HSBC Global Private Banking, Americas announced that Roberto Teofilo has joined as Managing Director and Senior Relationship Manager for the Brazil market. He will report to George Moscoso, Market Head for Latin America.
“We are thrilled that Roberto has joined HSBC,” said Moscoso, “he is a highly skilled professional who brings great experience over many years meeting the evolving needs of ultra-high net worth individuals and families in Brazil.”
Based in Miami, Teofilo will be responsible for bringing the global resources of HSBC to help ultra-high net worth clients based in Brazil manage, preserve, and grow their wealth.
With a career spanning nearly 20 years, Teofilo has worked at Deutsche Bank, JPMorgan, Merrill Lynch, and Credit Suisse. Earlier in his career, he worked in strategic planning at IBM in New York. He has a Master’s degree from the Thunderbird School of Global Management and earned his undergraduate degree from Auburn University where he graduated summa cum laude and was named the student-athlete of the year in 1995. Before moving to the United States, he participated in several professional tennis tournaments after a successful run in the International Tennis Federation’s Junior Circuits, reaching the top three in Brazil and Top 50 in the World Rankings in 1988.
“Brazil is one of our key markets within Latin America and we look forward to continuing to strengthen our team and our proposition so that we can best serve the needs of ultra-high net worth families and individuals,” added Moscoso. In addition to Brazil, HSBC Global Private Banking’s core markets within Latin America include Mexico, Chile, and Argentina.
The Brazil market team also recently added Cristiane Suzzio, as a Relationship Officer from JP Morgan and Rodrigo Medina, as a Client Service Executive from Banco do Brasil. These additions come after the Bank welcomed Alessandro Merjam and Monica Mavignier as Relationship Managers for the Brazil market team earlier this Summer.
Julius Baer has signed a declaration to support the United Nations (UN) Principles for Responsible Banking making it the first Swiss bank to commit to them. The Bank will formally sign the principles on the occasion of the UN General Assembly in New York in September 2019.
The Principles for Responsible Banking have been developed by the UN Environment Finance Initiative (UNEP FI) and 28 banks from around the world and will be officially launched on 22 September 2019. The Principles set out the banking industry’s role and responsibility in shaping a sustainable future and in aligning the banking sector with the objectives of the UN Sustainable Development Goals and the 2015 Paris Climate Agreement. The principles represent a single framework for the banking industry that aim to embed sustainability across all business areas.
Bernhard Hodler, Chief Executive Officer Julius Baer said: “We are very proud to be the first Swiss bank to commit to the UNEP FI Principles for Responsible Banking. At Julius Baer, we continuously include sustainability practices into our business, meeting a number of notable milestones in our pursuit of long-term value creation for clients, shareholders, and society as a whole. We see our responsibility as encompassing all aspects of sustainability: economic, social, as well as environmental. With our declaration to the Principles for Responsible Banking, we affirm our willingness to assume an active leadership role in sustainable changes.”
CC-BY-SA-2.0, FlickrCEPAL building. FDI Flows to Latin America and the Caribbean Increased by 13.2% in 2018
In contrast to the global trend, foreign direct investment (FDI) flows to Latin America and the Caribbean increased by 13.2% in 2018 compared to 2017, totaling 184.287 million dollars, which reversed five years of falls.
Although the figure reached last year is still below the values recorded during the boom price cycle of raw materials, the Economic Commission for Latin America and the Caribbean (ECLAC) reported in Santiago, Chile that, “when analyzing the different components of FDI, it is observed that the recovery of dynamism in 2018 was not based on the entry of capital contributions, which would be the most representative source of the renewed interest of companies to settle in the countries of the region, but in the growth of the reinvestment of profits and loans between companies”.
The study shows great heterogeneity in national results: In 16 countries there is an increase in entries compared to 2017 and in 15 countries there is a decrease. Most of the growth of FDI in 2018 is explained by the greater investments in Brazil (88.319 million dollars, 48% of the regional total) and Mexico (36.871 million dollars, 20% of the total).
They are followed, in terms of the amount received, Argentina (11,873 million dollars, 3.1% increase over 2017), Colombia (11,352 million dollars, 18% drop), Panama (6,578 million dollars, increase in 36.3%) and Peru (6.488 million dollars, 5.4% drop). Entrances to Chile (6,082 million dollars) grew slightly (3.9%), but, as in 2017, capital flows to the country were clearly below the average of the last decade.
