Year: 2013

Charles Borg on Malta | Bank of Valletta | Video

Posted on by Ashton Wenborn

We have just seen the meltdown of the banking sector in Cyprus and many think that Malta might be next in line. Bank of Valletta‘s Charles Borg joins World Finance to discuss the challenges facing Malta’s economy.

World Finance: How has the Cypriot crisis affected Malta and Bank of Valletta?

The financial jurisdiction of Cyprus and Malta are both totally different, built on different foundations, and fundamentals

Charles Borg: The similarities between Malta and Cyprus reside only in terms of, we’re both islands in the Mediterranean, we’ve both under British colony for a long number of years, and the both of us have 10 months of sun out of 12. But the similarities stop over there. The financial jurisdiction of Cyprus and Malta are both totally different, built on different foundations, and fundamentals. Basically, Malta’s financial sector is strong, it’s robust, it’s liquid, and very well capitalised.

The core domestic banking in Malta is about 2.5 times GDP, as opposed to Cyprus which is 5 times GDP, and our core banking system, the core banks, obviously are profitable, the Maltese government’s debt GDP ratio is strong and stable, and therefore the similarities are not there. In fact, this was confirmed by a number of houses, such as Fitch, such as Bloomberg, such as the IMF very recently, confirming that the two jurisdictions are totally totally different.

World Finance: Malta has developed into an international financial hub, as Malta’s largest bank, how has Bank of Valletta contributed to safe-guarding financial stability on the island?

Charles Borg: I believe that financial stability resides on three core fundamentals. The first and very important fundamental is a very strong regulatory and supervisory regime, and Malta has a very strong regulatory regime, which is based on the EU legislation and the UK FSA legislation. The second and very important is that the banks and institutions need to be very well capitalised, and capitalisation of the banks is among the highest in Europe. In fact, when we speak of Bank of Valletta’s capitalisation, the European banking authority the EBA issued its report in April, stating that Bank of Valletta’s one of the highest capitalised banks in Europe.

And the third and very important, is the liquidity of the banks. In order to safe guard the day to day operation and the short term of operations. And financial stability resides on these three main core areas.

World Finance: Some observers have voiced concern at the bank’s in Malta and their perceived over-exposure in the property market, what’s your exposure at BOV?

Property is an asset that’s very important for Malta

Charles Borg: Property is an asset that’s very important for Malta. And this question is constantly asked to us and to our regulators, in fact, even the IMF visit that we had last week, this is an issue that they raised. And property has always been important, this is an integral part of a loan book. However, one has to understand the meaning of property.

We do invest, and we have let a lot of clients in the property market, however we have taken a conscious decision some years back to restrict ourselves to the top end of the property market. And this has continued to command the price, and there is still the demand for it. Our exposure to the property market has gone down significantly, and we are in the region of 8 percent at the moment, of all our loan books, so we have reduced our exposure significantly. In the area of construction, we have a 5 percent exposure, we have reduced this significantly, and this is primarily aimed towards the large EU funded projects. And basically, therefore, the risks are mitigated significantly in the area of construction and real asset.

World Finance: How do you see your bank’s role in shaping Malta’s economy, and by extension, what’s the future of Malta’s economy in the Euro zone, which is still relatively unstable?

Charles Borg: I think this is a very critical critical question. Bank of Valletta being half the Maltese economy, our contribution is about 45-50 percent on both sides of our value sheet. By our valuation, by our size in Malta, we are critically important. We are important in terms of the fund-raising activity, because we raise all our funding from the retail deposits, and obviously the utilisation of those funds into the Maltese economy. We are being intrinsically tied to the Maltese economy, obviously we are interested to grow the Maltese economy in a sustainable manner.

We will ensure that the old economy continues to function properly, when I say the old economy, I mean tourism for instance, I mean the manufacturing sectors, I mean retail and wholesale sectors, and the manufacturing. But at the same time, we need to continue to identify the new areas of our economy. Like for instance, we are doing extremely well in the IT sector, in the iGaming, in the financial services sector, and so on and so forth. And areas which we haven’t tapped into significantly like the aviation and maritime sectors. So when we say Bank of Valletta is a shaper of the Maltese economy, it means basically that we identify these new areas, and that we incentivise them to grow by helping them to identify these opportunities. At the same time, making sure that the old sectors continue to function properly.

World Finance: A final question on the Euro zone’s onerous banking regulation, what affect is this having on growth?

We need to identify opportunities, we need to continue to grow our capital and strengthen our capability in different areas

Charles Borg: Regulation is important, we strongly believe that it is critically important so that it will put banks on a sustainable level. We are already ahead of the curve, I would say, in the sense that our capitalisation is already at a level which is Basel III compliant, our liquidity is already CRD4 compliant, so we are all ready, but we need to be ahead of the curve.

As a systemically important bank in Malta, Bank of Valletta needs to be ahead of what is acceptable as a benchmark. Therefore, constantly we need to identify opportunities, we need to continue to grow our capital and strengthen our capability in different areas, by profit retention, by new equity issues, by hybrid instruments, and we need to find the right combination of both. At the same time, making sure that the system, the financial system, is liquid enough in order to be able to assist the Malta economy, have and find the right funding for their operations.

World Finance: Charles, thank you for joining us.

Charles Borg: Nick, thank you for having me.

Persella Ioannides on ‘glocalisation’ | Meritkapital | Video

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The flow of funds into Cyprus has created opportunities for investors and asset managers alike but not without risk, as evidenced by March’s European intervention. Persella Ioannides from Meritkapital joins World Finance to discuss brokerage services and the European market.

World Finance: First introduce us to your business lines and services

Persella Ioannides: Our main business lines are custody, brokerage, so electronic trading, asset management, and recently we received our trading license. We cater mainly to Russian clients, so as such our competition is also big Russian investment firms that are themselves domiciled in Cyprus. Some examples are Renaissance Capital, Otkritie Brokerage Service, this is quite a substantial benefit for us because we face that competition and we thus benchmark versus their services, and because they have quite a substantial shared capital base they are investing very much in their infrastructure and their services. As you know it’s an industry that is developing very fast technically, so also we ourselves are also developing with them by benchmarking to their standards.

World Finance: You are based in Cyprus as you mentioned, how were you affected by the EU and IMF’s bailout recently this year?

We were unaffected by the Cyrpus-EU bailout terms because our client’s funds were protected

Persella Ioannides: We took a management decision when we started the company to use non-Cyprus based custodians, and as such we were unaffected by the Cyrpus-EU bailout terms because our client’s funds were protected and were not affected. Moreover, our operations were continued in full and were not affected by the capital controls that were imposed on the banking sector in Cyprus, because our clients’ funds were abroad. This is also the case for other financial services firms such as FX companies or our Russian counterparts in Cyprus because they themselves also use global custodians, and thus, their operations were not affected.

World Finance: You’ve spoken before about ‘glocalisation’ tell us what you mean by this?

