Barry Benjamin, responsible at PwC's Global Asset Management, commenting the report. Global AuM To Exceed $100 Trillion by 2020 with Nearly 50% Residing in North America
According to Asset Management 2020: A brave new world, a new report from PwC released on Monday, global assets under management (AuM) will rise to roughly $102 trillion by 2020 from a 2012 total of $64 trillion, representing a compound annual growth rate (CAGR) of nearly 6 percent. This forecasted expansion aligns with the findings of the firm’s recently released Global CEO Survey where growth projections among asset management CEOs eclipsed CEOs from numerous other sectors.
AuM in North America is predicted to grow at a CAGR of 5.1 percent to reach over $49 trillion by 2020 (from a 2012 total of $33.2 trillion), exceeding expected AuM for Europe, Asia Pacific and Middle East & Africa combined.
The game changers
As the global asset management industry progresses towards a significant moment in its evolution, PwC has identified six dynamics that should be analyzed and addressed to capitalize on emerging opportunities:
Asset management moves center stage:The changing focus of banks and insurance companies and shifting demographics/markets could propel asset management from the shadows to the forefront. However, rising assets and prominence are typically accompanied by rising costs. As the asset management industry expands and becomes more visible, new investments in data, technology and talent may be needed to respond to heightened regulatory and competitive pressures. These expenses could continue to burden profits, which, according to industry analysis, are still 15-20 percent below their pre-crisis levels.
Distribution is redrawn – regional and global platforms dominate: By 2020, four distinct regional fund distribution blocks in North Asia, South Asia, Latin America and Europe are expected to develop regulatory and trade linkages with each other, reshaping the way that asset managers view distribution channels. North American asset managers may need to evaluate their strategy to consider the impact of these linkages.
Fee models are transformed: By 2020, it is likely that major territories with distribution networks may look to introduce regulations to better align interests for the end-customer, which may place more transparency pressure on asset managers and have a substantial impact on the cost structure of the industry. In the US, asset managers are facing the unique confluence of imminent mass retirement and growing healthcare costs which is likely to shift investment strategy towards longer term wealth accumulation with more emphasis on fixed income and income generating assets.
Alternatives become more mainstream, passives are core and ETFs proliferate: Traditional active management should continue to be the core of the industry as the rising tide of assets lifts all strategies and styles of management. However, traditional active management could grow at a less rapid pace than passive and alternative strategies, and the overall proportion of actively managed traditional assets under management is likely to shrink. PwC estimates that alternative assets will grow by some 9.3 percent a year between now and 2020, reaching $13 trillion.
A new breed of global managers: By 2020, the industry is likely to see the emergence of a new breed of global managers, one with highly streamlined platforms, targeted solutions for the customer, and a stronger and more trusted brand. These managers will not only emerge from the traditional fund complexes, but from among the ranks of large alternative firms as well.
Asset management enters the 21st century: Today, asset management operates within a relatively low-tech infrastructure, but by 2020 technology may become mission critical to customer engagement, data mining for information on clients and potential clients, operational efficiency and regulatory and tax reporting. Moreover, cyber risk will intensify, ranking as a top priority alongside operational, market and performance risk.
“Amid unprecedented economic turmoil and regulatory change, most asset managers have not had time to bring the future into focus,” said Barry Benjamin, global asset management leader, PwC. “However, as the industry stands on the precipice of a number of fundamental shifts and the potential for significant volumes of assets, there is more responsibility on firms than ever to manage these assets to the best of their collective ability. Strong branding and investor trust in 2020 will only be achieved by those firms that place a premium on transparency, a concrete value proposition to customers, and a firm commitment to avoiding practices that could prompt concerns among investors, regulators and policymakers.”
Overarching trends fueling growth
According to the report, the asset management environment is being reshaped by the convergence of several significant global megatrends including demographic changes, accelerating urbanization, technological breakthroughs and shifts in economic power. At the client level, PwC predicts that global growth in assets will be driven by three key factors:
The increasing use of defined contribution (DC) plans partly driven by government-incentivized or government-mandated shift to individual retirement plans.
