FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

August 15, 2010 • 1:54 am 0

Online Stock Trading and Fraud have come a longway in the past 10 years

Online trading has definitely come a long way in the past decade.  Innovation and technology now allow you to follow and trade stocks from your phone or laptop, not to mention accessing advice and chart information at the same time.  However, our new online powers have lulled us into a false sense of security in today’s high paced electronic world.  The criminal element in our society is counting on that fact to ply their own online trade activity, that of deceiving you out of your hard earned cash.

Yes, the unscrupulous few among us had to spoil the fun for all investors.  Does $400 billion a year in securities related fraud losses get your attention?  The FBI believes it should, as does the SEC and CFTC.  The Internet has been the great enabler of our times, providing access to mountains of information and a dizzying array of applications to bring convenience to our hectic lives.  It also has brought anonymity, the cloak that hides the invisible swindler that may have tapped you as his next target of opportunity.

Does this mean that you should forgo buying an iPad and take a course in risk management instead?  Of course not!  Fraud mitigation starts and stops with you and your ability to be skeptical and use common sense.  Here are a few suggestions to help you avoid the most common pitfalls for the average investor:

Business Partners: Fraudulent brokers have stolen millions from investors.  Do your due diligence.  There are many review services for checking banks and choosing the best stockbroker or best forex broker.  Make sure your bank has a strong balance sheet, and that your broker is above board and onshore.  Consult your banker or broker for investment advice on every investment deal.

Warning Signs: Some signs, though obvious, need repeating.  Here are a few tell-tell signs:

  • Unsolicited offers should be questioned or avoided;
  • If it sounds too good to be true, it most likely is;
  • If there is little or no risk, then it isn’t for real;
  • If there is a sense of urgency, walk away;
  • Swindlers talk fast so you won’t ask questions;
  • If written explanations are not forthcoming, stop considering it;
  • If it sounds too complicated, don’t waste your time;
  • Con Artists always dress well to impress and deceive;
  • Ignore referrals from friends, until after doing your due diligence;
  • Be very skeptical when asked to send a check or wire funds.

Actual Scams Often Repeated:

The Ponzi Scheme: The swindler pays high returns from new client deposits to gain your trust and new referrals.  He takes what is left.  Bernie Madoff and Kenneth Starr are prime examples of the craft;

The “Pump-and-Dump”:  Mass communication of rumors is used to pump up a stock’s value.  The swindler unloads his shares at a huge profit only to leave unsuspecting Buyers holding the bag after the price plummets;

The “Tipster”:  The Tipster calls 100 people, passing along a “tip” to gain confidence.  He tells half that the stock will rise, and the other half that it will fall.  The next day, he now has 50 “marks” that believe.  He may continue his confidence game until he finally asks you for money.  Be sure to walk the other way.

Investment fraud generally happens to those people who never expect it or are easily tempted by greed.  Protect yourself by heeding these warning signs and being aware of the most typical scams that con artists love to use.

Source: FOREXFraud, 13.08.2010

Filed under: Banking, News, Risk Management, Wealth Management , , , , , , , , , , , ,

August 10, 2010 • 1:03 am 0

BlackRock Bob Dolls: 10 prediction for the next 10 years

“10 Predictions for the Next 10 Years” by BlackRock’s Bob Doll and what it means to investors:

  1. U.S. equities experience high single-digit percentage total returns after the worst decade since the 1930s.
  2. Recessions occur more frequently during this decade than only once a decade as occurred in the last 20 years.
  3. Healthcare, information technology and energy alternatives are leading growth areas for the U.S.
  4. The U.S. dollar continues to be less dominant as the decade progresses.
  5. Interest rates move irregularly higher in the developing world.
  6. Country self-interest leads to more trade and political conflicts.
  7. An aging and declining population gives Europe some of Japan’s problems.
  8. World growth is led by emerging market consumers.
  9. Emerging markets weighting in global indices rises significantly.
  10. China’s economic and political ascent continues.

Read Bob Doll’s full report  10 Predictions for the next Decade

Source:BlackRock / Carral Sierra, 02.08.2010

Filed under: Banking, Brazil, China, Energy & Environment, Japan, Korea, Mexico, News, Risk Management, Wealth Management , , , , , , , , , , , , , , , , , , , , ,

August 3, 2010 • 10:27 pm 0

Mexico to Follow US Expectations – August 2010- IXE BANIF – Monthly Analysis

Indications of a slowdown in US growth

Expectations of pick-up in the US economy for 2010 have cooled down recently. The most recent statements of the FED’s President suggested that a recovery in the US will happen only in the medium or long-term. This is a worsening of an already declining expectation for the US economy that started in June, and that we did not incorporate into our scenario at the time.

