Should Quality Company Growth Be Highly Valued in Today’s Abnormal Cycle?

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¿Deberían estar mejor valoradas las compañías que crecen en este ciclo económico?
Photo: Chase Elliot Clark. Should Quality Company Growth Be Highly Valued in Today’s Abnormal Cycle?

Good businesses are more expensive than they have been in the past, but ironically far more valuable in today’s world.

The reason for this is simple. In a world bereft of growth opportunities, growth is priced at a premium. Normal cycles produce an abundance of economic growth, which is good for the performance of average businesses. They also create opportunities for higher company earnings. However, this cycle is far from normal and requires differentiated thinking to achieve meaningful returns, not a reliance on what has worked in the past.

In December 2008, as the world was gripped by the onset of the great recession, US 10 year bond yields fell to 2.12%, a low not seen for more than 70 years. At that time very few grasped the deflationary risks the world was facing, apart from perhaps central bankers studying the Great Depression. Now, more than eight years on, despite higher stock markets, we still have a term lending rate to the US government of 2.03%. 

Why have yields remained so low, when the world is in recovery mode?

This question has been perplexing economists and has occupied the brightest minds. Part of the riddle might be better understood if the message from the current commodity price landscape is considered, with oil prices at levels last seen in 2008. We believe low commodity prices and low bond yields confirm depressed levels of economic activity at a macro level, paired with intrinsic business model risk at the asset level.

What should an asset allocator do?

If the Federal Reserve is unwilling to raise interest rates from near zero, should you consider investing in growth assets if there is no meaningful growth? Quality equities can help.  Quality businesses are more likely to produce consistent levels of growth during times of economic uncertainty. They can:

  • Provide compelling value: There has not been much new investment in Quality equity strategies over the past twelve months. This encourages us. Despite our funds delivering strong performance, we still see compelling value in owning a portfolio of businesses growing at high single digit rates, with no leverage and paying out 75% of the cash produced.  
  • Manage their businesses for different trading environments: Stable cash generating businesses in consolidated industries have the ability to manage their pricing structures better than other industries. They can also cut costs through optimising distribution and marketing, paving the way for higher margins in the good times or protecting cash flows in the bad.
  • Become more active in M&A: South African Breweries is a good example. Our portfolios have enjoyed a value uplift from the proposal from Anheuser-Busch InBev. But if we look at the deal multiples paid on this acquisition, it would suggest our portfolio is around 50% below fair value on similar terms. As such, we would expect more of these corporate deals to occur.

Clyde Rossouw, Co-Head of Quality at Investec Asset Management.

Credit Suisse: “The US Federal Reserve May be Able to Hike Rates in December 2015”

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Credit Suisse: “La Fed podría estar en posición de subir las tasas de interés en diciembre de 2015”
CC-BY-SA-2.0, FlickrPhoto: James Jordan . Credit Suisse: “The US Federal Reserve May be Able to Hike Rates in December 2015”

In his monthly Investment outlook, titled “Global economic stabilization more likely than a further slowdown,” Björn Eberhardt, Head of Global Macro Research at Credit Suisse, states that the US FED may be able to hike rates in December 2015, while other central banks, such as the European and Japanese ones, may still announce further easing.

Eberhardt points that “The global economic outlook remains very uncertain. However, recent activity data on a wide range of economies has supported our expectation that the global economy is unlikely to slow further.”

Adding that the latest US data has also been relatively stable overall despite some signs of softening. Q3 GDP data is likely to show weaker growth compared to Q2, mainly due to weakness in trade. “Looking ahead, although business surveys have been weakening, consumer confidence remains very high, indicating that private consumption is likely to continue to be the main growth driver. And while payroll growth weakened in August and September, other labor market measures point to still very good conditions,” he says.

Based on solid domestic conditions – Eberhardt explains,the US Federal Reserve has good arguments for a first rate hike in December, “but the timing remains very uncertain. In our view, financial market pricing that virtually rules out a December hike has gone too far.”

