaling “that new collectors related to these regions are playing an increasingly important role in the growth of the Latin American art market.” This newly expanded regional base is encouraging for Latin American art. But the expanded base doesn’t just apply to regional players- Latin American art is experiencing its own driving force of globalization, gaining international recognition and demand from buyers in Europe, the US and Middle East. Latin American art fairs have been a key infrastructure trend, and have started to attract attention from the international art world. A positive outlook in the market coupled with stronger regional and global demand are all positive forces for the Latin American art market and are encouraging signs for investors.
Conclusion
The art markets have strong forces driving demand: globalized buyers, the increasing ultra high net worth population and potential for increased allocation to art in investor portfolios. Experts see value in the Latin American art market, and BigSur is happy to act as a player in supporting the growing visibility of Latin American art and bringing it to the world stage. This year BigSur is sponsoring The Modern & Contemporary Latin American Art Show, PINTA, held in New York City on November 14th. In particular, we will be sponsoring a special exhibit on José Gurvich, a very important artist who among other things, embodies the diaspora phenomenon- born in Lithuania, raised in Uruguay, travelling and working extensively throughout Europe and Israel, and finally ending up in New York in 1970. All these diverse environments and experienced shaped his unique artistic talent.
Foto cedidaChris Palmer, manager of the Henderson Gartmore Latin American Fund . Argentina: Not For The Faint of Heart
The Argentine stock market has risen close to 50% in US dollar terms this year as stronger economic activity has combined with the hope of political change to entice investors back to this volatile frontier market. The attraction of Argentina is not dissimilar to other countries in Latin America, being resource-rich and having supportive demographic trends. However, the problems are also familiar, as populist and protectionist policies have been a hallmark of Argentine politics. This has become a major problem in recent years as Cristina Fernandez de Kirchner, who succeeded her late husband, Nestor Kirchner, as President in 2007, has resorted to price controls and nationalisations, as well as refusing to pay creditors. Much needed foreign investment in the country has consequently been scared away while the government’s fiscal situation has continued to deteriorate.
For observers of the finer details of Argentine economics, there is much confusion about both inflation and the currency. The official inflation rate is just over 10%, but the actual figures are estimated at more than double this – fines have been meted out to economists who publish ‘unofficial’ rates. Dwindling foreign currency reserves have also prompted restrictions on the purchasing of US dollars, causing much interest in the value of the black market “blue dollar”, where trading activity is high. Whilst the official exchange rate is around just shy of 6 pesos to the US dollar, the blue dollar is closer to 10, implying a huge devaluation.
Hopes of political change were raised recently when Kirchner’s ruling party saw its share of the national vote drop by close to 20 percentage points at the October mid-term elections. This essentially rules out the possibility of Kirchner changing the constitution to allow herself to run for a third term in the 2015 Presidential elections. The general consensus is that the alternatives to Kirchner will offer a more orthodox economic policy, paving the way for a more investor-friendly environment. However, the opposition is fragmented and potential Presidential candidates may resort to populist rhetoric to garner support.
This leaves investors in a quandary. Despite the recent rally in the market, the MSCI Argentina Index is still trading at less than half its 2008 peak, valuations in the stock market appear attractive, while political momentum has clearly shifted. Offsetting this is the risk of a significant devaluation of the currency and the painful process that the economy will have to go through before it comes out of the other side. The rewards from a recovery in Argentina are tempting, but they are not for the faint of heart.
In terms of activity, we have introduced Argentine oil and gas firm YPF to the strategy on the view that its shale oil and gas potential outweighs the macroeconomic risks. Argentina is believed to possess a significant amount of the world’s shale gas. Recently, the company reported a jump of 87% in net profit over the third quarter versus the same period in 2012 thanks to higher natural gas and gasoline prices.