Until June, nearly everyone’s attention was concentrated on the Euro zone, with fears for the bankruptcy of local banks. These fears faded as the results of a stress test made with a sample of banks showed that very few names were in trouble. The spotlight then turned to the stronger indications of a weakness in the US economy.

Mexico – Monthly Allocation – August 2010

Mexico likely to adapt to new scenario

The Mexican economy continues to depend on its neighbor for exports, as it accounts for most of the demand for its products. With the growing expectation of a reduction in US growth, we believe that the local Mexican economy will tend to migrate from a manufacturing profile (based on exports) to a consumption profile (based on local demand).

While we believe that slower growth of the US economy is not good, we believe that the pace reduction observed so far is still consistent with our current and unchanged expectation for Mexican 2010 GDP growth of 4.4%. We believe that we were in the lower end of the market range, and now believe that others will adjust their expectations downward. In this way, we should move closer to the upper limit of the range of expectations. One indicator on the local economy that we highlight is internal wholesales, which we believe reached its peak at 7% in June (YoY growth, 6.9% in May) and is likely to slow down during the rest of the year. We expect internal wholesales to reach 3.9% for the entire 2010, taking into consideration the negative figures of the first two months of the year. Internal retail sales are now following the wholesales’ trend as an indication that retail companies are reducing inventories. We also expect July figures, when announced, to indicate a reversion of the local deflation observed in the April-June period.

For August, we have added Geo and Chedraui to our suggested portfolio and have withdrawn Asur, Autlan and Urbi.

Filed under: BMV - Mexico, Banking, Exchanges, Latin America, Mexico, News , , , , , , , , , , , , ,

July 16, 2010 • 9:12 pm 0

Brazil Investment Summit, Hong Kong Nov 30/Dec 1, 2010

FinanceAsia and AsianInvestor are pleased to announce that the inaugural Brazil Investment Summit will be the second event in our Spotlight on Emerging Markets series. The previous event, the Russia- Capital Raising and Investment Summit, was held in Hong Kong in April and attracted more than 300 delegates.

Throughout the economic crisis, Brazil was a case study for success; its economy remained stable while other nations foundered. As it leads Latin America out of recession, where should Asian investors look in Brazil for value?

This inaugural summit will gather Asian financial market participants exploring investment possibilities in Brazil, attendees include:

  • Asian Institutional investors looking to put money to work in Brazil
  • Deal facilitators, including investment bankers and business brokers
  • Asian/Chinese corporates looking at M&A opportunities
  • Alternative investment funds, including private equity and hedge funds
  • Brazilian corporations looking to raise capital in Asia
  • Commercial banks
  • Sovereign wealth funds
  • Insurance companies
  • Central banks
  • Investors in commodities and natural resources
  • Service providers, including consultants, law firms, and accounting firms
    		•
    For more information about the Brazil Investment Summit, please contact:
    Speaker/Delegate queries:
    Laura Brody, Conference Producer
    (+852) 3175 1917
    laura.brody@financeasia.com    		 Sponsorship queries:
    Kar Wee Ang, Conference Sponsorship Manager
    (+852) 2122 5233
    karwee.ang@financeasia.com
    www.financeasia.com/brazil

    Filed under: Asia, Banking, Brazil, Events, FiNETIK Events, Hong Kong, Latin America, News, Services, Wealth Management , , , , , , , , ,

    July 8, 2010 • 8:54 pm 1

    China’s banking sector Serious Problem with Bad Loans

    Professor Pettis at Peking University explains that“in China, even if you believe that all the NPLs currently in the banking system have been correctly identified (a claim which few Chinese bankers believe), no one doubts we are about to see a surge in NPLs thanks to the out-of-control lending expansion of the past two years.  But things are even worse than the nominal numbers imply.  As I discussed in my April 6 entry, when we are trying to estimate the cost of a banking crisis we need to think about more than simply the ability of borrowers to meet current obligations.

    This is because, as in the case of the Japanese government obligations, when borrowers are able to benefit from artificially low interest rates, the effect is of hidden debt forgiveness which must be paid for by the net lenders, who are, as in the case of Japan, the beleaguered households.  In other words, if you want to know how much real bad debt there is out there that must be cleaned up, you need to calculate what share of the loans would go bad if interest rates were raised by at least 300-400 basis points, the minimum needed to bring Chinese interest rates in line with an appropriate rate.  This suggests that the Chinese banks, if obligations were correctly counted, might have much larger amounts of bad debt than any of us realize, and this needs directly or indirectly to be cleaned up.”