Despite the fact that economic momentum in the Eurozone has, if anything, been somewhat more robust than in the USA Credit Suisse believes that the European Central Bank (ECB) may nevertheless have to announce further easing, “mainly because the outlook for Eurozone inflation remains very subdued and inflation expectations have weakened again.” As is the case in Japan. Eberhard believes further easing from both Central Banks might come as soon as this year.

Lastly, the expert states that when it comes to emerging markets and despite weak data, “the situation in major emerging markets has shown some signs of stabilization.”

Pioneer Investments’ Iaccarino: Growth Exists, Although it’s “Hidden”

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Iaccarino, de Pioneer Investments: El crecimiento existe, pero está “escondido”
Photo: Piergaetano Iaccarino is the Head of Thematic and Disciplined Equity at Pioneer Investments since January, 2012. Pioneer Investments’ Iaccarino: Growth Exists, Although it’s "Hidden"

Even if Pioneer Investments is more positive about China than the consensus, the firm believes growth must be found in other markets. Piergaetano Iaccarino, Head of Thematic Equity for Pioneer Investments, shared his thoughts at the investment forum “Embrace New Sources of Return” held recently in Miami: “China is shutting down one of its economic engines, and starting another.” This transition from fixed investment, exports, and government control, to an economy oriented to domestic consumption, services, and the private sector, will take time, but in China “there are still available instruments” claims Iaccarino referring to the forex exchange controls.

Debt and Deflation

Iaccarino determines that in the coming years, growth will be higher in developed economies, “where we are seeing a better growth outlook than for the 2007-2014 period. In emerging markets, the situation is reversed.”

Economies operate in an environment ruled by two major trends: financial leverage and deflation. “Nations do not only face the repayment of outstanding debt, but also their obligations to pay pensions and health costs of a population which is ageing quickly.” Japan is not the only country with this problem, the United States has a similar debt level once these future obligations are incorporated, “and the emerging markets are not immune to this problem because they have doubled their debt in recent years, with half of that debt issued in hard currencies (euro and dollar).

The other major trend mentioned by the expert is deflation, which represents an added problem for the most indebted countries. “Central banks of developed countries do not have the rate cutting tool readily available; They can print money (QE) or manipulate the exchange rate,” although the effectiveness of these measures is questionable.

So, Where is Growth to be Found?

“Growth is ‘hidden’. It exists but it’s hidden,” claims Iaccarino. The United States, with the strength of its labor market, represents an opportunity. Employment generates consumption, to which a favorable demographic picture must be added. “Perhaps the only negative point in the US is political, with the uncertainty arising from the elections next year.” Even the exposure to exports towards China is correct, as they are not as relevant, representing 1% of GDP, but the trend is growing, however “and the Fed knows it, so that the evolution of the Chinese economy weighs increasingly in monetary policy decisions in the United States.”

According to the expert, Japan represents the eternal promise. “Fixing Japan always takes longer than expected. Culturally, the process of reaching a consensus is painfully slow, but once matters have been clarified, action is usually rapid. “The reforms presented by Shinzo Abe are now in full debate in Congress. The TPP (Trans-Pacific Partnership) is very important for Japan, which will have to introduce certain reforms touching on immigration and corporate governance. “In this regard, it has already achieved a lot, with a penetration of 50% of independent board members in listed companies, compared with 16% a few years ago. Valuation and momentum support investment in Japan. “

Should Emerging Markets be Avoided Entirely?

While it’s true that emerging markets will see less growth, they should not be avoided entirely. “Some countries are more vulnerable than others to external shocks. We must find countries with good foreign exchange reserves and a healthy current account balance. You need to be very selective, “claims Iaccarino.

Another factor to consider is the credibility of reforms and the stability of the institutional framework. “India and China are in a much better position than Russia and Brazil.”

What to do?

Perhaps the key to medium-term positioning is to manage volatility. “Volatility is increasing, especially the volatility of volatility, creating stress in the market. Volatility becomes a risk if you are forced to sell in times of high volatility; however, if you do not have that time pressure to sell, it becomes an opportunity”.