Persella Ioannides: ‘Glocalisation’ is a term that is known globally, and it’s basically combining a global perspective and global standards with a local requirements. If you take the instance of Meritkapital, the way we establish a foothold in a very monopolistic western capital markets industry is to provide a service offering that combines investment advice, electronic trading, which are front office services with a prime brokerage service line, which includes settlement and clearing, custody as you know, financing margin trading. So if you take examples of western companies such as Macdonalds or Starbucks, they tend to have a very standardized menu, but they combine it with their local product offering. So in that effect, Meritkapital also tries to provide a derivative product that is front office, and prime brokerage service line, which proved very successful because this is a local and regional requirement for us.

World Finance: Looking at the global markets, which trade calls look good to you in the medium term.

In my opinion we’re actually living in a very boom and bust economic environment which is triggered by the actions of the global central banks

Persella Ioannides: As you very correctly said, the equity markets and the commodity markets are experiencing quite a boost and in my opinion we’re actually living in a very boom and bust economic environment which is triggered by the actions of the global central banks through their liquidity triggering and their respective monetary easing operations. So following the sub-prime and the subsequent euro-debt crisis, like the global central banks tried to boost the global economic activity, but perhaps a lot of that economic activity is artificial which can be evidenced by the sharp rise in the equity and commodity markets.

We tend to follow a very conservative approach, so our investments are mainly in fixed income instruments, but we utilise fixed income instruments that have a twist to take advantage of the ensuing macro-economic environment. So for example, convertible bonds that have an equity underlying, maybe utilised in this environment where equity markets are performing well. Or floating rate bonds, if the central banks reverse their monetary policy operations where as you know, floating rate bonds will benefit from interest rates rising. Generally right now we keep duration in check, for the reasons that you just said.

World Finance: Finally, what are your thoughts on the ECB’s monetary policy and what advice would you give to Mr. Draghi?

Persella Ioannides: The advice that I would give Mr. Draghi is basically to take a more forceful and decisive decisions in his monetary policy operations, and that is true for most European policy makers because we all know that the Greek debt crisis basically reached the stage that it did because they were delaying in their monetary policy decisions. They need to be more forceful, because as we all know, Europe is very fragmented both culturally and politically, so there needs to be a unified approach to decision and decision-making.

World Finance: Persella, thank you.

Persella Ioannides: Thank you very much for having me

Rockwell Collins boosts commercial arm

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In the biggest aviation deal of the year so far, Iowa-based aerospace firm Rockwell Collins has purchased ARINC from the Carlyle Group, the world’s second biggest alternative asset management firm. The deal, which was orchestrated by Rockwell Collins’ new CEO Kelly Orthberg, provides the firm with a much-needed cushion against impending reductions in spending by the US military.

“ARINC operates in the heart of where we see the industry going,” Orthberg told shareholders. “Strategically, this acquisition is a natural fit.”

At present, around 85 percent of ARINC’s revenues derive from commercial clients. This means after the acquisition, Rockwell Collins business mix will shift in that direction, too – reducing its government contracts from 52 percent of all business to just 46 percent. Analysts suggest the change in strategy is a wise one, as US military spending is set to be cut by almost $500bn over the next decade. As a part of the sequester cuts that took place earlier this year, that figure is likely to increase even more.

Yet aside from protecting Rockwell Collins from a potential slump in government sales, ARINC’s niche communication technologies should also help its new owner to step out of the cockpit and advance its domination over the global aviation communications industry.

“We’re excited to be joining a company who shares our vision and focus on providing trusted solutions for our customers,” ARINC boss John Belcher said on the company’s website. “Rockwell Collins’ expertise in managing information on-board the aircraft, coupled with our innovative and reliable air to ground communications services, will be instrumental in providing new integrated information management solutions for our customers.”

At present, Rockwell Collins’ expertise lies in flight-deck avionics, cabin electronics, mission communications and other various information management systems. ARINC, which dabbles in the nuclear and rail sectors as well as aviation, will provide Rockwell Collins with a unique opportunity to significantly diversify its output.

“I’ve said that one of my primary areas of focus is to accelerate our return to growth, and that we intended to supplement our organic revenues with acquisitions,” says Orthberg, who’s only been on the job since August 1. “Our capital deployment strategy has always been to preserve enough firepower to be able to do a larger acquisition if the right opportunity presented itself. Well, that time has come.”

The timing of the deal suited ARINC’s former owners, too. In 2007, the Washington-based Carlyle Group purchased ARINC from a consortium of airlines including Continental, Delta and American Airlines. The terms of the deal weren’t disclosed, but it’s likely Carlyle got a bargain. It is now being estimated the firm will earn a fourfold return on its equity investment in ARINC, marking a graceful exit from the transportation communication business. In the second quarter alone, the Carlyle Group made nearly $4bn through various exits and portfolio sales, and last week co-CEO Bill Conway said Carlyle would continue tapering such investments in the second half of 2013. Other managers appear likely to follow suit, and Orthberg hinted that after this acquisition, Rockwell Collins will likely shy away from pursuing any other major deals in the mid-term.

Hani Baothman on investment funds | Sidra Capital | Video

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Sidra Capital has been established as a Shariah-compliant investment bank since 2009. Hani Baothman, CEO of Sidra Capital talks to World Finance about some of their investment offerings.

World Finance: Tell us about some of the investment opportunities that you offer your clients

Hani Baothman: Sidra Capital is a Saudi investment company that is geared towards providing investment opportunities to Saudi investors. We’re mainly divided into two divisions, asset management and investment banking. In the investment banking, we provide corporate advice to Saudi families, we’ve been involved in restructuring some of the biggest Saudi family groups lately in Saudi Arabia. We’ve also worked with big clients like the Ministry of Finance, in which we worked together in setting up a mortgage finance company. That has the involvement of CMHC which is a semi-crown entity in Canada.

“We wanted to do something that was beneficial to the community”

World Finance: And how have your core philosophies informed your investment approach?

Hani Baothman: Sidra’s shareholders and management believe that in the beginning we wanted to do something that was beneficial to the community. This is why we stayed away, as per our belief, from investments that do not benefit the people back home, such as equities, because there are other players who can do this better than us, and we don’t see direct impact on people’s lives with such investment products. So this is why we ended up doing mainly private equity related transactions, whether it’s in advisory or in the asset management side.

World Finance: Tell us about your Stirling UK Real Estate Fund

Hani Baothman: SURF was a fund that was established with our partner in London Gatehouse. We had the idea of setting up an income-generating real estate fund with UK assets. The problem we faced in the beginning was that most of the funds that we looked at were not fully 100 percent Shariah-compliant. This is why I decided to set up our own fund, it’s £100,000,000 fund, it looks for assets that are leased to blue-chip companies, a minimum lease period of 13 years, a minimum yield of 7.5 percent, and we have successfully managed to place this fund in Saudi and investors like it.

“We managed to structure the first fully 100 percent Shariah-compliant fund”

World Finance: So what differentiates your Sterling fund from other real estate funds on the market?

Hani Baothman: There are three main points, the first one is that as an asset manager we seeded the fund with a minimum of 30 percent of the fund, so as they say, we put money where our mouth is- this is number one. Number two is that we managed to structure the first fully 100 percent Shariah-compliant fund. Number three, most of the investors in this fund are dollar based investors, we don’t have any UK or Sterling based investors, that gives us the liberty to play the exchange game should the Stirling appreciate and the investors decide to exit, they may play the currency game, in addition to the real estate returns that the fund generates.