    Here are some recent reports from financial press sources regarding the health China’s banking sector:

    -”SHANGHAI -(Dow Jones)- The non-performing loan ratio in China’s banking industry declined to 1.58% by the end of 2009, 0.84 percentage point lower than the figure at the beginning of 2009, China’s banking regulator said Saturday.”(1)

    -”BEIJING: Chinese financial institutions’ non-performing loans (NPL) ratio edged down 0.1 percentage points to 1.48 percent in January, the China Banking Regulatory Commission (CBRC) said Friday.”(2)

    -”BEIJING, Apr 14, 2010 (SinoCast Daily Business Beat via COMTEX) — Non-performing loan (NPL) ratio of China Development Bank, a policy bank, had reached 0.85% by the end of March”(3)

    I don’t believe those reported percentages are accurate.

    For context, here is an analysis of China’s non performing loan issue from 2002:

    “Standard and Poor’s (S&P), which rates China as investment grade, said on Thursday it would take Chinese banks 10 to 20 years to cut average non-performing loans (NPLs) ratio to a manageable five per cent.

    It estimates the Chinese banking sector’s average NPL ratio is atleast 50 per cent, higher than the 30 per cent estimate of China’s central bank governor Dai Xianglong.

    “The cost of necessary write-offs could be equivalent to $518 billion or almost half of China’s estimated gross domestic product of $1.1 trillion for 2001,” Mr Terry Chan, a S&P director in Hong Kong said.

    The agency said China would be unlikely to cut NPLs in its banking sector to 15 per cent within five years, as its central bank wishes, given the current operating performance of the sector.”

    I seriously doubt that the problem identified in 2002 has been resolved yet.  There is an analysis here that supports my assertion.

    Source:SinoRock, 07.07.2010

    Filed under: Banking, China, News, Risk Management , , , , , , , , , , , , ,

    June 30, 2010 • 7:41 am 1

    A Definitive Guide to Investing in Panama

    Following up with last years release of the Offshore Banking report,  which, in the midst of the global banking crisis, gravitated towards Panama, Alternative Latin Investor has released an in-depth report of the of the country.

    Through extensive interviews, site visits and research the report deals with the main sectors relevant to foreign investors, Real Estate, Commodities, Banking and General Business practices as well as an exclusive interview with Former Panamanian president Nicolás Ardito. With Panama being the integral point of trade and business in the Caribbean, this report provides essential insight for those interested in getting involved in the region.

    The economic overview analyzes the trends and indicators affecting the outlook of the Panamanian economy. The real estate portion of the report covers where to invest, coastal developments and “insider tips” from the director of a local Real Estate firm. For those interested in commodities investing – the report highlights the prized Panamanian Geisha coffee bean as well as a complex discussion regarding Teak investment in the region. The final segment covers the details and benefits of banking in panama.    

    Alternative Latin Investor Panama Report For free access to the full content of both Panama Outlook 2010 and other ALI publications, visit: http://www.alternativelatininvestor.com

     About Alternative Latin Investor:

    ALI believes in the future of the Latin American alternative investment industry, but feels there is a lack of information regarding this sector which does not allow for growth or global exposure.


    Every two months ALI releases a digital magazine      in addition supplemental in-depth reports area also released, such as the just the current Panama Outlook: 2010 as well as Offshore Banking: Latin America 2009.  Both LatAm Commercial Real Estate and Latin Hedge Funds are slated for release later this year.


    Through creating a platform for industry professionals to submit articles concerning their areas of expertise, investors can benefit from the experience of alternative investment insiders. Through participation in Alternative Latin Investor industry professionals will be able to create new synergies both within the region and beyond.

    Filed under: Banking, Central America, Latin America, News, Services, Wealth Management , , , , , , , , , , , , ,

    June 10, 2010 • 11:00 pm 3

    Alternative Assets in Latin America: Expert Panel Discusses June 15, 2010

    Please join Alternative Latin Investor and Focus Point Press June 15th for a round table webinar of industry experts discussing alternative assets in Latin America.  http://www.alternativelatininvestor.com/Webinar/AlternativesAssetsInLatAm.pdf
    Our Panel:

    Brigitte Posch
    PIMCO Executive Vice President and Portfolio Manager in its emerging markets group. Prior to joining PIMCO in 2008, she was a managing director and head of Latin American securitization and trading at Deutsche Bank.

    Will Landers
    CFA, Managing Director, Senior Portfolio Manager, is the portfolio manager for the BlackRock Latin America Fund, the BGF Latin America Fund, the BSF Latin American Opportunities Fund and the BlackRock Latin American Investment Trust PLC.

    Andrew Cummings
    Founder and Chief Investment Officer of Explorador Capital Management, LLC.

