Photo: Thomas.fanghaenel. Can we rely on China’s official statistics?
For a country the size, state of development and complexity of China, the speed with which they produce certain statistics, such as quarterly gross domestic product (GDP) growth, is surprising. In fact, some analysts have gone so far as to question the fundamental accuracy of the numbers themselves.
There are a number of reasons for questioning the integrity of the data. Some claim that the highly top-down political system and China’s once-in-a-decade leadership change may have increased pressure on Communist Party officials to report strong numbers. China’s legacy of a state-controlled economy may be poorly set up to accurately gauge and measure the burgeoning and evolving consumer demand and importantly, the service sector where output is less about measurable goods. Economists worry that the numbers fail to reflect the new economic reality, or rather that they reflect political imperatives. However, China’s National Bureau of Statistics does not make it easy for independent outsiders to cross-check its work.
So, how do we, as fund managers, get around this issue? We look at the trends in macro data but rather than relying on ‘official’ government statistics, we prefer to use lower level data, such as power consumption growth, refinery throughput and manufacturing purchasing managers’ index (PMI) surveys to assess the strength of economic growth. Meanwhile, across all emerging markets, auto sales provide a useful barometer of consumer demand.
Figure 1: China auto market monthly sales overview
By combining several alternative data sources and importantly, continuously meeting many companies, we are able to form a composite picture of the overall economy.
Foto: Haitham Alfalah . BlackRock, a por los mercados de bienes raíces de Asia y Europa tras la compra de MGPA
BlackRock today announced that it has entered into a definitive agreement to acquire MGPA, an independently-managed private equity real estate investment advisory company in Asia-Pacific and Europe, significantly extending BlackRock’s real estate investment capabilities in these regions, said the firm in a statement.
The planned acquisition of MGPA’s complete business makes BlackRock a truly global real estate investment manager, with pro forma AUM of approximately $25 billion as of March 31, 2013 and substantial investment teams in the world’s top six markets, which represent 75% of the commercial real estate investable universe. It adds further best-inclass investment teams and capabilities to the BlackRock platform and demonstrates the Firm’s strong commitment to being a leader in real estate solutions.
“Today’s agreement advances BlackRock’s growth strategy in Asia-Pacific and Europe, where we are seeking to enhance our local offerings and build on the Firm’s real estate experience,” said Jack Chandler, Global Head of Real Estate for BlackRock. “It further strengthens our ability to offer clients an unrivaled set of solutions to the challenges of a low-return, high volatility environment, including access to MGPA’s top-performing investment teams and exceptional capabilities in key markets.”
MGPA’s offerings complement BlackRock’s existing real estate investment solutions, with virtually no overlap of people or products. The combined platform will also créate the potential to accelerate growth of MGPA’s business by leveraging BlackRock’s distribution capabilities for institutional and retail clients.
MGPA is focused on real estate funds management, co-investments and separate account mandates for institutional investors, offering products across the risk/return spectrum, including development, and has $12 billion in AUM as of March 31, 2013.
With an on-the-ground presence in 13 offices in Asia-Pacific and Europe, MGPA will augment BlackRock’s real estate investment platform with its pan-Asian and pan-European investment capabilities and complementary geographic footprint.
The transaction is expected to close in the third quarter of 2013, subject to customary regulatory approvals and closing conditions. The financial impact of the transaction is not material to BlackRock earnings per share. Terms were not disclosed. MGPA was advised by Berkshire Capital Securities LLC.
Wikimedia CommonsFoto: PENG Yanan. Los chinos de alto patrimonio, más preocupados por preservar su riqueza que por aumentarla
The number of Chinese high net worth individuals (HNWIs)—defined as individuals with at least 10 million RMB (approximately $1.6 million) in investable assets—grew to more than 700,000 at the end of 2012, more than doubling since the end of 2008, and on pace to increase an additional 20 percent this year; this according to the far-reaching findings of the China Private Wealth Report 2013, co-presented at a press conference today by Bain & Company, the global business consulting firm, and China Merchants Bank. The leading report of its kind is the third biennial collaboration between the two firms on the outlook for private wealth and HNWI attitudes in China, having launched their first joint report in 2009, and then again in 2011.