World Finance: Now, World Finance recently recognised your Ancile Global Structured Trade Investment Fund, why do you think this is?

Hani Baothman: It’s a new fund which we did with a Geneva-based asset manager, INOKS in London. In the beginning we wanted to get into commodity finance, but the problem we faced was that most of it was like structured product, we didn’t see anyone who is doing deal commodity finance. We went with them to Africa, we saw the farmers they’re financing, the impact such programs are having on people’s lives, smart returns such investments make and we decided to go back with them and create the first Shariah-compliant trade finance fund, which we did in Sidra Ancile Fund. Now this fund again as I said, is fully Shariah-compliant, it really considers the sustainable development part, we don’t provide farmers with bad chemicals, although we’re an investment manager, we do care about investment related activities that our fund gets involved in.

“One of the things that we find is a truly Shariah application in our fund is the sustainable development”

World Finance: Finally, do you think that being Shariah-compliant gives you an advantage over other funds?

Hani Baothman: Some investors and asset managers limit the Shariah part of the fund to the structure and legality of the fund, which actually we do, this is part of our Shariah mandate, but we take it a step further. We look into sustainable development, Shariah actually guides you towards not harming the land, not harming the environment, taking care of the environment you work in, and this is one of the things that we find is a truly truly Shariah application in our fund, which is the sustainable development part of it.

World Finance: Hani, thank you.

Hani Baothman: Thanks Nick, thank you.

Anna Zamurakina on Southeast Asia | FBS | Video

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Unlike the debt burden among developed nations in the West, Southeast Asia with its resilient growth represents a truly bright outlook. Anna Zamurakina from forex broker FBS discusses the economic potential of the region.

World Finance: The emerging nations of Southeast Asia show resilient economic growth, while developed Western economies are having a hard time trying to avoid recession. What’s the secret of Asian economic success in the recent years?

Anna Zamurakina: The economies of Indonesia, Malaysia, and Thailand are steadily growing. In 2012, each of them expanded by more than 12 percent. In our view, the Southeast nations are much more economically healthy than those in Europe, even than the US. The main reason is that Asian governments don’t have to conduct severe austerity measures, they have made a wise decision to rely on domestic consumption and not on exports. They seem relatively immune to external shocks, such as the European debt crisis, and they are able to enjoy their rapid economic growth. And when the economy is safe and sound, and people have money to invest, they come to forex; a perfect choice for an individual trader, either a beginner or a professional one.

“Forex is extremely dynamic and offers spectacular trade opportunities”

World Finance: So then, why should retail investors choose forex over other asset classes?

Anna Zamurakina: Much has already been said of the advantages of forex. To cut a long story short, it is certainly the easiest way to start your activity at financial market. Open 5 days a week, it is extremely dynamic and, so, offers spectacular trade opportunities. All you need to do is to choose a reliable broker, and FBS is surely the best choice. Such a rapid development of FBS, it’s reliability, and high-level services, has been awarded for the third time this year by a world’s leading financial magazine, World Finance. Despite our evident success, there is no time to rest on our laurels, we proceed with our Asian and world expansion, within our language support option, improve our services and offers, conduct local charitable actions, and more.

World Finance: You have significantly enhanced your IB program recently, tell us more about that

Anna Zamurakina: Well we have done a great job and now we are proud to announce that we have the best IB program on today’s forex market. Above all, FBS provides its partners with the highest IB commission on forex, 2.2 pips. Moreover, we offer a unique multi-level IB bonus program, efficient and constantly updated tools for client requirement, regular contests and promotions and more. Our IB program is easy to use, transparent, and it is a real chance to make thousands of dollars every month.

“In dynamic markets companies must constantly introduce new services and products”

World Finance: Finally, what are you working on now, and what’s your strategic vision for the next 12 months?

Anna Zamurakina: In dynamic markets companies must constantly introduce new services and products to keep up with changing consumer wants and needs. So in the near future a new trading platform, MetaTrader5, will become available to all FBS traders. MetaTrader5 is fully consistent with the concept all-in-one, it includes everything that you need to work at financial market. Secondly, FBS Palm account, ZuluTrade, and monitoring of traders’ account, will be introduced shortly. FBS Palm account is an ability to participate in the world’s largest exchange market, and it is the acquisition of profits without any experience and special knowledge. Capital management will be done by experienced traders. And finally, we have launched our new analytical resource FX Bazooka recently. FX Bazooka is an advanced information resource for traders. Through FX Bazooka you will gain access to currency forecasts and recommendations from the world’s most professional traders and analysts. So I think it is clear now that your best choice for forex is FBS.

World Finance: Anna, thank you.

Anna Zamurakina: Thank you

Matt Eagan on the economy | Loomis Sayles and Co | Video

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Loomis, Sayles and Company has successfully negotiated the volatile bonds market of recent years and now manages over $191bn of assets. Talking about their approach is Vice President and Portfolio Manager at Loomis Sayles, Matt Eagan.

World Finance: Introduce us to Loomis, Sayles and Company, what do you offer your clients?

Matt Eagan: Loomis is a global asset management company, we’ve been around since 1926, we’re currently on the fixed income side managing over $180bn worth of assets under management. We have a full range of capabilities on the fixed income side, everything from core products that are tightly managed verses a benchmark, to go-anywhere styles on the multi-sector stage, to alternatives including hedge fund capabilities.

“We have a macro-process integrated into everything that we do”

World Finance: What do you think has made you successful?

Matt Eagan: There are really four main factors that counts for our success. First, our macro process, we have a macro-process integrated into everything that we do. By doing this we are able to identify trends, spot them early and take advantage of them. Second is fundamental research; we have a very large staff of research analysts on the fixed income side and on the equities side. Third is our quantitative capabilities; we talk about quantitative, this is not just something that monitors risks from afar, we actually have it integrated into our process. This enables us to not shy away from risk but to take on good risk where we think we’re being compensated for it, understand that risk and manage it properly. And finally is our ability to consider alternatives and we have capabilities to look at the market, both from a long perspective and a short perspective, and it allows us to really optimise opportunities and risks for our clients in all portfolios.

World Finance: What kind of impact is the Federal Reserve having on portfolio management?

Matt Eagan: Well the Fed has had a very heavy hand in the market, and obviously their policies have had the affect of driving interest rates down to really distorted levels. We see the winds changing on that front, right now we think we’re transitioning to a period where rates are going to rise on a secular basis. So now, the good news is that rates are rising, but the challenge will be how to preserve principal as we get to that higher level of yields.

“The key area of diversification is away from interest rate sensitivity”

World Finance: You talk about this transition period, in what ways have you had to diversify to find value?

Matt Eagan: Well the key area of diversification is away from interest rate sensitivity, so that means de-emphasising government bonds and high-quality markets, so US treasuries and the like, and moving into other sectors like corporate bonds whether it be investment grade, high-yield where we have the flexibility, convertible bonds, emerging markets. Loomis Sayles is very research focussed and in many cases a lot of our portfolios will build one bond at a time, and focussing on where the value is. So those are some of the places that we may go. We’ll also invest internationally, we have global capabilities and are very comfortable investing in overseas markets, both in the developed area and in the emerging market area.