The increase of mass affluent and high-net-worth-individuals in the SAAAME (South America, Asia, Africa, Middle East) regions where economies are set to grow faster than those in the developed world in the years leading up to 2020.
The expansion and emergence of new sovereign wealth funds (SWFs) with diverse agendas and investment goals.
In 2012, the AM industry managed 36.5 percent of assets held by pension funds, sovereign wealth funds, insurance companies, mass affluent and high-net-worth-individuals. If the AM industry is successful in penetrating these clients assets further, PwC believes that share of managed assets can increase by 10 percent to a level of 46.5 percent, which would represent $130 trillion in Global AuM.
Pension funds assets
Overall, assets held by mass affluent (wealth between $100,000 and $1 million) and HNWI investors (wealth of $1 million or more) are expected to rise to more than $100 trillion and $76 trillion, respectively by 2020, as compared to $59 trillion and $52 trillion, respectively, in 2012.
While emerging wealth economies in the SAAAME regions will likely serve as the dominant catalyst for growth, North America is projected to continue expanding at a solid pace and ahead of expectations for a similarly mature market like Europe. In 2020, North American mass affluent assets are expected to reach $21.7 trillion (from $13.7 trillion in 2012, a CAGR of 4.9 percent) while HNWI assets will likely top $30 trillion relative to $20.1 trillion in 2012 (CAGR of 4.4 percent).
The size of SWFs is rising fast and their presence in international capital markets is becoming more prominent. AuM for SWFs is currently above $5 trillion and PwC predicts this figure will surge to nearly $9 trillion by 2020. SWFs based in the Middle East and Africa will grow the fastest, with Asia Pacific also seeing a rapid rise in SWF assets. This is a significant opportunity for strategic expansion for North American asset management firms that invest in the resources and capabilities required to effectively meet the unique needs of SWFs.
“Responding to the impact of the global megatrends and the game changers we’ve identified will require considerable thought in order to create a great strategy – there is no silver bullet to building the successful asset manager of 2020 and beyond,” said John Siciliano, managing director and strategy lead, asset management advisory, PwC US. “Those that are proactive about developing coherent strategies and act with integrity towards clients are likely to build the brands that are not only successful in 2020, but that are still trusted in 2020.”
To access the whole report, please use the following link.
Piazza Duomo. H.I.G. Capital Opens Milan Office And Names Raffaele Legnani Managing Director
H.I.G. Capital, a global private equity firm with more than $13 billion of equity capital under management, has announced that it has opened a Milan office and appointed Raffaele Legnani as a Managing Director to lead its efforts in Italy.
H.I.G., through its H.I.G. Europe affiliate, currently has a team of over 50 investment professionals based in Europe, operating out of offices in London, Hamburg, Madrid and Paris. H.I.G. Europe is one of the most active private equity investors in Europe, having completed 28 investments since it began investing in 2008. In July 2013, H.I.G. Capital successfully closed H.I.G. European Capital Partners II at €825 million ($1.1 billion), significantly above its initial target. The fund will follow the strategy of its predecessor fund, focusing on buyout and growth capital investments in middle-market companies primarily in Western Europe.
Mr. Legnani was previously founding partner of Atlantis Partners in Milan, the leading independent institutional investment firm focused on Italian mid-size companies in Special Situations. Before that, Mr. Legnani has successfully invested in a significant number of buyout transactions, both directly and through specialized private equity funds (the London based Stellican and the US based Wexford Management) serving as operating board member for several portfolio companies. Previously, he worked in investment banking for Goldman Sachs in London.