    Eric Saucedo
    Partner at Tricap Partners & Co., an investment banking firm focused on early-stage and middle market growth companies.

    Topics:

    -How alternative investment vehicles are faring in this recovery phase of the crisis
    -What strategies performed the better than others
    -What regions, sectors and vehicles are looking good for the coming year
    -New players to the region who we should keep an eye on
    -Growth of regulation in the alternative space
    -Where new capital to Latin America is coming from
    -Participation of both, foreign and domestic institutional investors
    -How LatAm stacks up against other emerging markets
    -The effect of Chavez on investor confidence in LatAm investments
    -How sustainable is Brazil
    -Countries to watch

    Date: Tuesday, June 15
    Time: 1pm EST
    Price: 89.00USD
    Register at http://www.regonline.com/Checkin.asp?EventId=866305

    For more information please see,
    http://www.alternativelatininvestor.com/Webinar/AlternativesAssetsInLatAm.pdf

    Filed under: Argentina, Banking, Brazil, Central America, Chile, Colombia, FiNETIK Events, Latin America, Mexico, News, Peru, Services, Venezuela, Wealth Management , , , , , , , , , , , , , , , , , ,

    February 6, 2010 • 1:03 am 0

    China to lead Asian distressed debt opportunity in 2010

    Domestic bank credit acts in a similarly pro-cyclical way to foreign debt. When growth is booming, credit growth hides bad loans in favorable nonperforming loan ratios because assets are growing so fast – leading to a booming economy.
    The problems show up if a macro shock of some sort intervenes. In the case of China, the shock will be a combination of higher inflation and interest rates. As growth slows, NPLs appear, banks pull back on loan expansion, and growth slows even more, creating a new wave of NPLs. Superficially “safe” NPL ratios suddenly reverse dramatically and risk sinking the whole macro ship.
     
    http://asiasentinel.com/index.php?option=com_content&task=view&id=2283&Itemid=422
     
    In Shanghai, outstanding loans to the real estate industry accounts for 27 percent of the total outstanding loans, according to Yan Qingmin, head of Shanghai Branch of China Banking Regulatory Commission (CBRC).
    “The non-performing loan (NPL) ratio in Shanghai’s commercial housing development loans kept rising in 2009,” Yan warned.
     
    http://english.people.com.cn/90001/90778/90859/6888068.html

    Source: CHINDA, 04.02.2010

    Filed under: Asia, Banking, China, Risk Management, Services , , , , , ,

    February 2, 2010 • 11:30 am 0

    Santander starts marketing Latin American funds in Asia

    Banco Santander, a Spanish bank with a large presence in Europe and Latin America, has created a new role in Hong Kong to develop its asset-management business in Asia.

    With the necessary licences in place, Alexander de Laiglesia will concentrate on selling funds manufactured by Santander Asset Management in Latin America and Europe to Asian wholesale distributors and asset managers.

    De Laiglesia, a managing director, has been with the firm for 20 years, starting in Tokyo as a deputy branch manager. He returned to Japan from Madrid in 2002 with a secondment to Shinsei Bank. He moved to Hong Kong last year, and has been developing the asset-management role for the past several months. De Laiglesia has also worked in Hong Kong and the Middle East in the 1980s with Standard Chartered Bank, and he speaks Japanese.

    Santander pursues a universal banking model in its core markets of Spain, Portugal, the UK and the countries of Latin America, including Brazil, as well as the US. The bank has built investment teams in those countries.

    The group mainly provides local products to its local investors. It cross-sells some products to provide these local customers with international exposure and may also provide third-party funds. Worldwide, Santander Asset Management manages €120 billion ($168 billion) of assets.

    Asian markets are not core to this business. “We are not here to manage assets,” says de Laiglesia. “We are here to channel investments from Asia to our core markets.” That means competing in the niche of selling Latin America funds to Asian wholesalers and domestic fund houses. Santander will also seek to develop sales to institutional investors as well.

    “We are the largest regional asset manager in Latin America, with big investment teams in markets such as Brazil, Chile, Mexico and Argentina,” de Laiglesia says.

    Santander has already notched up business in Japan as adviser to a couple of Brazil equity funds launched by Daiwa Asset Management, and in Korea, where Industrial Bank of Korea sells a Latin America equities product. Japan, in particular, has wealth, its investors are comfortable with Brazilian securities and that’s an asset class where domestic asset managers do not have a local presence, de Laiglesia says.

    Santander is flexible with regard to the type of relationship it will pursue with Asian distributors; it may act as an investment adviser, a provider of white-label products or a provider of mutual funds from its Luxembourg range. The firm will also seek segregated mandates from or sales of its Luxembourg funds to Asian institutions.