World Finance: How do you tackle challenges in other markets, such as Europe, and is it still possible to find other opportunities despite the challenges?

Matt Eagan: There are opportunities globally, and Loomis Sayles is a global firm, and what we do is bring our research capabilities to a market like that and look through the rubble to find where there is pockets of value in that market. For us there were opportunities in the peripheral sovereign market, that we participated in, as well as the investment grade corporate and high-yield area where some, a few, gems there. The market is a little bit more pricier than it was now, but we still think there’s good value in some of those areas.

“We use research to look through the rubble to find where there are pockets of value in that market”

World Finance: So finally, what’s your outlook for global growth?

Matt Eagan: So I think global growth will continue to muddle along here supported by very aggressive policies from central banks around the world. The growth will be lead by the major economies, fortunately the US we think is at the vanguard, in the developed world, for positive growth, being lead now by our housing sector we think is picking up steam, which is good news. There are still challenges in the US, the biggest one being our fiscal drag that we’re likely to have, so there’s pluses and minuses, but overall we should see about 2-3 percent growth rates in the US. And China is, the second largest economy, is struggling to maintain very rapid growth, but is growing still about 6-7 percent per annum, which is quite attractive. So the two largest economic engines are starting to gain some momentum and positive growth, which is good for the world. We look at the rest of the developed world, Europe is struggling to grow, and will continue to struggle based on some of the austerity that they have in place and just not enough aggressive policies from both the central bank and the regulators there. So overall, muddling through, positive growth from the main engines of the world, which should be supportive of risky assets.

World Finance: Matt, thank you.

Matt Eagan: Thank you very much.

Emre Hatem on sustainability | Garanti Bank | Video

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Established in 1946, Garanti Bank is Turkey’s second largest private bank with consolidated assets exceeding $104bn as of March 2013. Discussing their commitment to sustainability is Emre Hatem, Senior Vice President of Project and Acquisition Finance and the Sustainability Team.

World Finance: Garanti Bank’s approach to sustainability is quite unique, what have you outlined as the key areas of focus and how are you managing these areas?

Emre Hatem: Well under our sustainability strategy, we focus on a variety of key points. We can group them at five headlines, which are; customers, human resources, corporate social responsibility, corporate governance, and environment. Just to give some examples regarding customers, we have provided a significant support to women entrepreneurs we have provided $250mn of financing to them, and also regarding the SMEs we are doing periodical meetings with them, which we call Garanti Anatolian meetings, we reached 25,000 up to now. Regarding the environment, we have established a very detailed environmental management system, which is aiming to decrease our energy usage and to reduce our carbon footprint, and we have been awarded as the carbon performance leader in Turkey.

World Finance: Tell us about your training and engagement programs

We are working hard to increase our engagement programs with respect to our external stakeholders

Emre Hatem: Last year we have started a training program, an online training program, that has been delivered to 17,000 people in the bank. We also started a tailor-made training program with respect to environmental and social risk assessment, carbon markets, climate change, that training program has been delivered to various departments of the bank. On the other hand, we are working hard to increase our engagement programs with respect to our external stakeholders. Being a member to UNEP-FI, UN Global Compact, WWF, and Business Counsel for Sustainable Development, we are actively supporting their seminars, conferences and events in Turkey. For example, last year we sponsored a very important training program, an environmental and social risk assessment program in Turkey, and also we have sponsored the first sustainable finance forum in Turkey. We think that those engagement and training programs will play a key role in increasing awareness of our stakeholders.

World Finance: And how are the sustainability drives that you mentioned integrated into the bank’s day-to-day operations?

Our employees have a very positive approach towards sustainability

Emre Hatem: Most importantly, our senior management provides a solid ground in implementation and successful realisation of sustainability related activities. On the other hand, our efficient organisational structure enables an alignment within the bank. Certainly I can say that our employees have a very positive approach towards sustainability. Not only are they very sensitive about those issues, but also they contribute to the projects that they are working in. If you just have the organisational structure, employee commitment, and also senior management support, I think that at the end of the day we will achieve greater results.

World Finance: Garanti also has close links with renewable energy projects in Turkey, tell us about your involvement.

Emre Hatem: As part of our sustainability development policies, we support renewable projects to a great extent. Up to now, we have provided $3bn of financing to renewable energy projects. Once all of them are operational, the annual CO2 emission reduction will be 6mn tonnes, it’s a huge amount of reduction. We especially support wind projects; wind projects not only reduce the CO2 emissions, but also they reduce our country’s current account deficit, that is why they are also contributing from an economic sustainability perspective. Up to now we have financed 35 wind projects, we have provided $1.5bn of financing to them, and our market share in the local market amount to Turkish banks is 50 percent. Our aim is to continue our support to renewable energy projects, with a view of contributing to climate change.

World Finance: Tell us about the environmental and social risk assessments that you undertake in your lending activities

Emre Hatem: Well we established our own environmental and social risk assessment procedures, with the help of an internationally recognised company in 2011. Environmental and social policies in the bank consist of several steps; firstly we start with an exclusion list, this list consists of the projects or the activities that we don’t finance at all.

Secondly what we do is we check whether the project is in line with the ENS policies, and the sectoral principles, these are technical criteria. Then according to the investment amount and the scope of the project, then we make a rating analysis, we need to make sure that all the impacts are properly analysed, all the impacts are reduced to acceptable levels with certain precautions and actions, all the precautions and actions are written in an ESMP, in an action plan, and also we need to make sure that they are monitored closely during the construction and production period by our advisors. With the implementation of this system, we achieved significant progress towards compliance with the principles.

World Finance: Finally, what challenges has Garanti faced in the banking industry and what opportunities have you been able to take advantage of?

Emre Hatem: I will touch on two challenges and two benefits. The first challenge we faced was to increase the awareness of the employees and of the customers, because it’s a long term and a dynamic process. Secondly, convincing the borrowers, the project owners, to apply more stringent environmental standards was a challenge in front of us in a very competitive environment. Coming to the opportunities, by decreasing our energy usage we have benefitted from lower energy bills, that was an economic benefit. And the second opportunity in front of us is the reputational benefit of the bank, by applying such very detailed sustainability policies.

World Finance: Emre, thank you

Emre Hatem: Thank you very much

Edgardo Cantu Delgado | Vector Casa de Bolsa | Video

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Vector Casa de Bolsa is the largest independent securities broker-dealer in Mexico. The business has a huge network of advisors, assisting more than 32,000 clients, and has established operations around the world. President and CEO Edgardo Cantu Delgado talks more about the company, and the wider economic conditions in Mexico.

World Finance: First tell us more about Vector, how would you define your operation?

Edgardo Cantu Delgado: Vector is a Mexican securities broker dealer, specialised in customer relationships. Our main focus is on providing investment alternatives for high net-worth individuals, also to provide investment process services to institutional investors as well as corporations. Vector also, because of the relationship we have with high net-worth individuals, we are very active in merger and acquisition business. We also provide advisory services for clients for finance and equity activities.