In commenting on his appointment, Mr. Legnani stated, “I am very excited to join the H.I.G. team. H.I.G. is ideally positioned to successfully invest in Italy, given the significant amount of capital at its disposal and its experience in working with both growth companies and businesses facing operational and/or financial challenges. Focusing on midsize companies with a turnover above €50 million, H.I.G. targets the backbone of the Italian economy.” Mr. Legnani also added that he expects H.I.G. to be flexible in its approach in Italy, providing both debt and equity capital and investing in either majority or minority stakes in promising Italian businesses with a strong and sustainable competitive position. He also expects H.I.G. Capital to assist Italian companies to capitalize on international growth and expansion opportunities, given its global presence and its wide team of international experienced professionals.
Wikimedia CommonsCusco from Sacsayhuamán ruins. FIAP Organizes its International Seminar 2014 in Cusco
The International Federation of Pension Fund Administrators (FIAP) and the Peruvian Association of Private Pension Fund Administrators (AAFP) are pleased to welcome you to the 12th International Seminar FIAP and the 1st International Conference of the AAFP, entitled “Reinforcing the Foundations of the Individually-Funded Pension System to Ensure its Sustainability”. The event will take place on May 15 and 16, 2014, at the Cusco City Hall Convention Center, in the archeological city of Cusco, Peru.
The topics to be discussed, based on the principles of economic freedom and individual savings, aim at identifying the mechanisms that enable underpinning the foundations of the sustainability of the individually-funded pension system. The selected topics are highly relevant internationally for the members of the individually-funded pension system, pension fund administrators and government authorities.
FIAP and AAFP have invited speakers and panelists of the highest professional standing, who will discuss the key factors affecting the development of the individually-funded pension system, such as low pension coverage and retirement saving patterns; the returns on of the managed funds and the tools available for managing risks in unpredictable situations; the degree of efficiency and competence of the industry and its impact on administrative costs, and the type and quality of pensions; corporate government practices, transparency and relationships with members and pensioners; and finally, the coexistence of alternative contributory pension systems.
This event coincides with the celebration of the XXI Anniversary of the Private Pension Funds System in Peru and the XVIII FIAP Annual Assembly. As on former occasions, the event will be attended by participants from different parts of the world (FIAP members and others), including government authorities, congressmen, officials of international agencies, and representatives of pension fund managers, investment funds, mutual funds and insurance companies, as well as other personalities related to the financial and social security sectors.
Photo: Intel Free Press. Deal Activity Continues in Emerging Markets as Private Equity Investors See Opportunity in Adversity
Private equity investment activity held steady for emerging markets in 2013, and despite a sluggish start to the year, deal volume gained momentum in the last six months, according to the Emerging Markets Private Equity Association (EMPEA). This investment activity led to an overall capital flow of US$24 billion in emerging markets last year, representing 883 deals and a 7% decline in capital year-over-year from 2012. While fundraising was down with only 150 funds raising US$36 billion in 2013, a 19% decline in total capital raised compared to 2012, the relatively constant deal volume indicates that private equity investors continue to find investable companies across a diverse array of markets.
“Fundraising in private equity follows a cyclical pattern and we are still in a downturn phase of the cycle. The investment side is the real story, however, because where others see adversity, private equity investors see opportunity,” commented Robert van Zwieten, President and CEO, EMPEA. “Private equity continues to be the optimum way to tap into emerging market investment opportunities. We expect that these markets will adapt, greatly diverse as they are, to the new economic realities of a moderate Chinese economic slow-down and US interest rates rising gradually over time. For the time being, with asset re-pricing underway and local currencies depreciating in many emerging markets, this is a favorable time for highly discerning fund managers to put capital to work in select sectors.”
According to EMPEA’s data, some of the biggest year-over-year gains from 2013’s deployment of capital went to markets beyond the BRICs– including those in Southeast Asia, East Africa and Latin America (ex. Brazil) – a strong indication of where investors are seeing the most promising prospects for growth. Taking a closer look within each region, the following ten notable emerging markets private equity (EM PE) investment trends stood out from the past year.