    In addition to applying for regulatory licences, de Laiglesia is still researching which markets to focus on and which thematic products to highlight. Japan is the priority, but the region’s other large markets — Australia, Greater China, Singapore and South Korea — are also important.

    Source: AsianInvestor.net, 02.02.2010

    Filed under: Asia, Australia, Banking, Brazil, China, Colombia, Hong Kong, Japan, Korea, Latin America, Malaysia, Mexico, News, Peru, Services, Singapore, Wealth Management , , , , , , , , , , , , ,

    January 26, 2010 • 10:46 pm 0

    Actinver selects Misys BankFusion Universal Banking to support its aim to be the best financial services company in Mexico

    Misys plc ( the global application software and services company, today announces that Actinver has chosen Misys BankFusion Universal Banking to underpin its expanding banking operations.

    Actinver provides a wide range of services to corporate and institutional clients as well as retail customers. To help it to realise its strategic goals, the business was looking for the most technically advanced universal banking solution and a platform upon which to base all future growth.

    The decision to choose Misys BankFusion Universal Banking was taken after a rigorous selection process, which led it to evaluate all major local and international suppliers. Misys was chosen for its revolutionary process-oriented approach to building banking applications. This approach will provide Actinver with the power to model business processes accurately within the solution, ensuring maximum flexibility and speed to market for new products and services.

    “The agility that BankFusion Universal Banking brings to Actinver means we can focus on providing our customers with a unique service,” states Alvaro Madero Rivero, CEO Actinver. “We saw a brand new approach in the offering from Misys that we could not find anywhere else. This innovative solution will enable us to maximise the value we give our customers as our business grows over the coming years.”

    Guy Warren, EVP and General Manager, comments, “Actinver has built a great reputation for providing its customers with innovative products and a rapid response to their needs. We believe that BankFusion Universal Banking stands out in the market as the only solution that can give it the control it needs to define and manage how the business operates without being constrained by the underlying technology.”

    Key to Actinver’s decision was being able to meet the complex regulatory reporting requirements on a local and international level. Through its close collaboration with Soluciones Bajaware, Misys was able to ensure that BankFusion Universal Banking complies fully with Banxico and CNBV’s requirements.

    Alvaro Madero Rivero adds, “In the current economic climate, the pressures on financial institutions from a number of different angles are unrelenting. With increasing regulation, more competition and an escalating pace of change in the industry, we are confident that Misys BankFusion Universal Banking will fulfill our business needs now and in the future.”

    Source: Bobsguide, 26.01.2010

    Filed under: Banking, Data Management, Mexico, Services , , , , ,

    January 7, 2010 • 6:53 am 0

    Brazil:Positive Outlook – January 2010 IXE-BANIF Market Analysis

    Although subject to volatility, we are more positive about the stock market in January 2010, compared with last month. The news flow will definitely be positive throughout the year, given the easy comparison with 2009 (GDP in 2010 should grow between 5 to 6% YoY). Moreover, it is an election year in Brazil, which normally means more government spending and higher economic activity.

    In addition, investments in infra-structure should grow to support events such as World Cup (2014) and Olympic Games (2016), not including the oil industry that is boosting capex in the presalt fields and spending more on gas. Last but not least, we believe the country will continue to attract capital from foreigners and locals, such as pension funds, which should also divert more resources to equities – riskier assets in general – in search for higher returns, as the fixed income (interest rate) should not be enough to meet their actuarial required returns. In summary, before the samba (Carnival) in February, we believe the positive flow and expectation of improvement should drive the market.   Read the full Market Report Brazil – January 2010

    Elections + low interest rate + growth = more flow

    Elections for president, state governors and Congress will take place in October 2010. On one hand, this means more spending, higher economic activity and ensuing more company profits. On the other hand, we believe this could mean stress to investors from mid-year onward, as the presidential candidate Jose Serra (from the opposition) may change the current economic policies and uncertainties mean more risk. Even to a smaller degree than in other LatAm/EM countries.  Moreover, nothing of significant importance in Congress will be approved from 2Q10 on. Thus, with current visibility, investors should be cautiously optimistic.

    Interest rates should move up in 2010 and there is little doubt that it will happen. The debate is about intensity and timing. In any scenario, it should remain low compared with historical levels and continue to stimulate local investors to take more risks (i.e. equities). Bear in mind that most debts in Brazil are based on fixed rates and a more restrictive monetary policy does not mean less available income in the short term.

    We believe the news flow will be positive in most economies and the easy comparison should be a good support for equities. Brazil is and should continue to be a hot spot for investments, given the size of the domestic market and events to take place in 2014 (FIFA’s World Cup).