“The client relationship is our main differentiation element”

World Finance: And what makes you different from your competitors?

Edgardo Cantu Delgado:I would say that the client relationship and this specialisation are our main differentiation elements. In the kind of business we are, as you know the market moves very fast and in a very unpredictable way, then you need an organisation that is close enough to give you advice and to take advantage of the opportunities, that’s exactly what Vector offers. There’s a basic principle in our operations, that is, to be small enough to keep our real personal relationship with the client, and to be big enough to offer a wide spectrum of investment alternatives to our clients. That’s exactly what Vector offers.

World Finance: I mentioned that you’ve expanded round the world, how wide is your reach today?

Edgardo Cantu Delgado: The original idea of going international started when we established a new company, a broker-dealer company in the United States, with the idea to offer our clients in Mexico the alternative of investing internationally, opening accounts in the US. Later on in 2008, in a very difficult year, you remember this was the year that the financial crisis started, but we always believe that during a crisis there are opportunities and this is a good example of it, we decided to continue this expansion to some other countries in Latin America. The first step was to open some offices in the United States in cities like Miami, New York, or Houston, and later we started opening offices in different countries, today we have offices in Costa Rica, Venezuela, Colombia, Ecuador, Peru, and Chile. More recently, we opened an office in Singapore, because we believe we can establish a link between the institutional investors in the South East Asia region and Latin America. We also opened an office in Geneva in Switzerland, because again, what we want to offer our clients is different platforms to invest, one locally, one in the United States, and another in Europe or, why not, in Asia. In this way now Vector is the only Latin American financial company that has clients in more than 20 countries.

“Mexico is in very good shape financially speaking”

World Finance: Despite this expansion you’re still very much a Mexican company, tell us what you think of the country’s economy right now

Edgardo Cantu Delgado: Mexico is in very good shape financially speaking, Mexico has a very solid and sound condition. This is a combination of correct fiscal and monetary policies. Mexico has some other very attractive characteristics, like at the end, Mexico is still a very young country, we have a young and growing population. Mexico is growing if you compare what is happening with some other countries in Europe or the US, Mexico among the emerging markets is one of the countries that is growing better and we expect that in the next year we can improve the way Mexico is growing. But on the other hand, we also have some challenges, and we believe that there are some reforms needed in order that the favourable conditions that we have in the macro-economics could be transferred to the micro part of the economy.

“This is a very good time to invest in Mexico”

World Finance: Now some economic analysts are saying that Mexico is in fashion now to invest in, what’s your view on this?

Edgardo Cantu Delgado: That’s true. The combination of some elements like public and private financial conditions, the deficit in Mexico is very low, we also have a very diversified and open economy, Mexico has established trade agreements with many countries since maybe 20 years ago, and Mexico also establishes new ways to grow. With the new administration, with President Pena Nieto, they achieved an agreement, a very important political agreement among the three main parties, through this agreement they will be looking to establish new reforms in strategic sectors, like education, energy etcetera. With these reforms, we expect that the positive effect on the economy could be very attractive, with potential growth, with better education, with less informal employment, and more competitiveness. In summary I could say Nick that this is a very good time to invest in Mexico, as well as in some other countries in Latin America, and I could say that Vector is the best option for global investors to look for investment opportunities in this attractive region of the world.

World Finance: Edgardo, thank you.

Edgardo Cantu Delgado: Nick, thank you very much for this opportunity.

Orlando Cabrales Segovia | Agencia Nacional de Hidrocarburos | Video

Posted on by Ashton Wenborn

Colombia’s Agencia Nacional de Hidrocarburos was formed in 2003 in response to the need for a separate regulatory and administrative body. Talking to World Finance about Colombia’s hydrocarbons Industry is Vice Minister of Mines and Energy, Orlando Cabrales Segovia.

World Finance: Colombia’s hydrocarbon sector has seen some impressive changes over the last decade, tell us more about these developments

Orlando Cabrales Segovia: Yes, I mean really the Colombian energy sector has experienced a huge transformation over the last 10 years. We have almost doubled our crude production over the last seven years, we are producing over 1million barrels of oil per day. In terms of exploration, we have been increasing our exploration indicators, last year we achieved a record figure in the country 131 exploratory wells were drilled last year. It is a significant transformation that we have experienced over the last ten years.

“One of the key challenges for Colombia is increasing our R/P ratio”

World Finance: So what is the importance of the reserves/production factor in the development of the sector?

Orlando Cabrales Segovia: Well one of the key challenges for Colombia going forward is increasing our R/P ratio, reserves/production ratio, today our ratio is 7 years which is not much. We have also been increasing our reserve numbers, last year we ended up with almost 2.4 billion barrels of crude oil, which is not much, so our main challenge remains to increase the incorporation of our reserves, and to increase that r/p ratio.

World Finance: Tell us more about the reserves that you currently have, and the technology you are using to track these reserves

Orlando Cabrales Segovia: Well the incorporation of reserves that we have been having over the last years comes mainly from increasing the reoccurring factor of our existing fields. Today on average the reoccurring factor in Colombia is about 18-19 percent, so we have planned to increase that number by 10 percent over the following 20 years. By doing that we can increase, we can add up 3 billion barrels of oil reserves. That is number one. Number two is to open up new frontiers, new exploration frontiers. I’m talking about unconventionals, CBM, coal bed methane, shale gas, tight oil, as well as the off-shore, the caribbean off-shore. And I would say the third one is by continuing doing what we have done over the last years. We have very good potential in the Llanos Basin on the Caguán- Putumayo basin, so we are expecting to see more results over the following years in this area.

“We are expecting an investment of about $5bn to increase our transportation capacity”

World Finance: Now production has grown faster than your transportation capabilities, so what are you doing to address this?

Orlando Cabrales Segovia: That is correct. Our production grew, as I said, much faster than our transportation capacity. We are expecting an investment of about $5bn over the following years to increase our transportation capacity. There is one project which is going to add up 120,000 barrels per day, which is phase number one of the bicentenario pipeline. We have a project which is in the early stages, very early stages, which is to build a facility pipeline to the Pacific. The vast majority of our transportation capability goes to the Caribbean, to the Atlantic, and we believe it makes all sense to have a transportation capacity to the Pacific. In principal, that would be a project of 250, 000 barrels per day, but as I said, it is in the early stages.

World Finance: Aside from conventional extraction, how are you turning towards newer reservoirs such as shale oil and gas?

Orlando Cabrales Segovia: Well last year we set up a new fiscal and contractual framework to attract investment into the unconventionals. We took several measures; the first one our Colombian congress approved a 40 percent discount of the existing royalty rates, so that’s number one. Number two, we extended the development period for companies to develop these resources, from 24 years up to 30 years. We also increased the trigger in our windfall profit provision to 50 dollars per barrel, up to 81 dollars per barrel, so overall we believe and we have seen that the measures have been well received by the investors community, and we are expecting to have a significant investment in the unconventionals in the following years.

“The measures have been well received by the investors community”

World Finance: And finally, what are some of the challenges that Colombia’s hydrocarbons may face in the future?