Volatility feeds on a number of factors: the debt deleveraging process, an environment of below potential growth, in both developed and emerging markets, also coupled to the central banks’ lack of tools. In turn, there is the problem of liquidity in the market, directly derived from increased regulation of the financial sector.

All this creates opportunities, although “potential is limited, both in equities and in fixed income; the important thing is to hedge tail risks well.”

In credit, the expert mentions very selective opportunities in securities overly affected by the crisis in the energy sector. Pioneer Investments’ Head of Thematic Equity, has a more favorable opinion of equities, since there is a component of positive growth in developed markets, which is feeding into corporate earnings. “In Europe, the cycle lags behind the United States, but it’s improving. Valuation of the stock markets may be more questionable, but some things are attractive. The biggest risk is volatility, or risk perception, which punishes stock markets every time there is an episode of illiquidity.”

Iaccarino adds that technical factors particularly support the Japanese market, which is seeing a lot more domestic money in their stock markets, both by pension funds and by individuals, a group which now enjoys tax benefits for investing in stock markets.

Canadian BMO Global AM Launches Nine ETFs Aimed at European and British Investors

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La canadiense BMO Global AM lanza su primera gama de ETFs dirigida a los inversores europeos y británicos
Photo by Gerald Lau. Canadian BMO Global AM Launches Nine ETFs Aimed at European and British Investors

Canadian manager BMO Global Asset Management has launched nine ETFs targeting UK and European investors. The ETFs, all UCTIS compliant, are listed on the London Stock Exchange and registered in Ireland.  Three of them are global corporate bond ETFs, one is global high yield and five are equity ETFs. Amongst the equity ETFs BMO offers exposure to the US, Europe ex-UK and the UK.

Richard Wilson, CEO, BMO Global Asset Management (EMEA), told InvestmentEurope “Establishing our ETF offering in Europe is a key strategic milestone for us as we continue to expand across the region.”

According to BMO, their fixed income offer will allow investors to more precisely position their fixed income exposure at a time when the world is preparing for the Federal Reserve to raise rates.

In regards to their equity offer, which follows MSCI indices, the Canadian bank reminds investors that their Income Leaders ETFs come in hedged and unhedged versions, allowing investors to implement active positions on currency.

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BMO manages £10 billion across 60 ETFs and has over £160 billion assets under management (Over $226 billion as of July 2015).

Bill Gross: Central Banks are “Stubborn, And Reluctant To Adapt To A Significantly Changed Finance Based Economy”

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Bill Gross: los bancos centrales son unos “necios y reacios a adaptarse a una economía que ha cambiado en los últimos años"
Photo by Blatant World . Bill Gross: Central Banks are "Stubborn, And Reluctant To Adapt To A Significantly Changed Finance Based Economy"

In its latest monthly report, the so-called bond king, Bill Gross, warns of the risks that the Zero Bound Yield Curve brings to credit markets.

Gross, who has urged the Federal Reserve to raise rates several times this year, says that the near-zero levels are hurting the real economy and affecting the balance sheets of institutional investors such as pension funds and insurance sector companies because “profit growth is stunted, if short term and long term yields near the zero bound are low and the yield curve inappropriately flat”.

In his opinion, the US government should sell part of its more than $2 trillion in long-term bonds and buy short-term paper to improve the slope of the curve. But he doubts that the Fed will take that route because he believes that “central bank historical models fail to recognize is that over the past 25 years, capitalism has increasingly morphed into a finance dominated as opposed to a goods and service producing system”.

Another recommendation the bond guru makes to central banks is to raise their inflation targets, to say 3%, as the president of the San Francisco Fed, John Williams recently said. However, Gross considered unlikely that central banks of major economies would change their ways because they are “stubborn, and reluctant to adapt to a significantly changed finance based economy.”

You can read the report following this link.