“High net worth individuals in China have been very successful in creating wealth,” said Jennifer Zeng, Bain partner in Beijing and co-author of the report. “But as wealthy Chinese age, they now face a dilemma in how to preserve wealth and leave it to their families. This presents many opportunities for banks serving the private wealth market in China, if they can effectively respond to these emerging needs.”
Wealth in China is growing and expanding, the report finds. Average individual investable assets per HNWI were 29 million RMB at the end of 2008 and are estimated to grow to 31.8 million RMB by the end of this year, an increase of nearly ten percent. Further, there are now 20 provinces in China with HNWI populations exceeding 10,000, with five new provinces joining the ranks since 2010:
Heilongjiang—benefitting from natural resources and the reform and development of industrial bases
Chongqing—benefitting from the development of central and western regions and Eastern businesses that have relocated to the west
Shanxi, Shaanxi and Inner Mongolia—HNWI increases resulting from the growth in the coal and natural resources industries
As the ranks of China’s HNWIs have grown, investment behaviors continue to evolve. “Quality of life” and “children’s education” followed “wealth preservation” on the list of top wealth management objectives. “Wealth creation,” which topped the list of wealth management objectives in the 2009 survey, dropped to fourth place in the report released today.
“With the developement of China’s private wealth management market and proliferation of investment channels, HNWIs’ demans in investment management have become more sophisticated,” said Sameer Chishty, Bain partner in Hong Kong and global head of the firm’s wealth managament and private banking practice. “They have stronger needs in mid- and and long- term wealth planning, and have rising demands in wealth preservation and inheritance.“
Wikimedia Commons. Matteo Vanzi is Crowned the Bombay Sapphire World's Most Imaginative Bartender
Matteo Vanzi of Italy is the winner of the BOMBAY SAPPHIRE® World’s Most Imaginative Bartender competition. Matteo Vanzi took home the top honors at the global final in Tuscany, Italy, which saw him compete against professional bartenders from around the world for the accolade and a prestigious prize. The world’s fastest-growing gin brand by volume and value challenged the competitors to create a cocktail inspired by Tuscany, the home of the juniper berries, which lies at the heart of Bombay Sapphire gin.
The bartenders took part in a four-day event, in and around the historical city of Florence where they experienced the region. The winner, Matteo Vanzi of Italy was chosen from 11 finalists from around the world.
The Pastorini (Perfect Lady) – Matteo Vanzi’s Winning Co
Overall recipe ingredients
50ml Bombay Sapphire gin
10ml St Germain infused jasmine green tea and pink grapefruit peel
15ml Martini Bianco
20ml White Balsamic Vinegar with verbena and camomile
Homemade shrub
1tsp juniper berry meringue
Overall method
Combine all ingredients in a cocktail shaker
Shake, fine strain and serve in metal picnic mugs
Homemade Shrub
1 cup caster sugar
1 cup white balsamic vineger
Method for homemade shrub
Heat vineger and allow sugar to disolve and then filter
Infusion
375ml St Germain
3 tbs Jasmine green tea
Peel of one pink grapefruit
To make the infusion
In a Vienna coffee machine lightly infuse the green tea and pink graprefruit peel with the St Germain
Juniper Berry meringue
125g egg white
125g caster sugar
5 whole fine gounded juniper berries
Method for meringue
Whisk to mergine
The Finalists:
Austria: Markus Altrichter , Hammond Bar , Viena
Canada: Franz Swinton , Cube Tasting Lounge, Calgary
Denmark: Niklas Frank , The Union, Copenhague
Germany: Mathias Noori , Roomers Bar, Frankfurt
Italy: Matteo Vanzi, Stravinskji Bar hotel de Russie, Roma
Japan: Mai Seike , Cellar Bar, Rihga Royal Hotel, Tokio
South Africa: Assaf Yechiel, Orphanage cocktail bar, Ciudad del Cabo
Spain: Joao Eusebio , Magatzem Escola Borne, Barcelona