Orlando Cabrales Segovia: As we mentioned, the increasing the r/p ratio is one of the challenges, to keep the good momentum we have achieved by having more exploration activity, by keeping at least the production levels we are having, to further incentivise exploration in gas, in gas reservoirs. We also have a challenge of improving the time we are taking to grant environmental licenses to the activities, to the exploration and production activities in the country, so those I would say are the main challenges that we are having in Colombia.

World Finance: Orlando, thank you.

Orlando Cabrales Segovia: Thank you Nick, thank you for having me.

Mohammad Attiya on his ‘app store model’ | TradeNet

Posted on by Ashton Wenborn

We’re all familiar with buying apps for mobile devices- simple, cheap bolt-ons that make our lives easier. But Mohammad Attiya, President of TradeNet, has a vision of an app store model for online retail brokers

World Finance: First introduce us to TradeNet, what do you do?

Mohammad Attiya: At TradeNet we make software for retail brokers, and we are a full-fledged equity platform for emerging markets.

“It’s about extending the functionality of whatever product you’re offering”

World Finance: Fill us in on this ‘app store model’ for online retail brokers

Mohammad Attiya: The app store model is something that we did not invent, we actually copied from other industries. It’s basically about extending the functionality of whatever product you’re offering, without necessarily extending the cost, as well as increasing the stickiness of customers to the product you’re offering.

World Finance: So what kind of widgets does the TradeNet store offer?

Mohammad Attiya: It started with the typical widgets that are acquired for an investor and that includes fundamental analysis tools, technical analysis tools, market data, research from independent sources, ratings, that kind of thing. There’s no limit to what these widgets can offer.

“They offer you related products…think about that in terms of stocks”

World Finance: And you say there are lessons to be learned from Amazon?

Mohammad Attiya: Amazon is a very interesting company, they’re one of the companies that truly shifted their focus from what they are selling to who they are selling to. And you go to Amazon and they offer you stuff that you get surprised at times that they know that much about you. They also offer you related products, so when you go to buy a certain product, they say ‘customers who bought this product have also bought that product, are you interested?’ Think about that in terms of stocks, if you are buying a stock in London and there is a stock that is similarly performing in Kazakhstan, you wouldn’t know about it but if your broker is able to pull it together in front of you and tell you that this stock is similar or somebody who has bought this has also bought that, you might be assimilated to buy it. Another thing about Amazon is that they moved from selling books, to selling anything, and I’m starting to think ‘can they at one point in time sell stocks in companies for example, and how would that affect brokerage firms with the kind of customer intimacy that Amazon has with millions of customers?’

“It’s got to be seamless to the customer”

World Finance: So how can online retail brokers implement that strategy?

Mohammad Attiya: It’s got to be seamless to the customer, when Apple introduced the phone, the iPhone, it’s essentially five percent phone and 95 percent something else, but they called it a phone and the positioning was a phone. So people are accustomed to this kind of product, and they introduce it from the angle that the customer is used to, so that the customer doesn’t fear there is a big change coming that people have to be prepared for because people don’t like change. So this is the same for a brokerage firm, the customer goes to the website to do the usual things like executing an order or looking at their history or portfolio, they should also be presented with that plus, seamlessly, the other widgets that can be offered to them.

World Finance: So familiarity with the products, I guess, is key?

Mohammad Attiya: Familiarity with the concept, yes.

World Finance: Finally, what does the next 12 months- 2 years hold for TradeNet?

Very vivid focus on the TradeNet store as an enabler for our brokerage firms to get out of the commodity price wars that they are suffering from now, trying to sell execution only, increasing the stickiness of their platform or their e-trip platform to their customer.

World Finance: Mohammad, thank you.

Mohammad Attiya: Thanks

Andrew Bascand and Christian Hawkesby on investment | Harbour Asset Management | Video

Posted on by Ashton Wenborn

Last week we heard from Andrew and Christian on how New Zealand has not just survived since the global financial crisis – thanks to learning the lessons set by its own mini-crisis decades earlier, it’s thrived. This week they explain how Harbour Asset Management‘s expertise, transparency and innovation have won it great success: both in financial returns, and client relations.

World Finance: We’ve already heard about New Zealand and it’s ongoing success story, how does Harbour help investors access New Zealand’s opportunities?

Andrew Bascand: Harbour Asset Management is a leading funds manager in the New Zealand market. We’ve got around forty large institutional clients who have trusted their money with us. The reason they’ve done that is because of our expertise, our experience, and more importantly the transparency with respect to our investments processes. We’ve been doing this for a long time now, so people, when they’re giving us their money, understand quite clearly how we’re going to invest those funds, and they know that we really understand our investment markets.

World Finance: You mentioned expertise there, Christian, you both have impressive resumes, tell us about the experience of your team.

Portfolio managers at Harbour have had around 20 years of experience

Christian Hawkesby: That’s right, Andrew and I both have central banking and markets backgrounds, and more generally within the team our portfolio managers at Harbour have had around 20 years of experience, and the analysts have had in excess of 15 years of experience. We’ve all had international experience through time, both here in London and elsewhere, and really at Harbour what we’re about is taking global best practice and applying it in the local market, the market we know best.

World Finance: And what else makes your offering unique?

Christian Hawkesby: Well I think there’s an element of the experience of the team, not only individually but collectively, in the way that we work together. Secondly, that long track record as a team has enabled us to enhance and build our investment processes, and really that comes through in the performance and the way that’s translated through time. I guess finally, the feedback that we get from our clients, is that they love our research, they love the research that we put out, they love the way that we share our ideas about what the key themes are in the market and what we are doing about that in terms of managing portfolios.

World Finance: And Andrew, how are you innovating, how are you finding profit in a low growth world?

Transparency, together with a dialogue with clients, is what I call innovative

Andrew Bascand: We know that investors are really struggling with this as well, so three years ago we sat down and talked to a whole lot of our clients, and asked them a number of questions about how they’d like their money invested in this world. So we didn’t just dream up something, it was a process of discussion. And the answers were quite simple; we’d like lower volatility, we’d like yield, and we’re appropriate- we want diversified growth.

More importantly in fixed income portfolios, we just don’t want any defaults, we want high investment grade. So we set about thinking about these ideas, and we built two new key products; an Australasian equity income product, which has lower volatility and strong yields, and we built a core fixed interest product, which ensures significant diversification across a number of strategies, providing investors with a real understanding of what’s going on beneath the bonnet.

And that transparency, together with the dialogue with clients, is what I call innovative. Innovative to me is not strapping on a whole lot of derivative contracts and using a smart computer and black scholes model, I think we now know that real investing beyond that.

World Finance: And all of this adds up to some impressive returns for your clients

Andrew Bascand: I think clients know that markets go up and down. The last year has been great, we’ve got returns in our equity products well above 30 percent for the year and in our fixed interest products, ALFAs, or added value of well over 1.5 percent, which is really great in those sorts of products. But our clients know that to get those sort of returns you have to take risks, so they’re more focussed on the long term nature of what we’re doing, and over more than 13.5 years now we’ve delivered strong results in our core products, and there have been ups and downs, but people want to build real wealth over the long term, and that is the sort of dialogue we can have with our clients.