 

 

 

 

“Extended Alpha Fund Allows to Compete in A Race with Other Long Only Funds but with a 60% Bigger Engine”

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"Una estrategia “extended alpha” permite competir en una carrera de fondos long only con un motor un 60% más grande"
Ashish Kochar is a co-fund manager of Threadneedle Global Extended Alpha Fund. Courtesy photo.. "Extended Alpha Fund Allows to Compete in A Race with Other Long Only Funds but with a 60% Bigger Engine"

Ashish Kochar and Neil Robson, co-fund managers of the Threadneedle Global Extended Alpha Fund, explain in this interview with Funds Society the benefits from a 130/30 strategy and the need to generate alfa in a more volatile world.

The ‘Extended Alpha’ concept that names the strategy: In what does it consist exactly?

The easiest way to think about an Extended Alpha fund vs. a typical Long only fund is the analogy of competing in a race with other Long only Funds but with a 60% bigger engine (in this case the 60% extra Gross; upto 30% each from both the Long book and the Short book.)

Extended Alpha Funds or the 130/30 funds take short positions in stocks that are expected to fare badly, while taking long positions in stocks that are expected to outperform the market. The ultimate aim is to create a positive spread between the longs and the shorts. It might sound odd but even if the shorts outperform the market (benchmark) but underperforms the long stock – it still works in creating a positive spread ie alpha creation. They are called 130/30 because approximately 130% of the portfolio is invested in long positions, and 30% in short positions. (Investment managers can short a higher or smaller proportion of the portfolio). These funds have an overall net exposure to the market of approximately 100% and a beta near one, the same as a long-only fund.

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How do holding short positions help raising the portfolio’s value?

Shorts positions help the portfolio value in two ways. First, positive alpha creation:  You short something and it goes down and you create alpha. This is the bit that is easy to understand. Second, risk management for long book: This is the more interesting bit in that it allows one to own more of what they like in the long book and hedge out part of the risk by shorting a less good company.

In the current market: Is it more important to capture the ‘beta’ or obtaining the ‘alpha’? Why?

Over the past few years strong market performance has provided attractive market (beta) returns to investors.  Going forward, we expect lower returns from beta, and therefore the relative contribution and importance of alpha is quite important.  In the case of Global Extended Alpha we have been able to generate excess return compounded over the last five years. The more important bit is that these returns have been generated by taking minimal incremental risk.

Do you consider that volatility in the markets will rise?

Yes.  We live in an interconnected world so monetary policy changes around the world, particularly the dynamic of potential US rates rising; against slowing emerging market growth presents a major risk. We are concerned about the second-order effects of shifts in currency and commodity prices. Another risk factor is China. The economy is undergoing a long and a difficult transition. This creates new risks and volatility as we saw in the recent Chinese stock market correction.

Which is the current net exposure of the fund and why? Is it time to be cautious or aggressive in the markets?

The Net exposure of the fund is in the middle of the range with beta near one.  Equity markets are finely balanced at present and as long as one is confident about growth they look remain attractive relative to bonds.  (This is illustrated by the gap between Earnings vs. Bond yields in the chart below.)

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Do you believe that there are ‘bubbles’ in some equity markets?

Generally speaking no, we don’t see bubbles within major equity market regions.  Some subsectors of the market (and indeed valuations in some private markets (venture capital technology for instance), do look frothy. 

Is there value in the global markets? Where would you identify better values for your long and short positions (in sectorial terms, by countries)?

At the present time we believe the global market is relatively fully valued. From a long perspective we favour the US, technology, and consumer sectors. 

In your fund’s particular case, you hold conviction bets. How is conviction better than diversification? Is it possible to obtain a diversified portfolio while holding position in few names?

We have a large team, regional team resources, and central research analysts available to us, which means we generate a large number of high conviction ideas within our global opportunity set. Through our investment process we can achieve reasonable diversification by sector and region while only owning stocks that we have strong conviction in. We never own stocks just because they are in our benchmark.

“In 2015 Feminism Is A Business Issue”

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"En 2015 el feminismo se ha transformado en un asunto de negocios"
Barbara Stewa. "In 2015 Feminism Is A Business Issue"

The future looks very bright for women in finance, says Barbara Stewart, CFA. Author of the Book “Rich Thinking 2015: Future of Women& Finance”, and guest speaker at CFA Spain “Future of women and Finance” Forum. Stewart, portfolio manager at Cumberland Private Wealth Management Inc. Toronto. Canada, explains in this interview with Funds Society that the financially confident woman is the number one target market and technology has levelled the playing field for women.