“In an international context of reducing FDI flows and strong competition for investments, national policies should not be aimed at recovering the amounts recorded at the beginning of the decade, but rather attracting more and more FDI that contributes to the formation of capital from knowledge and move towards sustainable production, energy and consumption patterns,” said Alicia Bárcena, ECLAC Executive Secretary.
“The increasing incorporation of a sustainable development approach in the strategic decisions of the main transnational companies in the world is an opportunity to design policies that accompany this paradigm shift,” said the senior official. The outlook for 2019 is not encouraging because of the international context. A drop of up to 5% in FDI inflows is expected, according to the report.
In 2018, FDI in Central America grew 9.4% compared to 2017 due to the momentum of Panama. In the Caribbean, the entries decreased 11.4% due to lower investments in the Dominican Republic (2,535 million dollars, -29%), the main recipient in this subregion.47% of FDI inflows in 2018 corresponded to the manufacturing industry, 35% to services and 17% to natural resources. On the other hand, cross-border merger and acquisition megaoperations were concentrated in Chile and Brazil, in the mining, hydrocarbons and basic services (electricity and water) sectors.
Regarding the behavior of Latin American transnational corporations, known as translatinas, the ECLAC document reports that the outflow of FDI from Latin American countries decreased in 2018 for the fourth consecutive year and reached 37.870 million dollars. 83% of direct investment abroad from Latin America originated in Brazil, Chile, Colombia and Mexico.
Most of the capital that entered the region came from Europe (which has a greater presence in the Southern Cone) and the United States (main investor in Mexico and Central America). China, meanwhile, lost participation in mergers and acquisitions in Latin America and the Caribbean, according to the report Foreign Direct Investment in Latin America and the Caribbean 2019.
Finally, the report indicates that 7.9% of FDI received by Latin America between 2012 and 2016 went to the agrifood chain, especially to the agribusiness sector, a percentage that rises to 15.5% in the case of Uruguay, 14.5 % in Paraguay, 14.4% in Mexico and 11.9% in Argentina. “FDI can contribute to the need for changes in regional agri-food chains to meet the environmental and social challenges of the coming decades,” concludes ECLAC.
Wikimedia CommonsAlberto Fernández. International Markets try to Calibrate Fernández in a Distrust Climate
In the midst of the storm unleashed by the victory of Alberto Fernández in the primary elections in Argentina, which predict a possible return to the power of the Peronists, international managers and analysts try to gauge the situation: what measures will a hypothetical new government take? Will there be default, renegotiation with the IMF, capital control? … And, above all, a key question: Is the Argentine risk sworth it?
Luc D´hooge, Vontobel‘s Head of Emerging Markets Bonds, and his colleague Thierry Larose, Senior Portfolio Manager, have entered fully into the risk analysis that matters most to international investors.Thus, they point out the risks of a Fernández presidency is that the new administration will embark on a left-wing populist agenda that includes (classified by ascending gravity):
A loss of independence from the central bank.
A sudden stop of the Macri economic and social reform agenda
A loss of transparency and credibility in inflation figures.
A reimplementation of capital controls.
A repudiation of the current reserve agreement of the International Monetary Fund (IMF)
A possible restructuring of the external debt.
Therefore, Vontobel analysts ask: Are we now negotiating at an attractive price for the risk we take? “For us, the answer is yes. The current risk premium of the external debt includes a decent remuneration in the event of default, and the current valuations of the local debt are in line with a strong depreciation of the currency along with the imposition of capital controls. In addition, the IMF will not only record a cancellation of its $ 44 billion rescue program. In addition, it makes no sense for a country with a large current account deficit to stop paying its foreign currency debt (especially when that debt is governed by foreign law, for example, debt issued in the United States and the United Kingdom).”
For the manager there is another question: What are the risks of Argentina following Venezuela in an economic abyss? “The answer here is more nuanced. Argentina has a long history of political errors. Macri achieved good things, but all his efforts were ruined by his gradual approach and monetary policy errors of late 2017 and early 2018. In fact, we believe that the new administration will have no choice but to continue with Macri’s policies. However, the problem is that they will try to avoid the most unpopular (for example, labor reform and a strict monetary policy), placing the country on the same wrong path again, the one that failed miserably before,” they say from Vontobel. Luc D´hooge and Thierry Larose explain that investors are waiting for some clarity about Fernández’s economic policies and bet that he adopt a pragmatic stance since “power spreads pragmatism”.