    Risk aversion could continue

    In the past days of the year, risk aversion increased at global level, triggered by Dubai’s debt negotiation. Later on, several countries had their credit ratings downgraded. The euro lost ground against the dollar, as well as EM currencies. It is an adjustment of expectations regarding fiscal imbalances and a higher focus on risk management. We would not be surprised if this movement continues. We are cautiously optimistic looking ahead.

    Source: IXE Banif, 04.01.2010

    Filed under: BM&FBOVESPA, Banking, Brazil, Exchanges, Latin America, Risk Management , , , , , , , , , , , , ,

    • 6:38 am 0

    China Merchants receives QDII approval despite ING troubles

    China Merchants Fund Management will test domestic appetite for global resources investments with a new fund, for which shareholder ING is a sub-advisor.

    China Merchants Fund Management — a joint venture between China Merchants Bank, China Merchants Securities and ING Investment Management — has secured approval for a qualified domestic institutional investor (QDII) product.

    The China Securities Regulatory Commission (CSRC) has approved the Shenzhen-based firm’s product plan to launch a global commodities fund, with ING IM as the sub-advisor. The Dutch firm will be responsible for supplying investment research and strategic and tactical asset-allocation advice to the fund. The product will most probably be structured as a fund-of-funds.

    “Currently we have no resources fund or strategy into which this fund will invest,” says Edmund Lacis, regional head of wholesale and business development at ING IM in Hong Kong. “We will be leveraging our existing global knowledge and expertise to develop a new strategy for this fund.”

    Grant Zhang, portfolio manager at China Merchants, tells AsianInvestor he will act as the fund’s manager. He started as a securities analyst at China Merchants Securities.

    The QDII approval comes on the heels of a recent QDII fund launch by Guangzhou-based E-fund, which began fundraising for a self-managed Asian equity strategy on December 7. E-fund has yet to announce how much money it has attracted. Up next, Penghua has an $800 million quota for a manager-of-managers strategy with shareholder Eurizon Capital, while Changsheng has a $700 million quota for a pending Goldman Sachs-advised product.

    Sources say Guotai also secured a $700 million quota for a tracker fund based on the Nasdaq 100 yesterday.

    The State Administration of Foreign Exchange (Safe) only resumed quota handouts in October, after a 17-month hiatus.

    The CSRC’s approval of China Merchants’ product plan has raised concerns among some industry observers. The green light has been given despite the uncertainty over ING IM’s future ownership due to the European Commission-mandated break-up of its parent. In October, ING was told to offload its investment and insurance businesses by 2013. Institutional investment consultants Watson Wyatt and Mercer have since withheld their ‘buy’ recommendations for the group for that reason.

    Even before the ruling, ING had been seeking buyers for its businesses in Asia and the US, to raise funds to repay the bailout capital it has received from the Dutch state. In Asia, it has already sold off its Taiwanese insurance, Australian wealth management and Asia-wide private banking businesses.

    In a Financial Times interview on December 21, new global chief investment officer Jan Straatman outlined a plan to break up ING’s 300-strong investment team in Europe into 14 different boutiques. These units will be organised by the asset classes they invest in. Straatman is quoted as saying that the same structure will be applied in the Asia-Pacific region and the Americas, despite admitting that he has not consulted local staff on the decision.

    The plan appears to contradict previous goals set when ING Group split the investment management and real estate investment business from the main balance sheet and combined them to improve synergies by centralising back-office functions and combining sales roles. The firm is facing increasing difficulties in retaining talent.

    These variables are viewed as a risk to the management of China Merchants’ fledgling QDII fund and to its future investors.

    That said, an overseas commodities fund will be a novelty to investors on the QDII scene. China Merchants has a positive house view on the long-term global demand for commodities. Having gained CSRC approval, the next step for ING and China Merchants is to secure a foreign exchange quota from the State Administration of Foreign Exchange.

    China Merchants’ move will mark a potential point of differentiation in the sector. Its global resources theme will be a first. Of the 10 existing QDII mutual funds in the market, the main asset types have been global equities, Hong Kong H-shares, red chips and Chinese concept stocks in Asian equities.

    Moreover, the launch will be backed by the distribution prowess of China Merchants, China’s third largest brokerage. China Merchants Bank and China Merchants Securities are among the most successful private wealth management providers in penetrating the growing Chinese middle class. The bank went public in an IPO in 2006, followed by the securities arm last November.

    Shanghai-based consultancy Z-Ben Advisors believes the group’s IPO last year has distracted it from the business of fund management. Based on assets under management, China Merchants’ ranking slipped 11 places from 18th in 2008 to 29th last year, with Rmb35.6 billion ($5.2 billion) in AUM as of December 31. This can be partially explained by the string of portfolio managers it lost last year, including You Hai, Hao Jianguo and Huang Shunxiang.