How do you see the future of women in finance, and in the asset management industry in particular?

The future looks very bright for women in finance! Many studies now show that more women = more money and this is a very compelling equation for a still quite traditional investment industry. My research findings are clear that a) feminism makes good business sense, b) the financially confident woman is the number one target market, and c) technology has levelled the playing field for women. Women are huge users of social media and with respect to the asset management industry,  – this is beginning to radically change the way we inform our clients about stocks and bonds, the way we find our clients, as well as the way we communicate with our clients.

Women presence is still poor in the investment industry … do you think it will grow over time? Will women take on positions of greater responsibility?

Because of the fact that we will have more and more financially confident women as clients, we will need more sophisticated advisors to work with them. My research has shown that women like to communicate in a language that makes them comfortable and they prefer to invest in causes and concerns that matter to them. The best advisor moving forward? A highly competent male or female advisor who uses a holistic approach and integrates the so-called feminine values of empathy and open communication. Many firms are attempting to attract female advisors because they are a natural fit for this role.

How these developments can benefit the financial and asset management industry?

These developments are great for the industry because once again, it has been proven that more women equals more money. Simply put, women are making more money, they are controlling more money and they are making most of the financial decisions in their families. Our industry needs to do a good job marketing to these financially confident woman – she is the future. If we market to these women properly (using their preferred method of communication and accurately reflecting their values when we suggest various investment alternatives) – we can capitalize on this opportunity to attract significant assets from this critical demographic.

What the advantages of diversity are for companies in the finance and  the investment industry?

According to Dr. Ann Cavoukian, one of the ‘smart’ women that I interviewed for my white paper this year (Executive Director, Privacy and Big Data Institute, Ryerson University, Toronto, Canada) – “Feminism is not about saying no to makeup. It is about saying yes to academic, economic and social freedom for both men and women.” In 2015 feminism is a business issue. This type of open communication (through diversity) leads to a better functioning marketplace and a better functioning workplace. Progressive firms that embrace diversity currently have a competitive edge. Firms that “get it” have a But this won’t be the case for much longer. Soon ‘business feminism’ will be normal – just like using computers or using electricity.

How the role of women is as a customer of the financial industry? Is it an important target group? Are women needs different to those of men?

My research has shown that women prefer to learn about and/or hear about financial matters through either informal instruction (via social media/gamification/sharing platforms) or through real-life stories. This means that we need to be ultra-precise when communicating with or marketing to financially confident women. They prefer to invest in causes and concerns that matter to them so our job as advisors is to help them align investment ideas with their values. Most importantly, realize that women aren’t risk averse, they are risk aware. They may take longer to make an investment decision but they will do their homework and take calculated risks. Success with this number one target group will be all about better communication – in the way that they prefer to communicate. And if you make it meaningful to women, they will invest in your product or service, and they will do so with loyalty.

Every time there are more women in major positions: Mrs. Janet Yellen in the FED, Mrs. Christine Lagarde at the IMF… How do you think people perceive them because their women role? Do you think they are judged differently than men?

Actually no. I think there was a time when female role models were being judged differently than men but I don’t think that is still happening. Of course there will always be “unconscious bias” but ultimately it is results that count in the business world and as long as these highly visible women are producing results, well … it is becoming more and more accepted that they are truly top performers and we need them. The beauty of seeing more and more female role models is that it is self-perpetuating – it is becoming more mainstream to view women as effective leaders.

What is the role that women are called to play in the future of the financial industry in Spain, and worldwide?

We need women to act as excellent communicators and to enable the transformation of the industry. We need to restore trust and the best way to do this is through the integration of social media and marketing. One of my interviewees – a behavioural economist, Dr. Gemma Calvert (Founder of Neurosense, Singapore) said – “women may not trust the investment industry but they will trust each other”. The way forward is for smart women to share their positive stories about success in work and life … and inspire other girls and women to think  “I can do that too!”