The past weighs and Fernandez is surrounded by a sea of mistrust
Markets are discounting with a 78% probability that Argentina fails to comply with its debt obligations with a Peronist government, Schroders says in a long report.
Pablo Riveroll, director of Latin American equities, said that “if Alberto Fernández is elected, as we expect now, the continuation of political orthodoxy is a significant risk. Although Fernández’s economic plan is still unclear, his popularity is driven primarily by his formula partner, former President Cristina Fernández de Kirchner. Kirchner has been very critical of the agreement with the IMF, the elimination of capital controls and increases in energy tariffs, as well as having several accusations of corruption against him. Alberto Fernández himself also made radical comments during the campaign, including the reestablishment of capital controls and the relaunching of growth through the easing of fiscal and monetary policy. If he tones down these views in the coming months is an open question.”
Riveroll highlights the distrust he creates amongst many investors: “It will take a long time to understand what Fernández’s true policies will be, so for the next 12 months we would expect much greater uncertainty, a deterioration in growth due to the lack of confidence and a reversal of the recent fall in inflation. Given the increase in uncertainty, we expect investors to take into account a higher risk premium and significant downward revisions of the benefits The outlook for Argentina, both for short and medium term, has deteriorated sharply after the primary elections on Sunday and, therefore, the stock market is unattractive as an investment destination.”
James Barrineau, Director of Emerging Markets Debt Relative of Schroders, affirms that “the investors in debt will look for two signs in the short term and in the first place, a response of Fernandez. Although for the most part he remained silent in the period before the primary elections, he said some imprudent things about economic policy. However, as it is the clear favorite now and alleged winner, it has an incentive to try to calm the markets and not attract a renewed atmosphere of crisis from day one. Second, a demonstration of the ability of the central bank to limit currency volatility. A substantial depreciation of 20% or more later could trigger another round of higher inflation and an additional depreciation spiral, and make debt metrics unsustainable in the medium term.”
Opportunities in emerging markets?
Fidelity warns that the result of the Argentine primary could reverse its pro-market policies. Andressa Tezine, senior sovereign debt analyst, says markets will focus on “when and how a potential Fernández-Kirchner government would announce new controversial measures that would reverse Macri’s reforms. Regardless of the timing of the official announcements, the markets will discount this in the price before the October 27 elections. Consequently, investors should be very attentive to the political evolution of the coming months and consider whether they can withstand the associated risks. If concerns about Argentina extend to emerging markets in general, opportunities could be created for agile investors in countries with no connection to this electoral process or its final outcome,” concludes Fidelity.
CC-BY-SA-2.0, FlickrPhoto: CAIA Miami. CAIA Miami To Host an Alternative Investments Educational Event
CAIA Miami prepares an educational event, titled Private Equity / Venture Capital Outlook, which will take place on Wednesday, September 18th.
The event, sponsored by Lloyd Crescendo Advisors, brings together industry professionals to discuss alternative investments market trends and opportunities in the current market environment.
Starting at 5:30 pm, guests will meet at 801 Brickell Avenue to hear from Roque Calleja, BlackRock Head of Alternative Specialists, Yuval Avni, Crescendo Ventures, Israel Tech VC, Nayef Perry, Hamilton Lane and Amy Lawrence, US Trust / Miami Finance Forum.
For more information or registration, follow this link.
Wikimedia CommonsColfondos Tower. AFP Habitat announces the acquisition of AFP Colfondos in Colombia
Inversiones La Construccion (ILC) and Prudential Financial Inc., which together hold 80% of the ownership of AFP Habitat, announced on Friday an agreement to acquire, through AFP Habitat S.A., 100% of the ownership of Colfondos S.A. Pensiones y Cesantías, a Colombian pension fund manager currently owned by Scotiabank and Grupo Mercantil Colpatria.