There was greater diversity in the types of deals executed across emerging markets, with venture capital (VC) investment accounting for 43% of deal activity in EM PE, following an annual upward trend since 2009, when VC made up only 17% of deals.
While Emerging Asia accounted for 78% of VC deal activity across emerging markets, the largest disclosed VC deal took place in Latin America for Panama-based online language school Open English.
US$2.2 billion was invested through 61 deals in Southeast Asia in 2013, a six-year high in terms of activity and a 39% increase in capital from 2012.
In China, deal activity rebounded in the fourth quarter, with 89 investments executed—the most in a single quarter for the country since Q3 2011.
PE investment in India proved resilient, increasing 11% in volume and holding flat in total capital, year-over-year. Investment in the country was robust in part due to a 33% increase in the number of VC deals.
CEE and CIS showed healthy exit activity with six liquidity events valued at an estimated total of US$3.5 billion, according to third-party data. Three of the six exits were in Russia-based companies.
Russia and Turkey accounted for 48% of deal flow in CEE and CIS.
Seven PE deals closed in Tunisia and ten in United Arab Emirates, comprising 45% of MENA investment activit.
Mexico witnessed a five-year high in capital invested and also saw one of the year’s top ten largest deals for emerging markets: Axis Capital’s US$200 million buyout of Oro Negro.
For Sub-Saharan Africa, capital invested reached a five-year high of US$1.6 billion, a 43% increase since last year, and East African deals increased by 29%.
Morningstar has announced the agenda for the Morningstar Ibbotson Conference taking place Feb. 20-21 at the JW Marriott Desert Ridge in Phoenix, Arizona. The conference, Morningstar’s premier event for institutional investors, will feature thought leaders from academic institutions, the financial services industry, and Morningstar. They will discuss the changing investment landscape and some of the latest advancements in investing and financial planning with a focus on delivering better financial outcomes.
David Laibson, Ph.D., Robert I. Goldman Professor of economics at Harvard University and research associate at the National Bureau of Economic Research, will discuss different kinds of risk, and how investors can improve their asset allocation by increasing investments in good risks while decreasing investments in bad risks.
Additional general session speakers include:
Nardin Baker, chief investment strategist for Guggenheim Partners, who will share his latest research about the benefits of low volatility investing in markets around the globe, and how investors can take advantage of these opportunities;
Roger Ibbotson, Ph.D., founder of Ibbotson Associates (which Morningstar acquired in 2006), professor of finance at Yale School of Management, and partner at Zebra Capital Management, who will examine how to use stocks with less popular characteristics—small cap, value, illiquidity—to get more return while taking on less risk;
Harvey Rosenblum, Ph.D., executive vice president and director of research for the Federal Reserve Bank of Dallas, who will provide his outlook for the U.S. economy;
Sam L. Savage, Ph.D., executive director of ProbabilityManagment.org and consulting professor at Stanford University, who will discuss the flaw of using averages when modeling uncertain situations and new techniques for making more accurate predictions;
James Upton, senior portfolio specialist and chief strategic officer for Morgan Stanley, who will explore the outlook for emerging markets and growth prospects for various countries.
A series of breakout sessions, a number of which will feature new research, will include the following topics:
Time Diversification—Evaluating whether equities really become less risky over longer investment periods and the implications for investors;
Quantitative Equity Ratings—Overview of Morningstar’s forward-looking quantitative ratings for equities;
Controlled Volatility Strategies—Approaches for managing volatility without using guaranteed products and the pros and cons for those with no liability to hedge;
Momentum, Acceleration, and Crash—New research about the contribution of accelerated stock prices to crashes;
Time-Varying Return Estimates—Estimating capital market assumptions when expected returns are not constant;
Economic Policy Reform in China—Analysis of the risks and opportunities from new economic reform in China;
Global Economic Outlook—Morningstar’s outlook for the global economy;
Persistence in Mutual Fund Performance—Do some mutual funds show consistent performance and how can investors improve their odds of successful fund selection?