    According to data from investment consultant Morningstar, of China Merchants’ 11-strong investment team, eight have been with the firm for less than three years, and four of those have less than one year of service. CIO Zhang Bing has been with the firm for about four years.

    The most experienced person at China Merchants Fund, Yang Yi, does not manage funds. He has been there since 2003, but his expertise is only available to institutional investors or high-net-worth clients who have signed up to China Merchants’ segregated accounts.

    Z-Ben Advisors analyst Zhang Haochuan expects demand for the new fund to be weak. China Merchants has freshly finished a round of sales totalling Rmb2.6 billion for its small- to medium-cap fund, so customers’ appetite for further China Merchants products may be subdued.

    In addition, notes Zhang, Chinese investors don’t need to go offshore for commodity investments. “Unless there are additional derivatives involved, investors will probably get higher exposure by investing in local commodities companies,” he says. “They don’t hedge [their books] as much.”

    Source:AsianInvestor.net, 07.01.2010 by Liz Mak

    Filed under: Banking, China, News, Risk Management, Services , , , , , , , , ,

    December 7, 2009 • 2:27 am 1

    China: Thanks but no thanks: E Fund declines help on QDII debut

    The Chinese fund house’s prospectus for its Asian equities product, slated for launch next week, indicates it will manage the fund without MOU partner State Street.

    Guangzhou-based E Fund Management, the second-largest Chinese fund house in asset terms, is poised to launch its first QDII fund, by itself, rather than with a foreign sub-advisor.

    The firm is set to launch an Asia-Pacific equities fund under China’s qualified domestic institutional investor programme on Monday, December 7. Despite having signed a memorandum of understanding last year with State Street Global Advisors, E Fund will manage the portfolio itself.

    The firm’s investment management team is in Guangzhou but it also has an office in Hong Kong run by Zhang Xiaogang that is expected to play a role. Calls and e-mails to E Fund were not returned by press time.

    Executives at investment firms in Hong Kong say Beijing-based Harvest Fund Management’s acquisition of the Asian equities platform of DWS, the retail arm of Deutsche Asset Management, was the watershed event. This proved the determination of China’s fund houses to manage their own overseas investment products.

    ICBC Credit Suisse Fund Management has also decided to run its own QDII funds. E Fund is the first firm independent of any foreign partnership to do so.

    Foreign executives downplay the notion that these moves are simply about fees, aware of cases such as China Southern Fund Management’s decision to discontinue a sub-advisory agreement with BNY Mellon Asset Management, which was partly based on fees. Rather they reflect the ambition among Chinese firms to build international expertise in house.

    “These fund-management companies have been supported by foreign advisors for 10 years, in some cases, and they’ve learned a lot,” says one banking executive in Hong Kong.

    A spokesperson at SSgA says the firm does not have a relationship with E Fund. The firm declined to discuss the terms in the MOU.

    Peter Alexander, principal at Shanghai consultancy Z-Ben Advisors, says E Fund’s move should not be interpreted as part of a wholesale trend. Although the biggest Chinese firms are keen to control their own products, the majority are probably not ready to follow suit.

    Alexander says other QDII funds slated for launch early next year still look as though they will work with appointed foreign partners, including China Universal Fund Management (with Capital International) and Bosera Fund Management (with Singapore’s Fullerton).

    But global asset managers that have written confident reports to headquarters regarding the QDII sub-advisory opportunity set may need to review the space, particularly if E Fund’s QDII product is rated a success, he warns.

    The State Administration for Foreign Exchange has allocated $1 billion to the E Fund Enhanced Asia Pacific QDII Fund. Safe has also allocated QDII quota to Bosera, China Universal and China Merchants Fund Management, a joint venture involving ING Investment Management.

    E Fund’s primary distributor in China is ICBC, which suggests little difficulty in attracting assets. Its QDII product will also be cheaper than its peers, charging 1.5% versus the 1.85% that has been charged for other QDII funds. Although called an Asian equities fund, it actually has a 60% ceiling on stocks, with a minimum 40% in cash or bonds. The Hong Kong market is expected to play a big role in the portfolio.

    The QDII launch comes on the heels of E Fund’s successful launch of an exchange-traded fund, which raked in $2.8 billion last week. The firm was ranked 54th in AsianInvestor magazine’s rankings of fund houses by assets sourced from Asia-Pacific clients (based on September figures; see our December edition); its recent exploits suggest it will have climbed a few more rungs.