Colfondos is the third largest pension fund manager in Colombia, with 1,916,000 clients and 27 years of history. The transaction involves the purchase, by Habitat, of 100% of the ownership of AFP Colfondos. As per an official communication of AFP Habital to the national regulator CMF, the price of the transaction in 585.000 million pesos ( 170 million dolars) that will be paid in cash.
Upon completion of this operation (subject to usual closing conditions, including regulatory approvals), AFP Habitat will consolidate its presence in three countries (Chile, Peru and Colombia), reaching a market of around 100 million inhabitants and over 850,000 million dollars of total GDP.
“This transaction consolidates the corporate relationship we have with Prudential and ratifies our vision regarding the potential of the Latin American market. Likewise, and if authorized by Colombian regulatory authorities, AFP Habitat will take a significant step in its expansion strategy, contributing in a new country its differentiating attributes such as its track record in investment returns, professionalism and leadership in the industry”, said Pablo González, CEO of ILC.
Additionally, Cristián Rodríguez, Chairman of AFP Habitat Chile said that “we are very happy with the decision to acquire AFP Colfondos, as it will allow us to consolidate a portfolio of about 5 million affiliates in the Andean Region (Chile, Peru and Colombia), capture the regional growth potential and work towards the goal of achieving better pensions for the people”.
The Manager of Prudential for Latin America, Federico Spagnoli, said that “our partnership with ILC is delivering the expected results, and this transaction is a concrete demonstration that the internationalization of AFP Habitat is being achieved in the right terms and conditions, responding to the spirit that drove our alliance in 2014”.
As reported previously, in October 2014 ILC -an investment company of which the Chilean Chamber of Construction is a majority shareholder- partnered with Prudential Financial Inc., a North American company, to control 80% of the ownership of AFP Habitat, which was an important step to strengthen the internationalization strategy of this company. Since then, AFP Habitat has consolidated its presence in the Peruvian market by becoming one of the main pension funds managers in the country.
Foto cedidaHenry Wong, CFA Managing Director Head of Asia Fixed Income. Henry Wong, DWS: "There are Currently More Interesting Investments than Chinese Fixed Income from a Risk Return Perspective"
Henry Wong, CFA Head of Asia Fixed Income, with close to 30 years of experience in the industry, has a management style that runs away from sentimentality, maintains its long-term investment strategy, seeks internal and external transparency. “My intention when buying an asset is to sell it and when I sell it, to buy it again at a better time market momentum” states Wong
Chinese Macroeconomic picture
For the manager, “after four decades of continued growth, the Chinese economy is tired and with significant excess capacity” . The adjustment of this excess capacity will be painful in terms of job losses and increased competitiveness by companies.
In his opinion, it is still premature to know if it will be successful or not, because this adjustment needs a change in mentality that has not yet occurred and that takes time. But “they have no choice but to do so, and the government must decide whether to do it gradually or faster,” says Wong.
In addition, Wong points out that the markets since 2007/2008 have been favored by an excess of liquidity that benefited more asset holders than ordinary people, so in his opinion, the political class, especially in the United States and Europe, has to rethink its strategy in this line to redirect this imbalance.
For Wong, the trade conflict between the United States and China is a “consequence of this money printing excess,” but to some extent this increase in protectionism is also related to sustainability policies by having to reduce the transportation costs of products to favor of local products. “I do not think we can foresee a specific termination date of the conflict, it is a global structural change that will take decades,” he concludes.
Bond Connect
From his point of view, China, like many other economies, faces a problem aging population that will lead to a reduction in income due to lower taxes collected from a depleted workforce and an increase in expenses derived from an older population,
In this sense, the Bond Connect project, which will include fixed income assets in local currency in the main world indexes, is an effort by the State to open its capital market and secure foreign financing sources.
Although Wong´s portfolio invests mostly in hard currency, the manager states that this process has just begun and that the supply of available assets is still reduced, limited to government bonds and state owned entities: “At this very initial moment the Investment alternatives are very limited for international investors, who can only move along the curve buying assets with different maturities, but the number of issuers is very limited and liquidity is reduced. I think this market will get bigger every day, but it will do so at a very gradual speed, ” concludes Wong.
Regarding the attractiveness of the Chinese fixed income market, the manager affirms that risk return ratio currently does not suggest putting too many resources in Chinese assets, or in other words: “There are currently more interesting opportunities from a risk/return perspective than China”, he points out.