Chris Palmer, manager of the Henderson Gartmore Latin American Fund
Wikimedia CommonsPhoto: Tijs Zwinkels. AXA to acquire 51% of Colpatria’s Insurance Operations and Enter the Colombian Market
AXA has entered into an agreement with Grupo Mercantil Colpatria to acquire a 51% stake in its composite insurance operations in Colombia –Colpatria Seguros– for a total consideration of COP 672 billion (or Euro 259 million). AXA expects to consolidate the acquired operations within its Mediterranean & Latin American Region.
Colpatria Seguros is the number 4 insurance player in Colombia (7% market share), with operations in both Property & Casualty and Life & Savings. It is a leader in the segments of compulsory Motor Third Party Liability ( number 3 with 15% market share) and Workers Compensation ( number 4 with 14% market share). Its nationwide coverage and diversified distribution networks, with multi-tied agents representing approximately 40% of premiums, have supported its strong growth.
The transaction will allow AXA to enter the attractive Colombian market and benefit from its strong growth prospects through developed and profitable operations in a joint-venture with a well-established local partner. Colpatria Seguros will benefit from Axa’s strong know how to accelerate further its development and leverage its competitive advantages in the Colombian market.
“This acquisition gives AXA a unique opportunity to enter the fast-growing Colombian insurance market with well- established positions in all lines of business, while benefiting from the support of a solid and reputable local partner. Moreover, colpatria Seguros’ sustained historical growth and profitability, both above market average, provide AXA with a strong platform for further development. This operation strengthens Axa’s growth profile and marks another milestone in our strategy of accelerating in high growth markets, which is at the heart of our Ambition AXA plan” said Henri de Castries, Chairman and CEO of AXA.
“We are very much looking forward to working with Colpatria Seguro’s teams. By combining their extensive knowledge of the domestic market and Axa’s capabilities and expertise, we expect to provide individual and corporate customers with a wider product range and an innovative offer”, added Jean-Laurent Granier, CEO of AXA Mediterranean & Latin American Region.
Completion of the transaction is subject to customary closing conditions, including the receipt of regulatory approval, and is expected to take place in 2014.
About the Colombian Insurance Markets
The Colombian insurance market is the fifth largest in Latin America with ca. Euro 8 billion of revenues. Property & Casualty represent close to 50% of the market, followed by Life, Workers Compensation (Labour Risks) and Voluntary Health. The top 5 players represent ca. 50% of the volumes. Distribution is dominated by multi-tied agents (52%) and brokers (31%).
The Colombian insurance market has enjoyed robust growth over the past four years, at 12% per annum on average. It still presents further upside potential with a low penetration rate of 2.4% and assuming strong prospects for the Colombian economy. On top of increasing economic activity and a growing middle class, market growth has been boosted by the strong development of mandatory insurance coverage, such as Motor Third Party Liability, Workers Compensation and Health Insurance.
In 2012, there were 47.7 million inhabitants in Colombia and GDP was Euro 288 billion.
Earlier than expected the ECB decided to lower its official interest rate by 25 basis points to 0.25%. A more accommodative monetary policy is positive for global risk appetite. In this enviroment, ING Investment Management increased their overweight position in equities from +2 to +3.
The asset manager had expected this move, but not before December. Even after the cut, the ECB maintains an easing bias, saying it expects the level of interest rates to stay at the current or a lower level for an extended period of time. Hence, at this stage, the central bank does not close the door to further rate cuts.
Why the ECB has acted on 7 November
Broad support for risk appetite
Not only the ECB policy but also the policies of the other big central banks (US, Japan) are currently supportive for risk appetite. Last but not least the improving earnings, the relatively attractive equity valuations and the lack of event risks and a broad decline in uncertainty should be good for risk appetite.
What would be the biggest danger for risk appetite?
The biggest downside risk would come from a sharp rise in bond yields that is not sufficiently met with an improvement in economic data and the earnings outlook. With global monetary policy in maximum easing mode until March 2014 and better leading indicators, this is a risk scenario, but certainly not our base case scenario.
You can read the full report on the attached document.