Do Fund Flows Signal Future Performance—Do fund asset flows serve as a contrarian indicator for intermediate-term performance?
Jazz, Firefighters, and Hedge Funds—How to improvise in dynamic, uncertain environments;
Industry-Specific Human Capital, Outside Wealth, and Optimal Portfolio Choice—How do an investor’s occupation, geographic location, and pension benefits affect his optimal portfolio allocation?
“The U.S. stock market has been on a tear over the last five years, but the trend may not be sustainable in the long run. Developed markets are looking at rising debt and rapidly aging populations, while emerging markets could hold promises and pitfalls,” Thomas Idzorek, president of Morningstar Investment Management, a unit of Morningstar, said. “For two days, we’ll bring together some of the leading minds in the financial service sector to share new ideas and techniques for managing risk and pinpointing bright spots in the capital markets.”
Philip Apel, Head of Fixed Income at Henderson. Short Term Squalls But Long-Term Outlook Still Fair
It was unlikely that the relative calm that had characterised markets in the latter part of 2013 was going to last. Most notable has been the correction in equities, with the bullish tone punctured, perhaps only temporarily, by the US Federal Reserve pursuing its tapering of asset purchases and fresh fears about the strength of emerging markets.
Citi’s widely-followed US economic surprise index has dipped slightly but its still elevated level betrays the fact that the media have been quick to promote negative stories and linger on earnings disappointments even when much of the hard economic and earnings data remains positive. This is not too surprising given that a change in tone is eminently more readable than a continuation of yesterday’s news.
In our view, little has fundamentally changed. Our key strategic themes remain as previously. We continue to expect the global recovery to strengthen, led by the US, Japan and the UK. Europe should be better in 2014 than last year albeit still facing the headwinds of a banking system that needs to shrink and the ongoing requirement to implement structural reforms to improve fiscal sustainability.
Whilst core government bond yields pulled back in January, they are likely to resume their rising trend if, as expected, the US economy continues to improve and tapering is completed by the end of the year. That said, we are closely watching inflation, which is forecast to remain at low levels, particularly if disinflationary forces emanate from emerging market economies.
The current environment lends itself to some key themes within our portfolios. Core European bonds are expected to outperform US bonds given the divergent growth and monetary policies of the two regions – Europe is at an earlier stage to the economic cycle than the US and this gives the European Central Bank greater capacity for further monetary policy accommodation. We expect higher yields in the long end of the UK rates markets. We also expect a steeper European yield curve (rates lower for longer at the short end but longer maturity bonds underperforming) versus a flatter yield curve in the US where we expect the 5-year part of the curve to come under pressure as an improving economy puts upwards pressure on rates.
In emerging markets, we have been relatively cautious on local debt markets in general, although expressing bullish views in Mexico. We started to acquire some short maturity bonds in selected emerging markets that are offering value i.e. where we do not expect the degree of rate hikes currently priced in to be delivered, for example in South Africa. We may have been a little early, given the broader emerging market sell-off but we have kept some powder dry because of just such a possibility.
At the currency level our preference is to be long the US dollar, whilst short the Australian dollar, Euro and yen.
Within credit markets, the longer-term theme of low interest rates and improving economic data continues to lead demand for higher-yielding corporate securities, particularly in Europe. With low default incidence and good corporate liquidity, that should sustain the popularity of lower-rated corporate bonds over 2014. We are, however, aware that credit markets have been more resilient than equities in the latest shake-out so there is some near term vulnerability for credit should the ‘risk-off’ phase be prolonged.