Switzerland: Nico Colic, Hotel Rivington & Sons, Zurich
UK: Joe Wild , Berry & Rye, Liverpool
USA: Rustyn Vaughan-Lee , The Sporting League, Las Vegas
Wikimedia CommonsBy Merlix. The Industry of Luxury Goods, driven by HENRY's
Worldwide luxury goods market revenues will grow as much as 50 percent faster than global GDP, with an expectation of four to five percent growth in 2013 and five to six percent annual average through 2015, on track to break the €250 billion sales threshold by mid-decade; this according to Bain & Company, the leading advisor to the global luxury goods industry, in the Spring 2013 update to its industry bellwether “Luxury Goods Worldwide Market Study;” unveiled today at a conference hosted by Fondazione Altagamma (the Italian luxury goods industry trade association).
Bain confirmed that luxury revenues grew by 10 percent in 2012 (at current exchange rates), given the strong growth tailwinds present in the first half of last year. All growth estimates for 2013 and beyond are at constant exchange rates.El estudio que lleva por título “Luxury Goods Worldwide Market” fue presentado este jueves en una conferencia organizada por la Fundación Altagamma, la asociación italiana de las empresas de la industria de bienes de lujo.
Bain’s spring update sees the key drivers of the luxury goods market as:
WHO
Tourists are changing their consumption habits, seeking out new destinations (e.g., Dubai, South East Asia, Australia) and showing more savvy in the items they purchase
Each year, more “HENRYs” (High Earnings, Not Rich Yet) become potential customers, with ten times as many HENRYs as ultra-affluent individuals
The rise of the middle class in emerging countries is polarizing the competitive arena, becoming a “new baby boom sized generation” for luxury brands to target
WHERE
High consumer confidence among the affluent, increased store openings in American cities, and intensive investment in linking physical and digital shopping are all fueling United States sales growth
The impact of 12 percent sales growth across Central and South America (notably Brazil and Mexico) will result in overall growth of five to seven percent in the Americas
In Asia, growth in China is stabilizing to an expected seven percent, while South East Asia will experience 20 percent growth driven by a wave of new store openings, and increasing strength and relevance of second-tier markets
Japan returns to a strong growth story of five percent as the country’s monetary policy depreciates the yen and pushes local consumption
Europe remains a challenge for the industry; as tourism slows, as tourists spend less per visit, and as Europeans, especially in southern Europe, curtail spending—Bain expects flat-to-two percent growth
Middle East is growing at a steady pace, with Dubai continuing as the center of gravity and the only city attracting foreign luxury consumers (e.g. Russians, Indians, Africans)
“We are seeing a more even distribution of global growth,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study. “In turn, brands are refocusing from short-term, reactive hot spot thinking to long-term sustained growth strategies.”
Over the long term, Bain estimates that the global luxury goods market in 2025 will likely be more than five times larger than it stood in 1995. The key for winning in the luxury market over the next 10 to 15 years, says Bain, is “to get ready for Luxury 2.0.”
Foto cedidaFoto: Ronald Doeswijk. World economy inching forward
The global economy has had some of the wind taken out of its sails. One illustration of this is the decline in the US ISM manufacturing index.
But there are no major causes for concern according to Robeco Chief Strategist Ronald Doeswijk as “the underlying movement is more favorable than one headline figure suggests”. It was mainly the inventory component of the ISM index which caused the fall, which means production can take off more quickly once demand gets into gear.
Furthermore improving labor and housing market data indicate ongoing recovery. The self-reinforcing economic recovery here means that the US is still Robeco´s favorite region for equities.