    See also

    E-Fund (GF Securities) ETF raises $2.8 billion, as Bosera gets ETF approved

    Source: AsianInvestor.net, 04.12.2009

    Filed under: Asia, Banking, China, Hong Kong, News, Risk Management, Services, Wealth Management , , , , , , , , , , ,

    October 31, 2009 • 1:23 am 0

    SinoRock new star in China’s bank related assets/debts market

    China’s NPL (Non-Performinb Loan) market is getting bigger, but the business model is changing to favore services-oriented local manager who have a large, local, sustainable and scalable operation throughout China.  Sino-Rock Investment Management Co Ltd based in HK brings a new dimension to NPL and Distressed Funds for Private Equity and Investors, with indepth knowhow, experience and understanding relations in China and the markets.  With the backing of its major shareholder Cinda (China’s largest AMC of NPLs), SinoRock is on the way to become the new star manager in China’s bank related assets/debts.

    Foreign managers are losing NPL legal battles because their legal-battle oriented strategy is not working due to new policies and local cultures.  If NPL investment could be done by fighting legal battles, everyone could hire lawyers to fight legal battles to make profits.  That’s not the case  in China.

    Source: SinoRock, October 2009

    Additional News on China’s growing bank related assets/debts

    Filed under: Asia, Banking, China, News, Services, Wealth Management , , , , , , , , , , ,

    October 28, 2009 • 10:38 pm 1

    Brazil: Bank update-Loans to individuals improving – IXE/BANIF

    The Central Bank published data on credit relating to September showing increases of 1.5% MoM and 16.9% YoY, a flat in relation to the August growth rate. Once again public banks showed the stronger growth rate increasing portfolio by 1.9%% MoM, while private banks’ loan portfolio increased by 1.5% MoM (an improvement to the 1.3% growth last month) and foreign banks showed a mere of 0.6% MoM expansion (also improving over Augusts’ 0.3% growth). Delinquency ratios, continued flat MoM at 4.4% of total loan portfolio with provisions down by 10 bps to 7.2% of total portfolio, from the adjusted 7.3% in the previous month. In September, delinquency ratios coming from individuals continued decreasing to 8.2% from 8.4% in August while the ones coming from corporate moved up to 4.0% from 3.9%. Private Banks decreased provisions, to 8.5% from 8.6% in August, while public banks decreased provisions from 6.1% to 5.9%.  The trend continues positive with individual delinquency ratios improving, but still causes some concern as delinquency ratios at corporate continued showing a small rise. The problem is that it is still unclear if corporate can renegotiate debts or if delinquencies will lead to shut downs and consequent layoffs, which would once again result in an increase in default levels coming from loans given to individuals. Brazil: Banks – Sector Update – 10282009

    Breakdown

    Loans to individuals increased 1.4% MoM and 17.1% YoY. Corporate loans showed a 1.2% increase MoM, with loans using domestic resources increasing by 2.8% MoM and those with external resources reducing by 8.0% MoM.

    Amongst earmarked loans, the largest increase this month was in farming loans to coops (+11.1% MoM) followed by BNDES pass through (+3.8% MoM) and with BNDES direct loans dropping by 0.6%.

    Loans for vehicle purchases increased 1.9% MoM, improvement to Augusts’ 1.3% growth. Leasing increased by 0.5% MoM in August, while direct financing was up 1.3% MoM.

    Total credit increased its participation in GDP to 45.7% in September, from 45.2% in July, with GDP up by 0.65% MoM.

    According to Central Bank data, the average spread charged by banks in September continued moving down, to 26.0% from 26.3% in August and is now lower than one year ago when it reached 26.4%. Loans to individuals had the largest decrease in spreads, down to 33.4% in August from 34.3% in August, while spreads on corporate loans were down another 10 bps to 17.7%, from 17.8% in August.

    Default

    Default levels were flat at end of September at 4.4%, still much higher than the 2.8% of the previous year. Public banks saw a decrease in default levels to 2.6% of loan portfolio reducing provisions flat to 5.9%. Private Banks decreased provisions for the first time in the last 12 months to 8.5% from 8.6% in August, even though default levels increased to 5.7%.

    D-H classified loans decreased to 9.4% of total from 9.6% in August.

    Conclusion

    We believe that the larger banks are the bigger winners this month. This is because we saw most of the growth in vehicle financing and mortgages. Although some small banks operate in the vehicle segment, they do not operate in the mortgage market. However, in addition to not expect continued growth in vehicle financing, we believe that the share price of most banks capture the growths of September. Thus, our top pick remains Itau-Unibanco that will still show synergy gains.

    Source: Banif – IXE, 28.10.2009

    Filed under: Banking, Brazil, Latin America, News, Services , , , , , , , , ,