How the investment industry may become a better place for women?

The investment industry is the best place for a woman to work in my opinion. Why? Because you get rewarded for your results. So if you learn how to make money you will have not only financial independence but also the freedom to come and go as you please. And technology has changed everything. Women want to work from anywhere and now they are able to do just that. The role of an investment advisor can accommodate this need for flexibility so that women can continue to live their lives and structure their work schedules around their lives and competing responsibilities/interests.

Equity Income: Why Big Is Not Necessarily Best When it Comes to Dividend Yield

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¿Existen indicios de que están repuntando los beneficios europeos?
Photo: KMR Photography. Equity Income: Why Big Is Not Necessarily Best When it Comes to Dividend Yield

In the current low interest rate, low growth environment investors are increasingly looking to equities for an attractive level of income. There are still lots of interesting investment opportunities around the world, but I believe investors should be wary about simply looking for the highest yields on offer.

Diversification

History shows that dividends from the highest-yielding stocks can often be unsustainable (as illustrated in the chart below). This is one of the reasons we believe that investing across a diversified list of moderate-paying companies that have the potential to offer both dividend and capital growth over the medium to long term is the best approach.

Sustainability

The chart below looks at the sustainability of dividend yields across developed markets between 1995 and August 2015 and highlights the risk of chasing high yields without considering the underlying strength of the company. It shows that, in general, an estimated yield above 6% is less likely to be realised, as seen by the difference between the red and grey bars, than a forecast yield of 6% or below.

Enlarge

Avoid value traps

We believe in avoiding value traps. This is because high-yielding equities can be more risky than their lower-yielding counterparts, particularly after a period of strong market performance (equity price rises push yields down). The high-yielding companies that are left are often structurally-challenged businesses or companies with high payout ratios (distributing a high percentage of their earnings as dividends) that may not be sustainable. An investor simply focusing on yields, or gaining exposure to this area of the market through a passive product, such as a high-yield index tracker fund, may end up owning a disproportionate percentage of these companies, which are often known as ‘value traps’.

We believe that an active, stock-picking approach is essential to equity income investing because it allows fund managers to analyse and understand which higher-yielding companies may have been undervalued by the market. To establish whether there is a real value opportunity we analyse a company’s earnings, strategy and the industry fundamentals to determine whether it is structurally at risk or whether it is just temporarily unloved, undervalued, or its earnings power underappreciated by the market.

Growing cash generation

Investors utilising a barbell investment approach, holding very high yield stocks to deliver income and very low dividend payers with more growth potential, may end up facing a greater than average number of dividend cuts than they appreciate. We prefer to spread risk by having a diversified portfolio of moderate dividend payers. Our focus is on investing in companies with strong and growing cash generation with the aim of finding attractive capital and dividend growth.

There are still plenty of opportunities for income investors with a global universe of more than 1,300 stocks in the MSCI All Country World Index that currently yield 2% or more. We focus on dividend paying companies that are generally yielding between 2% and 6%. This helps to ensure the yields we deliver to investors are at a healthy level and are suitably diversified with no reliance on any one sector or stock. This is in line with our philosophy of avoiding overvalued areas of the market.

Ben Lofthouse is a fund manager in a range of Equity Income mandates at Henderson.

Why the BOJ Does Not Need to Ease Much, If At All

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¿Por qué el Banco de Japón no necesita flexibilizar mucho la política monetaria?
Photo: Japanexperterna.se. Why the BOJ Does Not Need to Ease Much, If At All

Most economists expect the BOJ to ease further, quite aggressively so in many cases, later this month or shortly thereafter. Certainly, Japanese economic growth does seem to be lackluster, with industrial production and machine orders recently forcing many economists to lower their 3Q GDP forecasts to near zero growth from the 2Q. But there are several reasons to be more sanguine about the situation.

Firstly on economics, core inflation excluding all food and energy (which should be called “standard core”) ran at a 1.4% six month annualized rate in August, and this includes a housing rent component that continues to decline. Excluding rent as well, the CPI is rising about a 2.2% six month annualized rate. Note that Japan’s CPI rent is slightly lower than it was a decade ago (while the US rent CPI has risen about 35%), and if was rising at a 1% rate, then Japan’s standard core CPI would be rising at a 1.8% six month annualized rate, or very close to the BOJ’s goal.