Europe – positive news is hard to find What Ronald Doeswijk describes as the “most striking development in Euroland” is the weakening German economy, marked by a significant decline in producer confidence over the last few months. It is reasonably quiet on the periphery but unemployment is ticking up. A preference for structural reform over austerity measures and stays of execution when it comes to budget-deficit reduction are the order of the day. Therefore a new chapter in the debt crisis is even possible.
Central bankers keep reins loose In both the US and Europe central banks are inclined towards more monetary easing. President Ben Bernanke of the Federal Reserve Bank has kept the doves happy by implying in his press conference that the door is still open for further easing. And in the Eurozone deflationary risks are likely to increase, according to Doeswijk. “Although we are not expecting this in the near term, additional easing may come in the form of a negative deposit rate”. Last but not least the BoE will continue its efforts to stimulate lending to the real economy.
“Below-trend growth but positive developments in the US economy and increasing optimism about Japan”
Japan – light at the end of the tunnel? While on the subject of monetary easing, it is important to figure out the effects of Abenomics. Has Abenomics given Japan a bit of its sparkle back? Perhaps. Japanese consumers seem to think so as their household spending jumped 5.2% in March reflecting new optimism also underscored by solid stock market gains. Before he can take a positive view on Japan, Doeswijk would like to see “more evidence of an economic rebound to support the stock price rises”.
Growth momentum slowing in Pacific Elsewhere in the Pacific the growth momentum is slowing – here too inflation is stable or in a downward trend. Our view on the region is neutral.
Equities – defensive sectors outperformance set to continue Equities are beneficiaries of the current low interest rate scenario. Corporate earnings are more or less flat and have given few surprises. Valuation remains neutral but the appetite for riskier asset classes is unlikely to wane until quantitative easing moderates – something unlikely to occur in 2013.
Defensive sectors have outperformed over one and three month periods. Their earnings revisions are also more favorable than their cyclical counterparts. According to Doeswijk and his team the relative performance of these stocks tends to be strong in the May-October period.
Real Estate – valuation is high but upside potential remains Global REITs continue to perform strongly, rising 14% over the last three months. The current environment enables low cost refinancing and yields are attractive. The earnings outlook is more realistic than for equities but a “clearly negative factor” according to Doeswijk is valuation; Japanese REITs rose 48% in the first quarter (prices are now 50% above their NAV).
High yield and emerging market debt favored The outlook for credits and high yield is positive. High Yield in particular offers decent absolute returns in the current low-interest-rate environment. Spreads for high yield are now close to those for the mostly investment grade local currency emerging market debt. Doeswijk is positive on both and summarizes the difference as a “trade-off between a lower rating (HY) and currency risk (EMD)”.
Commodities and government bonds are lagging in the search for yield The outlook for commodities remains weak. Basic metal inventories are high and weaker economic activity in China and a faltering Eurozone have depressed oil prices. Geopolitical risks could cause upside surprises for oil. The outlook for gold remains bleak after its steep decline (prices fell 14.7% on April 15th) triggered by ongoing outflows from gold ETFs, lower physical demand and lower inflation expectations.
The current scenario of falling or low inflation, easier credit and moderate economic growth mean that there are few reasons to hold government bonds. Yields are too low to be tempting – there are more attractive, albeit riskier opportunities to generate returns elsewhere.
Foto: Andrej Jakobčič. Eslovenia, un rescate manejable
The bailout deal for Cyprus cast a shadow over Slovenia’s potentially under-capitalized banking sector. Manolis Davradakis, Senior Emerging Econmist at Axa IM argues that the recapitalization needs of Slovenian banks stand at €3 to €5bn, significantly lower than those of Cyprus. A mix of bailout from Eurozone partners and enacted bail-in clauses should help to overcome these concerns.