Wikimedia CommonsPhoto: Brett Weinstein. Latin America is Home to 111 “Billionaires”, 5% of the World's Total Census
The number of Latin American billionaires reached 111, a population which has grown 2.8% during the last year representing 5,11% of the first census of “billionaires” elaborated by Wealth-X and UBS.
Latin American billionaires have a total net worth of almost $500 billion. Carlos Slim’s total net worth, amounts to almost 15% of the total net worth of the Latin American region.
The inaugural Wealth-X and UBS Billionaire Census 2013, reveals that the global billionaire population reached a record 2,170 individuals in 2013 and total billionaire wealth in Asia surged nearly 13 percent, making it the fastest-growing region. At current growth rates Asia will catch up with North America in five years.
Asia also saw the highest percentage rise in billionaire population (3.7% from 2012) and total wealth (13%) in 2013, suggesting that it is driving the tectonic shifts in wealth globally. The report also shows that 810 individuals became billionaires since the 2009 global financial crisis. The billionaire population’s combined net worth more than doubled from US$3.1 trillion in 2009 to US$6.5 trillion in 2013 – enough to fund the United States budget deficit until 2024, and greater than the GDP of every country except the United States and China. The report – which looks at the global billionaire population from July 2012 to June 2013 – examines this tier of the ultra affluent population by region, country, gender and the sources of their wealth.
Below are other key findings from the inaugural report:
The global billionaire population rose by 0.5 percent and their total wealth increased by 5.3 percent in the past year.
Europe is home to the most billionaires (766 individuals). However, North America has the most billionaire wealth (US$2,158 billion).
Asia contributed the largest number of new billionaires (18) this year, followed by North America (11).
Latin America is the slowest growing region in terms of billionaire wealth, increasing by just 2.3 percent in the past year.
As of 2013, the average net worth of the world’s billionaires is US$3 billion.
Globally, there are 111 individuals who each have a net worth that exceeds US$10 billion. Their combined net worth is over US$1.9 trillion, greater than the GDP of Canada.
Despite popular notions of billionaires being jet-setting, cosmopolitan individuals, most billionaires are still based in the same locations where they were raised.
60 percent of billionaires are self-made, while 40 percent inherited their wealth or grew their fortunes from inheritance.
Only 17 percent of female billionaires are self-made, while 71 percent gained their fortunes through inheritance.
“UBS has had the privilege of serving the world’s most successful families for more than 150 years, and we are delighted to partner with Wealth-X in presenting the first Wealth-X and UBS Billionaire Census,” said Chi-Won Yoon, CEO of UBS Asia Pacific. “In Asia, most billionaires are entrepreneurs who remain heavily involved in their family businesses. UBS is uniquely positioned to meet the demands of this highly sophisticated clientele by offering world-class capabilities seamlessly integrated across our wealth management, investment bank and global asset management businesses.”
For the report’s microsite and additional video commentaries by Wealth-X and UBS executives, visit www.billionairecensus.com.
Hedge funds that invest in people management register higher average investment returns than their peers, according to a new survey from Citi Prime Finance. This concept of “people alpha” is the latest potential differentiator for managers in an industry that is becoming increasingly competitive and institutionalized.
The survey corroborates numerous other academic studies that have shown the connection between superior performance and an investment in an organization’s people.
“Just as hedge funds once claimed ‘operational alpha’ as a differentiator, we believe that ‘people alpha’ will separate some firms from the pack and will soon become an industry norm,” said Sandy Kaul, Global Head of Business Advisory Services at Citi Prime Finance.
To conduct the study Citi interviewed a diverse group of 24 hedge funds, each with at least $500 million in assets under management, and evaluated each firm’s practices by focusing on four key pillars – Talent Acquisition, Talent Retention, Learning & Development and Performance Management. For each of these categories, Citi developed a list of standard and market leading criteria and ranked firms using a 10 point scale, cumulating in a single ‘people score.’
According to the survey, the number of people working at the firm is the determining factor in their focus on people-related matters. Larger firms (+150 people) consistently outscored and outperformed medium and smaller sized firms. When there were similar sized firms such as those between 50 and 150 employees, those that fell in the bottom half of the study’s people score underperformed similarly sized firms in the top half by nearly 600 basis points between 2009 and 2012.