In our Euro credit strategy, we are continuing to favour subordinated bonds, BBB-rated bonds and high yield because these sectors of the market have a higher spread and lower interest rate sensitivity. Investment-grade non-financial sector valuations are less compelling than a year ago and consequently we are more cautious about these sectors, particularly the cyclicals. Another aspect of non-financials is the degree of potential event risk from merger and acquisition activity and re-leveraging, especially in the telecoms sector. This may offer some upside in the high yield market but in investment grade the key will be to avoid the poor performers rather than picking winners.
Looking ahead, with duration the bigger threat to bond returns than defaults, floating rate and multi-asset credit strategies are likely to remain in vogue given their lower rates sensitivity and attractive yield.
Fred Thompson, David and Julia Koch. Top 10 Wealthiest Individuals in America’s Oil and Gas Sector
Charles y David Koch of Kansas are the wealthiest individuals in America’s oil and gas sector, with a combined net worth of US$83 billion, according to a Wealth-X Top 10 list that includes billionaires from Texas, New York and Oklahoma.
Charles, Koch Industries’ chairman and CEO, and David, executive vice president, are the principal owners of the Wichita-based company founded by their father Fred in 1940. Charles and David Koch each own 42% of Koch Industries, which is involved in the manufacturing, refining and distribution of petroleum, chemicals, polymer and other materials.
Four billionaires from Texas appear on the list: Milane Frantz (one of two females on the list), Ray Hunt, Jeffrey Hildebrand and William Hunt. Kansas is home to three oil and gas billionaires, the two Koch brothers as well as Elaine Tettemer Marshall, who inherited her fortune from her late husband, Everett Pierce Marshall, (who had holdings in Koch Industries).
Photo: Daniel Christensen. Mauricio Sanchez Mendez Named Complex Manager At Wells Fargo Advisors, Miami
The International Private Clients Services Group of Wells Fargo Advisors has announced that Mauricio Sanchez has joined the Miami International Office as Complex Manager. Mauricio will be responsable for day-to-day operations of the Miami International Complex and its 71 Financial Advisors.
“We are delighted to have Mauricio Sanchez joininig the International Private Clients Service team. He is a seasoned executive who knows and understands the needs of our internatinal clientes; his experience is also fundamental to continue supporting our Financial Advisors covering the Latin American region”, said Alberto Gonzalez Saint Geours, Managing Director of the International Private Client Services Group.
Prior to joinin Wells Fargo Advisors, Mauricio served as a Private Wealth Management Sales Manager, Domestic and International at Morgan Stanley, New York Branch. He has over 25 years experience in the financial services industry. Mauricio held different management positions at Merrill Lynch Wealth Management in Geneva, Montevideo, Buenos Aires and Santiago de Chile.
Mauricio Sanchez holds a bachelor Degree in Accounting from Universidad de la República de Uruguay. Mauricio is relocating from New York to Miami.
Wells Fargo & Company is a financial services company with $1,4 trillion in assets.
París. Foto: zoetnet, Flickr, Creative Commons.. La Française y Forum Partners dan paso a la plataforma LFF Real Estate Partners
Following their recently established strategic partnership and formation of a European direct real estate investment joint-venture, La Française and Forum Partners have announced their acquisition of Cushman & Wakefield Investors (CWI), the investment management business of Cushman & Wakefield (C&W). This acquisition, subject to regulatory approval, will be jointly owned by La Française and Forum, 66.6% and 33.3% respectively, and will operate under the brand La Française Forum Real Estate Partners (“LFF Real Estate Partners”).
CWI executives David Rendall (CEO) and Jens Göttler (Managing Director), together with their current team, will continue to manage the business and investments. All existing service arrangements between Cushman & Wakefield and CWI will be transferred to LFF Real Estate.
CWI provides a complete investment management service in both direct and indirect commercial property investments for a wide range of international clients across the UK, continental Europe and in Korea. CWI is a recognized specialist in core and core plus real estate investment strategies throughout Europe, most notably the French, German, UK and Swedish markets. Building on over 30 years of investment management experience, CWI has over $1.2 billion of assets under management from separate accounts and the PURetail Fund, in a joint-venture with Scottish Widows Investment Partnership (SWIP). PURetail is a closed-ended pan-European (France, Germany and Sweden) real estate fund focused on urban retail assets. Existing local teams will remain in place and will continue to operate out of Paris, London and Frankfurt.