According to the report the bailout is likely to be requested once external auditors have completed a due diligence of the banking system, although sovereign-rating downgrades could trigger an early request.
Axa IM points out that Latvia might be the next in line for a bailout.
Abstract – Since the adoption of the floating exchange-rate regime in 1999, the Brazilian Central Bank (BCB) has intervened several times in the foreign exchange market, buying and selling dollars in the spot, futures and derivatives markets. What are the variables that led the central bank to intervene in the foreign exchange market? In our investigation of this question, we find that the behavior of some variables – including, among others, the risk premium, the deviations of the real from its prior trend, comparison of the performance of the real with that of similar currencies, the volatility of markets and of the exchange rate itself – strongly influence the likelihood of BCB intervention in FX. We also conclude that the monetary authority acts in “blocks”, and that the fact that it had intervened the day before increases the likelihood of a new intervention. We also note that the BCB interventions (“reaction function”) change over time, in accordance with different macroeconomic scenarios and administrations.
. Bloomberg nombra a Samuel Palmisano asesor independiente en materia de privacidad y datos
Bloomberg LP announced today the appointment of Samuel J. Palmisano, the former Chairman and CEO of IBM, to serve as an independent adviser regarding the Company’s privacy and data standards.
Mr. Palmisano will immediately undertake a review of the Company’s current practices and policies for client data and end user information, including a review of access issues recently raised by the Company’s clients. In addition, Mr. Palmisano will make recommendations and advise on the implementation of any enhancements to these practices and policies, including the independent verification of the Company’s systems and procedures. Mr. Palmisano will report to Bloomberg’s Board of Directors.
To assist Mr. Palmisano and the Company in the review of data and privacy issues, the formulation of recommendations, and the implementation of any recommended enhancements, the Board has hired Hogan Lovells and the Promontory Financial Group. Additional expertise will be retained as necessary.
In addition, Bloomberg announced that Clark Hoyt, Editor-at-Large at Bloomberg News until today and formerly the public editor of the New York Times, will conduct a review of Bloomberg News’ relationship with the Company’s commercial operations, including privacy and data policies. He will make recommendations stemming from that review. All necessary resources will be made available to Mr. Hoyt, who will report to Mr. Doctoroff.
Sam Palmisano is the former CEO of IBM, where he served until January 2012. He also served as Chairman of the company until September, 2012. He was promoted to CEO in March 2002 and named Chairman effective January 1, 2003. Under his leadership, IBM achieved record financial performance, transformed itself into a globally integrated enterprise and introduced its Smarter Planet agenda. He serves on the boards of ExxonMobil and American Express. He also serves on the Board of Bloomberg Philanthropies.
Wikimedia Commons. BBVA Compass pone a Andrea Smith al frente de la entidad en San Antonio
After 12 years of successfully managing commercial banking relationships at BBVA Compass, the bank has promoted Andrea Smith to San Antonio city president.
Smith brings more than 18 years of experience in the financial services industry. Most recently, she worked as a commercial relationship manager at the bank in Birmingham, Ala., and focused on governmental and institutional lending to nonprofits, universities and municipalities. She also brings expertise in health care, commercial and industrial lending.
“Given the strong business climate in San Antonio, including the health care and government sectors, we believe this will be a very good fit,” said BBVA Compass Head of Commercial Banking Rafael Bustillo. “San Antonio is the seventh-largest city in the U.S., so it’s a very important market for BBVA Compass.”
Prior to joining BBVA Compass, Smith spent six years in community banking at Lamar Bank and Pike County National Bank in Mississippi. She previously served as president of the board for the Community Food Bank of Central Alabama, and as a board member for the YMCA and the Railroad Park Foundation in Birmingham.
Smith earned a bachelor’s degree and a master’s degree in business administration from the University of Southern Mississippi. In addition, she completed the BBVA Compass UT School of Management program and Alabama-based executive programs such as Project Corporate Leadership and Leadership Birmingham.