Other key findings:
The greatest difference between top and bottom performing firms was in their approach to talent retention. This included developing an interactive culture and offering an extended benefits package, flexible workplace arrangements and workplace perks.
Firms that scored well in talent retention also tended to have stronger approaches towards talent acquisition. These firms used techniques such as implementing internship programs and actively recruiting a diverse workforce.
Firms that displayed strong growth also emphasized learning and development. This included leadership training, formal mentorship programs and ongoing coaching for the management and investment teams.
Another indicator of current and future success is the presence of a robust review process that includes peer reviews, separate performance and compensation discussions and the inclusion of qualitative as well as quantitative factors.
“As the industry continues to mature, sophisticated investors will assess hedge funds’ adherence to people management as a standard part of industry due diligence,” added Kaul.
The full report, along with other industry analysis and reporting can be viewed at this link.
CC-BY-SA-2.0, FlickrFoto: Toy Dog Design. Corea levanta la voz por sus accionistas
Corporate governance practices in South Korea’s family-controlled conglomerates, known as chaebol, find their roots in a social contract that was implicit in the process of the country’s economic development under military dictatorship, which began in the early 1960s. Korea’s previously autocratic government initiated economic plans and wielded power in the private sector by assigning different areas of development to each of several chosen corporate families. These corporations were expected to create jobs and earn U.S. dollars through exports. In turn, they received the privilege of government subsidies and considerable freedoms. Finally, under such a social contract, ordinary citizens were forced to give up certain democratic values and endure harsh working conditions to pull themselves out of poverty. Under this system, little if any consideration was given to shareholder value, and a culture of good corporate governance was an afterthought.
But South Korea has become a successful model of economic development and its governance is also changing accordingly. The implementation of democracy and an expectation of shareholder capitalism are part of the country’s new social contract. As it happens, South Korean authorities have recently imposed more severe punishment on business executives found guilty of corruption. In the past, courts were fairly lenient with chaebol tycoons, often pardoning them with comments such as “in consideration of past contributions to the national economy.” In terms of public sentiment in recent years, the reputation of Korea’s chaebol has also changed from that of “an export powerhouse” that can benefit the overall economy to that of an independent interest group whose expansion into domestic businesses might threaten the prosperity of the average citizen. Reflecting this new attitude, recent government measures have imposed limits on the expansion of such chaebol-owned businesses as franchise discount stores, bakeries and restaurants.
From the perspective of ownership in the local market, we can also observe a change. The assets under management of the country’s 14-year-old National Pension Fund have grown at a brisk pace. It now commands a considerable 6% of total ownership in the country’s stock market, up from about 3.6% in 2009. Given the continuously growing stake of the National Pension Fund in numerous Korean companies, it is not surprising that there will be incremental demand for better corporate governance and shareholder value, which may be mirrored in dividend payouts. The dividend yield of the Korean Composite Stock Price (KOSPI) Index is a mere 1.14%, while that of the MSCI All Country Asia ex Japan Index is 2.47%. Lower dividend payouts may reflect lower efficiency of invested shareholder capital, and may indicate that a company is sitting on excess cash. This scenario has been key to the so-called “Korea Discount” among global equity markets.
Interestingly, demand for better corporate governance in Korea has been initiated by liberal-minded social activists rather than capitalists. The group of political activists, who have also contributed to the nation’s political democracy, have been more vocal than activist investors about corporate governance issues. The fact that Korea’s somewhat conservative legal system has begun to react in favor of shareholder returns and economic democracy is an encouraging indicator of the formation of a new social contract for Korean society, and one I am optimistic about.
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.
Investcorp, a manager of alternative investment products, announced that its US-based real estate arm has acquired a group ofhigh qualityoffice and retail assets in the greater Chicago, Los Angeles, Minneapolis and New York areas valued at $250 million.