Andrew, Christian, thank you.

Thank you.

Ahmed Khizer Khan on banking in Pakistan | Burj Bank | Video

Posted on by Ashton Wenborn

Pakistan‘s central bank is pursuing strategies to promote Islamic banking, including establishing fully-fledged Islamic banks in the private sector. Ahmed Khizer Khan from Burj Bank discusses the advantages of Islamic finance.

World Finance: Briefly introduce us to Burj Bank and your market position

Ahmed Khizer Khan: Burj Bank is the newest bank in Pakistan. I think the best way to look at it is that the Islamic market in Pakistan is divided into two categories, the first one is the fully-fledged Islamic banks, there are five of those, and then there are thirteen windows. When I say ‘windows’ for an Islamic bank I mean the parent is probably a conventional bank, and their window operation, as we call it, for Islamic banking.

Burj Bank is a fully-fledged Islamic bank

Burj Bank is a fully-fledged Islamic bank, and it’s the newest Islamic bank. It used to be called Dawood Islamic Bank and it got rebranded to become Burj Bank, and we are positioning ourselves based on service delivery, the quality of service we provide, and, Alhamdulillah, that’s allowed us to become one of the fastest growing Islamic banks in Pakistan.

World Finance: You talk about the importance of service quality, what are your key products and services?

Ahmed Khizer Khan: The main products are our deposit accounts and in the asset book we grow on various mudarabah, musharakah, the Islamic financing products. The other place that we have also started in the consumer banking arena is our autos product, and we are becoming pioneers in terms of launching new products and facilities. I think the key element in Islamic banking right now is a mix of various products that the customer requires and as far as our delivery channels are concerned, the main channels besides branches, we have the branchless banking we’re focussing on, we call it the ADC which is the Alternative Distribution Channel.

In anything that we do where we touch the customer or where the customer is touching us, we ensure service quality, we monitor it. So the focus on service quality is what’s differentiating us. From the time the customer enters a branch, the look and feel of the branch, the way the first person who they interact with, which we call a CSO, a Customer Service Operator, who is going to direct them, and depending upon what transaction they want to do, up until the time that they leave the branch. And the branch manager thanks them for coming in, we focus on service delivery.

World Finance: You mention the re-brand and the re-profiling process that took place in 2011, tell us about this and the challenges involved.

Ahmed Khizer Khan: I think re-branding is one thing that has worked phenomenally well for us. This bank was a family-owned bank so to speak, and that’s why it was called Dawood Islamic Bank, its major shareholding was with the Dawood family. We had a major change in shareholders, one of our largest shareholders is now the private sector development arm of the Islamic Development Bank, which is known as ICD, which is Islamic Corporation for the Development of private sector. Also we have Bank Alkhair which is a Bahrain based bank, we have a Kuwaity investor, we have UAE which is Gargash Enterprises, Daman Investments, so one of the things we noticed was this is now a middle-eastern heritage, the shareholding is significantly changed, and then we looked for various options, with our shareholders with our board, of names.

Islamic finance is probably one of the fastest growing elements in Pakistan

We really wanted to reach new heights, and Burj as you may realise is a name which is now associated with reaching a new level, a new height. The challenges mean that you have to rebrand every physical location, you had to get the brand across, and you had to earn from the customer the trust with the new brand. So we moved very fast on that, our marketing team did an exceptional job in making sure that the message was received, and what the brand stood for, what the objective was and what the bank wanted to accomplish was communicated effectively. And we overcame all the challenges, and the brand became one of the most recognised brands now.

World Finance:So in the context of Pakistan’s banking sector, what role does Islamic finance play?

Ahmed Khizer Khan: Islamic Finance is probably one of the fastest growing elements in the Islamic Republic of Pakistan. As you know, Pakistan is one of the most populous countries, there’s about 180 million people, it’s the second largest Islamic country in the world after Indonesia.Predominantly, the population are muslims, so therefore Islamic finance is a very appealing concept to the general public.

It is now that we have penetrated the market to become about 10 percent closer in Islamic banking, this is the entire Islamic banking industry, and the conventional banking has continued since the inception of the country, so they’ve been there for 65 years, whereas Islamic banking has been there for probably about 10 years. But it’s probably one of the most rapidly growing areas and like I said, the choice remains between fully-fledged Islamic banks, or the windows, but I think both elements are growing very very quickly.

World Finance: How important is transparency and inter-department communications, both at Burj Bank and in Pakistan at large?

Ahmed Khizer Khan: Well, I’ll speak for the bank first. I think one of the, if you like, the bases of our success has been the transparency, from anything else occuring, from the strategy to our execution of our strategy, to various difficult decisions we’ve been taking, to the good times in terms of when the business is doing well, everything is shared with our management and our senior team, and then trickles down into the organisation. One of the forums and ways we do this is in our town halls. So I travel from each city, and I have touched and communicated directly with about 85 percent of our staff, and there’s 1000 people that work at our bank. They have an open forum, so they ask any questions, the management sits on stage, they answer anything. Then we have a very effective board, I think transparency, governance is very strong at the board level.

So management, fiduciary responsibility remains to make sure that the staff has very clear direction at the bank, and what is important in terms of the board in terms of the shareholders, because at the end of the day, delivery of what the vision is is critical to our success. As far as Pakistan is concerned, I think I would apply the same principal anywhere, if it’s transparent, it’s clear, it’s honest, I think you’ll have less room for misinterpretation, less room for misgivings, and overall success. Transparency is critical for Pakistan also.

World Finance: You mention there the delivery of your vision, so finally, tell us where you want the bank to be in 5 years?

Ahmed Khizer Khan: We would like to be Alhamdulillah one of the fastest growing banks, we’d like to be the lead bank, we want the customer to make the choice to come to us. We want to be the bank that is looked at to be a progressive bank, which is coming out with unique solutions to cater to the customers needs. We would like to be considered the bank which is going to be the first stop for any customer when they want to have an Islamic finance, or and Islamic banking transaction. And when they leave or the transaction is complete, they should have a feeling that this is the right bank that they approached, that there is a lot of repeat customers and repeat business. As such, we would like to be the bank the choice that the customer makes, and Alhamdulillah, we are on that track.

Ahmed, thank you

Thank you.

Telecom consolidation continues with revived Telefonica merger with KPN

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The trend of mergers between European telecom giants is set to continue amid news that two of Germany’s largest firms are reviving discussions over a deal that was thought to have ended a year ago.

Telefonica Deutscheland, the German arm of Spanish telecom giant Telefonica, has bought Dutch firm KPN’s E-Plus unit for €5bn. In return, KPN will retain a 17.6 percent stake in the new business, meaning the entire deal is worth around €8.1bn in total.

For the German market, this deal means that Telefonica, which owns the O2 Deutschland brand, will control 38 percent of all users. Currently, E-Plus and O2 Deutschland are in direct competition for third place in the market, which is dominated by Vodafone and Deutsche Telecom.

The news of the merger was met with concern about the continued integration occurring between Europe’s telecom firms. In 2009, the UK saw a merger between Deutsche Telecom and France Telecom’s respective T-Mobile and Orange brands create EE for a total of £7.7bn. The deal drew criticism from rivals including Vodafone, who saw it as giving the new firm an unfair advantage.