India and Indonesia
Specifically, one of its current hard currency bets is Indonesia, since after the presidential elections it is one of the countries that can benefit the most from an exit from the factories of China in search of greater competitiveness. Preferably, they opt for companies that have already gone through a process of restructuring and sovereign or quasi-sovereign issuers for the good macro moment that the country is going through.
Additionally, India is also an overweight country in its portfolio, although they are very selective and avoid financial names.
Increase in portfolio duration
With regards to positioning within the curve, Wong explains that they have been extending the duration of the portfolio gradually since last October, reaching a duration of 5 years compared to the 2 years they maintained in August 2018.
This commitment responds to his conviction that global growth will be slower and less efficient affected by protectionist policies and capacity adjustments. This duration objective has been achieved through the purchase of high quality long term Asian corporate bonds and 10 year and 30 year US treasuries up to 10% of its portfolio.
Foto cedidaChris Kaminker (left) and Ebba Lepage (right) / Courtesy photo. Chris Kaminker and Ebba Lepage Join Lombard Odier
Lombard Odier further strengthens its commitment to sustainability with two strategic hires. Christopher Kaminker and Ebba Lepage have joined the firm.
Kaminker joins as Head of Sustainable Investment Research & Strategy, a newly created role within Lombard Odier Investment Managers (LOIM). He will lead on strengthening LOIM’s sustainability offering and research capabilities. He joins from Skandinaviska Enskilda Banken (SEB), a leading Nordic financial banking group, where he was Head of Sustainable Finance Research and a Senior Advisor. He is the author of over 30 publications on sustainable finance, and has held responsibilities for cross-asset research and strategy, as well as advising on and structuring sustainability financing solutions for investors, corporates and sovereigns.
Prior to SEB, Kaminker was the lead economist and policy advisor for sustainable finance at the Organisation for Economic Co-operation and Development (OECD) and represented the OECD as a delegate to the G20 and Financial Stability Board. Previously, he worked at Société Générale and Goldman Sachs.
Ebba Lepage will join as Head of Corporate Sustainability on 19 August 2019. Her experience in corporate business development and ESG strategy, assessment and implementation will be key assets to help drive Lombard Odier’s sustainability agenda forward.
Lepage has worked in a multinational environment, in New York, Montreal, Monaco, London, and Stockholm. She has spent her career in corporate finance, investment banking, asset management and for nearly five years in sustainable innovation. She joins from Stora Enso, a sustainability leader of renewable solutions in biomaterials for consumer products, where she was Group Vice President M&A and Corporate Finance. Here, she oversaw the Biomaterials Innovation group division’s sustainable investment activities.
Patrick Odier, Senior Managing Partner of the Lombard Odier Group, said: “I am pleased to welcome such experienced talents to Lombard Odier as we continue to strengthen our sustainability expertise and offering. Seeking to identify and provide the best solutions for our clients is at the heart of what we do, while always ensuring we have a positive impact on society, creating a better future for the next generation.”
Hubert Keller, Managing Partner of the Lombard Odier Group and CEO of Lombard Odier Investment Managers, said: “Investors and the corporate world are coming under mounting pressure to transition to a sustainable economy. Christopher’s extensive experience across the academic, financial and policy sectors will advance our integrated sustainability solutions and bolster our research capability within LOIM as we seek to give our clients access to companies which adopt sustainable business models and practices.”
Annika Falkengren, Managing Partner of the Lombard Odier Group, said: “Lombard Odier has a long heritage in sustainable investment and corporate sustainability. These appointments further demonstrate our commitment to continually innovate in these fields. Ebba’s experience in sustainable innovation will be crucial in helping us become an even more sustainable business as we continue to grow over the coming years.”
Foto: Dennis van Zuijlekom. In The First Half Of The Year Mexico Saw 7 New Ckds And Cerpis
A total of 7 CKDs* were issued in the first half of 2019, of which 5 were CERPIs. Together, they add up to 1.595 million dollars of which only 366 million dollars have been called.
The 7 issuers of the first half of 2019 were five CERPIs: Mexico Infrastructure Partners (energy); SPRUCEVIEW MEXICO (private equity), Blackstone (fund of funds), ACTIS GESTOR (fund of funds) and Harbourvest Partners (fund of funds). And two CKDs: Walton Street Capital (real estate) and ACON (private capital).