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Secondly, there are several political reasons why Japan should avoid a weaker yen, which would be the obvious consequence. Already the US has been quite generous in not complaining about the yen at 120 against the US dollar, but there is not likely much tolerance for further weakening. US protectionist sentiment is rising and it is even questionable now whether the Trans Pacific Partnership (TPP) will be passed. Hillary Clinton, in stating her opposition to the deal, suggested that there was not enough effort on the foreign exchange component, and most Congressional Democrats would agree with her. In fact, a separate bill on monitoring foreign exchange matters had to be passed in conjunction with the Trade Promotion Authority in order to get enough votes for it to pass. A dramatic weakening of the yen would further harm the prospects for this major “third arrow” achievement of Abenomics, especially over the next three months before the US vote in TPP occurs. Lastly on the political side, Japanese voters are getting quite tired of inflation.

Thirdly, there are financial stability considerations. If Japan buys more JGBs and pushes long-bond yields even further near zero, then insurance companies, banks and other financial institutions, including pensions will complain that it is impossible to meet their long-term obligations with a reasonable amount of risk, as regulated by the government. Although there has been no major trouble so far, despite the fears of many doomsayers, an over-aggressive BOJ policy may unsettle the JGB market.

Many in the investment world are encouraging the BOJ to act, but from my readings of their thoughts, the BOJ would like to look past the short term considerations and count on wages rising enough to spur personal consumption, housing rents beginning to rise and Japanese corporations accelerating domestic investments instead of overseas ones. Indeed, the BOJ should be pleased that it has raised the standard core CPI from the negative annual rate extant since the late 1990s (except for a few months in 2008), at great risk to its reputation. Relying on a weaker currency or more aggressive monetary policy is not the key to success for Japan, but rather, continued structural reforms, including the TPP and components of Abenomics 2.0, corporation’s confidence in their own country and workers, and of course, a continued sturdy global economic backdrop.

Opinion column by John Vail, Chief Global Strategist, Nikko AM.

Santander Private Banking Named “Best Private Bank 2015” in Latin America and Portugal, According to The Banker

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Santander Private Banking, elegido 'Mejor Banco Privado 2015' en Latinoamérica y Portugal por la revista The Banker
Ángel Rivera, Senior Executive Vice-President and head of the Retail & Commercial Banking Division at Banco Santander.. Santander Private Banking Named "Best Private Bank 2015" in Latin America and Portugal, According to The Banker

The Banker magazine named Santander Private Banking the “Best Private Bank” in Latin America for the third consecutive year and in Portugal, for the first time. These awards acknowledge its specialized advisory service model for private banking customers.

Ángel Rivera, Senior Executive Vice-President and head of the Retail & Commercial Banking Division at Banco Santander, states, “One of the main focuses in the transformation process under way at Santander is specialization, with a unique offering and a personalized customer-care model, which provides solutions tailored to each customer. The Santander Private Banking model draws from the Group’s strengths and expertise. The private banker is the main point of contact for the customer and is backed by the Group´s commercial networks, multidisciplinary specialists and technological tools. Together, they help customers take investment decisions based on their unique profile and needs, consolidating a long-lasting relationship of trust.”

In addition to this recognition, Global Finance magazine named Santander Private Banking’s units in Portugal, Mexico and Spain as the “Best Private Bank 2015”.

Santander Private Banking offers services to local clients in Brazil, Chile, Spain, Italy, Mexico and Portugal, , and also offers services to international clients through its presence in the United States, Switzerland and the Bahamas.

Santander Private Banking ended 2014 with assets under management of USD 218.3 billion (up 11%) and a 3% increase in the customer base. Net funds raised amounted to USD 11.414 billion, up 57% on 2013. In Latin America, assets under management increased by 14% and the customer base was up 23%. In Portugal, assets under management rose by 8% and the number of customers grew by 10%.