While prices in the United States may have grown, investors’ interest is still focused there. Indeed, many opportunities remain, justifying investment levels that are still high and generally fully in place. As a result of the 2013 rallies, the market is becoming less thematic as well: accordingly, hedge funds are no longer excessively concentrated in individual sectors.
“Finance is not and should not be a leading player. Finance has an indispensable duty to support the management of capital and guide it towards productive activities, but the leading players are the wealth creators, not us. We must have certain fundamental characteristics to better do our job and the most important of these is an independent ownership structure. This leads to a long series of consequences that differentiate sound and useful finance from the distorted, pathological finance that we have often seen in the past few years”.
South America, for more attentive investors, is much more than just Brazil. For example, Mexico is faring particularly well as it enjoys a few favorable trends, including the start of a credit cycle and the slow penetration of financial services, growing salaries, energy sector reforms and the rebirth of production. Furthermore, Mexico is one of the few countries on the continent implementing fairly orthodox policies to balance the GDP growth model, taking no notice of currency depreciation and rising raw material prices.
Travelling to take advantage of the opportunities that arise through meetings with local managers, the Kairos multi-manager team recently had occasion to explore the situation in China. Most of the contacts with whom they met emphasized that the new administration’s attempts at economic reform to the detriment of growth will continue to fuel uncertainty in the short term. Weakening macroeconomic data could persist in the near future, but no one expects there to be a hard-landing, since the government seems willing to prevent it through ad hoc stimulus measures.
Beginning in the last few months of 2013, the macroeconomic scenario has shown clear signs of improvement thanks to measures taken by the Minister of Finance, Chidambaram and the new governor of the central bank, Rajan. The rate of inflation has fallen from 11% to 8%, the current account deficit is down from $88 billion to $35 billion and the currency has stabilized. The market has reacted positively to these developments, but everyone is waiting with bated breath for the general elections which will be held in April and May.
“We are thrilled to accept this award and all the more honored to have been selected by a wide panel of our peers,” announced Caterina Giuggioli, Sales Director of Kairos Julius Baer, after the Milan-based company was named the winner of the 2014 Euromoney award. Number one in the Hedge Fund Investments category, Kairos was ranked the top company directly by private bankers participating in the annual survey, which aims to provide a quantitative and qualitative analysis of the best private banking services in each region and service area.
A chiaroscuro continent, South America has traversed two decades of growth and incumbent crisis, forcing investors to carefully consider their steps; the countries that have contributed to growth in the region certainly include Colombia, which is enjoying dramatic economic growth without inflation, fueled by the infrastructural projects worth approximately $55 billion (roughly 15% of GDP) that the government has announced. The local stock market boasts five or six very promising names, but the banking and airline sectors are also interesting.
At a recent conference, managers from the Kairos multi-manager team were able to hear one of the most authoritative figures in international finance, George Soros, speak. The crux of his speech related to Europe, which he said remains a debt prison for the periphery countries. Although normalization has recently begun, the divergent trend between countries will stay in place until the disparate costs of financing for companies in the various countries aligns. In any case, an improvement has been seen in the periphery after the dramatic situation until not long ago.