“This acquisition adheres to Investcorp’s approach of targeting high quality assets, located in major metropolitan areas characterized by economic growth. In addition, our approach is to invest in assets that we believe will provide attractive yields soon after they are acquired,” said Herb Myers, managing director in Investcorp’s real estate group. “We believe that these properties also present an opportunity to improve their operating and leasing performance over a longer time horizon.”
The following properties comprise a total of more than 1.6 million square feet and have a combined occupancy rate of approximately 92 percent.
1603 & 1629 Orrington, Evanston, Illinois: Located in Chicago‘s northern suburbs, this two building office complex encompasses 339,000 square feet and benefits from its close proximity to Northwestern University. The city of Evanston has a thriving business district, is well-served by public transportation and is in close proximity to the City of Chicago.
Mountaingate Plaza, Simi Valley, California: Situated on 25 acres in the greater Los Angeles area, the second largest metropolitan area in the U.S., Mountaingate Plaza is a multi-tenant grocery and drugstore anchored retail centre with a connecting medical office facility located in Simi Valley, CA. The 246,326 square foot property has access to a number of highways connecting to San Fernando Valley and local residential neighbourhoods.
Oracle & International Centre, Minneapolis, Minnesota: With a total of 622,000 square feet, this acquisition is comprised of two Class A–/B+ office towers in the heart of Minneapolis’s central business district. The office complex is leased by a group of 43 longstanding tenants, including Oracle America.
Long Island Office Portfolio (Garden City, Mineola and Rockville Centre) New York: Located on Long Island, with access to mass transportation and major roadways connecting to New York City, these three office properties have displayed historically high occupancy rates. The multi-tenanted portfolio is leased to 132 tenants and totals 374,000 square feet. Tenants include many local law firms as well as businesses in the healthcare and technology industries.
Since 1995, Investcorp has acquired more than 200 properties with a total value of approximately $10 billion. The firm currently has more than $4 billion of property and debt funds under management
Photo and video from Youtube. When Recognizing Your Faults is the Right Way to Go
Action: The textile industry uses huge quantities of clean, drinking-quality water to dye and finish fabrics. Dyeing and finishing are wet processes, which means they use water to transfer dyes and other chemicals evenly onto fabric. To achieve consistent, even application, the water must be pure and clean. When the process is complete, the water contains residual chemicals and colorants that do not stay on the fabric. Unfit for reuse, this wastewater is discharged after some level of treatment, into waterways and public water systems.
As a result, there is a great deal of dirty water behind all the exciting new fashions and colors, and a growing number of consumers are becoming aware of it.
Reaction: Although it is almost impossible for shoppers today to know whether or not the clothes they buy come from polluting factories, their awareness of the issue is prompting outdoor clothing companies, fashion brands, retailers, fabric manufacturers, textile dyehouses and chemical suppliers to work together towards change. Patagonia is a perfect example of a great brand that has decided to be totally transparent. Its founder, Yvon Chouinard, states “you shouldn’t be worried of telling everybody about the bad things you are doing, as long as long as you say, that we’re working on these things”. A couple of years ago, Patagonia created “The Footprint Chronicles”, where they stated in their website the story of the products they were selling. They told the consumer how their products were made and, when you looked at it from an environmental point of view, it was not good news. As a matter of fact, the outlook, for one of the most environmental friendly textile brands in the world, was plain bad. Nevertheless, since The Footprint Chronicles saw the light Patagonia has posted record profits. The consumers praise transparency and the fact that Patagonia decided to be honest and to work to solve these environmental issues.
Solution: Patagonia doesn’t make their own fabrics or sew their own products. They design styles, choose or develop materials and contract with factories to produce the things they sell. Realizing this complexity, Patagonia began working with bluesign technologies in 2000. Today, bluesign technologies is their most important partner in minimizing water use and the environmental harm done in Patagonia’s name from textile manufacturing.
Patagonia states that they are “well on our way toward meeting a goal we set in 2011 to be using only bluesign-approved materials by 2015”.