Just four months ago, La Française and Forum Partners announced their partnership and aspiration to become a leading European real estate investment manager and advisor. The acquisition of CWI enables La Française and Forum Partners to provide a variety of solutions for investors seeking European core real estate exposure.
Patrick Rivière, Managing Director of La Française, commented: “When screening partners, we are extremely sensitive to their corporate culture. La Française is what it is today because employees and directors have a vested interest in customer satisfaction, which in the end determines our success. That same dedication to service and quality emanated from CWI and its people. It was a natural fit. As a real estate investment manager focused predominantly on France, we now possess a demonstrated and recognized pan European direct real estate expertise.”
Russell Platt, CEO of Forum Partners, commented: “We are thrilled to welcome David Rendall, Jens Göttler and their team as senior management of our new direct real estate venture with La Française. Their impeccable credentials, market knowledge and pan-European resources will bring immediate benefits to both firms and accelerate the development of our collaborative efforts.”
Commenting on the sale of CWI, Carlo Sant’Albano, CEO Cushman & Wakefield, EMEA said: “At Cushman & Wakefield we remain focused on executing our plan which is critical to growing our business and for delivering high quality, value-added services to our clients. With a number of high priority strategic growth initiatives underway at present it is not the right time to invest substantially in building out the CWI platform. In the best interests of the existing CWI client base, we are pleased to have reached an agreement to sell the business to LFF Real Estate Partners which is looking to increase its European exposure and can provide CWI’s clients with access to a larger investment management entity and importantly, continuity of service.”
As a result of this acquisition, La Française and Forum Partners can now offer a complete range of bespoke Pan European real estate investment solutions (direct real estate, listed and unlisted real estate investment funds, private and public equity and debt) to retail and institutional investors worldwide. The new combined platform will have total assets under management amounting to close to $20 billion, of which $14 billion are direct core European real estate investments.
Chile. Foto: @Doug88888, Flickr, Creative Commons.. Las clases medias en América Latina suman dos décadas de crecimiento, pero los retos continúan
The Credit Suisse Research Institute this week released a report entitled Latin America: The long road. The report looks at the growth trajectory of Latin American economies, explores their challenges and strengths on the road ahead, and outlines investment opportunities in the region.
The report highlights that over the last two decades, Latin American economies have significantly narrowed the economic and social gap with more advanced economies. The region has come a long way from the recurrent financial crisis, rampant inflation, stagnation and persistent impoverishment that in the past characterized many Latin American countries.
Along with the strengthening of the manufacturing and services sectors, which are creating domestic opportunities, a primary driver of the region’s economic growth has been the rise of the middle-income class. The middle class in Latin America grew by 50% between 2003 and 2009, from 103 million to 152 million people, or 30% of the population. This has profound implications for the economy as well as the investment environment.
The report provides context for the current macroeconomic situation in the region and outlines investment opportunities across sectors, including e-commerce, retailers, financial services, and energy. By evaluating the structural changes in Latin America and how each country stands relative to the developed world, the countries’ potential for growth is revealed – allowing for the identification of sectors that are likely to offer the greatest opportunities.
“The report outlines the long-term outlook for the region by taking an in-depth look at demographics, infrastructure, intangible infrastructure, employment, and macro conditions,” says Stefano Natella, Co-Head of Securities Research & Analytics. “While the region as a whole is in a much better position to absorb a serious shock, Latin American governments and societies still face considerable challenges.”
The report concludes that underinvestment in infrastructure, low savings ratios, a growing income distribution gap and education are some of the key challenges affecting the growth outlook for the region. The next ten years will be crucial to consolidate the gains that have been made over the past two decades.