Of these issuers:
For Walton Street Capital, is its fourth CKD that issues individually to reach total commitments of $ 1.274 billion USD in the real estate sector without considering the CKD that they jointly issued with FINSA in 2015.
In the case of Mexico Infrastructure Partners, is its fifth issue (3 CKDs and 2 CERPIs) to complete total commitments for 728 million dollars in the infrastructure and energy sector.
For Blackstone is its fourth CERPI as an issuer in the fund of funds sector that allows it to add commitments for 717 million dollars.
Finally, the issuance of ACON, it is an option to acquire Series B certificates for AFOREs holding the previous CKD (ACONCK 14).
The number of issuers for the same period of 2018 (first half) was 10 (9 CKDs and one CERPI) out of a total of 38 that were issued throughout 2018. The total amount placed in 2018 was 1.649 million dollars and commitments for 6.869 million dollars. After the explosive offer of CERPIs observed in 2018 (18 in total), in the first six months of 2019 (5) it is observed that the offer takes a slower pace of growth.
The 13.098 million worth of the CKDs and CERPIs market through 133 issues represent 0.9% of GDP. The 109 CKDs in circulation are equivalent to 80% of the resources committed, while the 24 CERPIs in circulation represent 20% of the total.
The largest number of CERPIs issues continues to be funds of funds (13 of the 24 total CERPIs that have been placed), while 6 are private equity, 3 of infrastructure and the ones with the least supply have been those of energy and real estate of which only one of each has been placed. According to the quarterly publication of CKDs & CERPIs made by 414 Capital as of July 2019, ), there is a total of 38 CKDs in pipeline that have made the process as issuer with the Mexican regulator (National Banking and Securities Commission or CNBV) of which 7 are CERPIs. With the intention of issue since 2016 there is one, while there are 11 of 2017, 14 of 2018 and 12 of 2019 which reflects the interest of many to issue. Historically there are few CKDs and CERPIs that issue in the first year.
Although this year is the beginning of a new public administration, the offer of alternative investments has been maintained through CKDs and CERPIs.
Column by Arturo Hanono
*CKDs are private equity funds that are issued in the stock market through a trust, which allows institutional investors such as AFOREs and insurance companies, among others, to participate in this asset class. In 2009 the first CKD (RCOCB_09) was issued. CKDs only invest in projects in Mexico. Although the first CERPI arises in 2016 (MIRAPI_16) it is in 2018 when 90% of the projects in which they invest are allowed to be abroad and 10% in Mexico. This situation is what causes the rise of CERPIs.
Foto cedidaFrom left to right: Rafael Mendoza, CFA; Pablo Jaque, CFA; Magdalena Bernat; Luis Fernando Pérez y Diego Chomali, CFA. Oaktree Acquires Strategic Stake in Chilean-based Singular
Oaktree Capital Management announced on July 29th that it has agreed to acquire a 20% strategic stake in Chilean-based asset management firm and placement agent Singular. This is Oaktree’s first corporate acquisition in Latin America.
Howard Marks, Co-Chairman of Oaktree, stated, “We have worked with the people of Singular for seven years. We respect them; their work in the region has been excellent; and most importantly they embody Oaktree’s culture. We are very glad to take this next step in extending our relationship and deepening our commitment to Latin America.”
“I am pleased to continue our work with the Singular team,” said Daniel Saieh, a Managing Director at Oaktree specializing in distribution of funds in Latin America. “They have been great partners for Oaktree and our clients and I look forward to expanding this important relationship throughout the region.”
Singular will continue to operate independently. Oaktree will have the right to appoint one representative to Singular’s board of directors.
Singular Chairman Pablo Jaque said, “We are thrilled to partner ever more closely with Oaktree. We welcome the expertise and best practices Oaktree has to offer to our platform as well as their additional support as we continue developing our asset management business across Latin America.”
Oaktree is a leader among global investment managers specializing in alternative investments, with 119 billion dollars in assets under management as of March 31, 2019. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. The firm has over 950 employees and offices in 18 cities worldwide.
Singular is an asset management company based in Chile bringing a long track-record in managing institutional money to the Latin American market and extensive experience as Oaktree strategies’ institutional distributor in the region.