However, while regulators have looked at these deals in detail, some think that they will be more accepting of this latest merger as it will enhance network provision across Europe. Ronald Klingebiel, professor at Warwick Business School, told Bloomberg: “Even as the EU generally frowns upon in-market consolidation, they may now be more lenient toward this type of deals as its policy starts to change toward fostering pan-European network provision. Still, the deal will face high regulatory scrutiny both in Germany and at EU level.”

International industry leaders have called for further consolidation in the European market, however. Portugal Telecom CEO Zeinal Bava told a conference in July that European firms should look to learn the lessons of US rivals in the search for a leading role on the world stage.

He said: “Europe doesn’t like in-market consolidation and the US loves in-market consolidation. And I think the US is right, because if you don’t have in-market consolidation, you don’t look at the EU as one big market, then we will always lag behind the US.”

Portugal Telecom was looking at Brazil to expand, taking a 23.34 percent stake in the country’s Oi network. Bava added: “European operators have to get together simply because we are competing against very large companies worldwide. Either we scale to compete or we get priced out of the market.

“Unfortunately Europe has taken the view that in-market consolidation has not been a priority and that means it will be very difficult for European operators to aspire to the kind of efficiency that a market like the US is developing now.”

Maznah Mahbob on investment solutions | AmInvest

Posted on by Ashton Wenborn

AmInvest is a global asset management house that provides investment solutions for global investors across a full spectrum of asset classes, in both the conventional and Islamic space. Maznah Mahbob, CEO of AmInvest, discusses the company’s expansion plans, and its strategies for success.

World Finance: First, how is AmInvest positioning itself in the global market?

Maznah Mahbob: What we are offering is actively managed Asian equities, actively managed Asian bonds particularly local currency, and Islamic investments across both Sukuks and equities globally.

World Finance: This is the second year in a row that World Finance has recognised AmInvest as the Best Investment Management Company in Malaysia, what sets AmInvest apart from its competitors?

Maznah Mahbob: Primarily its investment performance, and a lot of the awards that we have been getting are based on that. Traditionally we have been largely a fixed income house, where we win the awards every year for the Best Bond Fund, the Best Bond Group, but increasingly our equities funds across the board have had a very healthy performance. Not just our fixed income bond funds, but our equities funds were consistently in the first and second quarter across all the asset classes, Islamic, conventional, fixed income, equities, so that is also encouraging.

World Finance: What do you think were the key achievements for AmInvest last year?

What drives our innovation is actually our customers

Maznah Mahbob: From the business point of view, ending last year on a three-year basis, we have grown faster than the industry, we have grown faster in equities from a lower base, faster in foreign assets, faster in Islamic assets, and faster in institutional assets. As a result, our asset mix and our client mix is increasingly becoming more balanced than before, and we like that because it means more stability in income growth and profitability. We are expanding our team, we are expanding our capacities, so it’s all these things perhaps.

World Finance: Tell us more about your innovation, what are you offering to your potential investors today?

Maznah Mahbob: What drives our innovation is actually our customers, whether it’s institutional or retail. We always pay attention to their needs, and over the last few years, the years have been challenged by a low interest-rate environment. Many of our investors, they want cash flow and income, so many of our strategies, our mandates, and our products try to deliver this to them. For example, Asia pac ex Japan REITS Fund, a fund we launched two years ago which has done very well in Malaysia. It performs, it has income, and it’s pretty smooth, it raised about 300 million USD and it returned over these two years over 42%, so we try and give them these kinds of solutions.

World Finance: How do you see AmInvest growing over the coming years?

Maznah Mahbob: Well, we hope to have a higher profile among international investors as well- beginning with institutional and sovereign funds, pension funds, also Takaful companies, family offices- who are looking for exposure to Asia, exposure to local currency bonds- this is our speciality- and looking for the same risk/return they have enjoyed in the conventional investments, in the form of Shariah compliant investments. So you know, those are the kinds of investors that we want to add value to.

Datin, thank you very much for your time.

Thank you very much

Andrew Bascand and Christian Hawkesby on New Zealand | Harbour Asset Management | Video

Posted on by World Finance

With Europe is still in the throes of the debt crisis, we don’t hear much good news about the economy. However, New Zealand has recorded solid growth for the last few years. Andrew and Christian explain how emerging technology sectors are supporting New Zealand’s traditional export industries, discuss the central bank’s influence on the country’s stability, and outline how this story is affecting the New Zealand equity market.

World Finance: Andrew, let’s begin with the big picture for the New Zealand economy.

Andrew Bascand: Well, the truth of it is the New Zealand economy is in good shape. And the foundations of that shape really started almost three decades ago, when we had our own financial crisis. We nearly defaulted on our debt.

So, we then spent the best part of a decade putting in place the structures and productivity improvements that we needed to, and since then  the economy has been more productive, more flexible, and it’s opened its arms to the Asian economy. We’re four and a half million people: we’re maybe not that important to the world economy, but the world economy’s important to us, and the economy’s going well.

World Finance: You say you’re not important to the world economy, but you do have very important export sectors. What are the sectors driving economic growth in New Zealand?

Andrew Bascand: You know, that’s very true. Clearly New Zealand exports renewable resources to the world: water and sunshine. Obviously, we create protein, and we’re exporting protein to the world. But, people maybe think too much of just those sectors.

The truth of it is, we have a vibrant technology sector. A lot of bright Kiwis have been around the world, they’ve come home, and they’ve started globally relevant companies that are doing really well.

The final thing about our growth at the moment is that we’re rebuilding our second-largest city. Christchurch was devastated in 2011. Tragic. $40bn will be spent over the next five to 10 years rebuilding that city. It’s started today. And guess what? That money is coming from global insurance companies.

It’s very relevant: $40bn is 25 percent of our economy. So, we’ve sort of underwritten our growth, through being attached to Asia, and having this rebuilding story.

World Finance: You both began your careers with the New Zealand central bank, so, Christian: what has that done to improve the economy’s stability?

Christian Hawkesby: New Zealand has really been a pioneer in providing the central bank an inflation target and the independence to achieve that. That happened back in the late 80s, among a number of other macro-economic reforms which have really provided a stable macroeconomic backdrop over the last 20 years now.

Added to that, the reserve bank has been very focused recently on ensuring that banks are well capitalised and have good liquidity positions, and that’s really helped the New Zealand banking system weather the global crisis in a much better shape than North America and Western Europe.

World Finance: Andrew mentioned the connection you have with Asia, especially China. Tell us more about that relationship.

Christian Hawkesby: Absolutely. It’s really benefited New Zealand hugely, being on the doorstep of Asia and the structural changes that are going on there. For places like Australia that’s meant demand for steel and iron ore; in the case of New Zealand as Andrew mentioned it’s more about protein, dairy products and tourism. So, we’ve benefitted greatly.

New Zealand’s been very focused on negotiating free trade agreements, and they’ve really been ahead of the curve. That’s been great, because it’s really unlocked and enabled us to tap into that very fast-growing part of the world.

World Finance: Back to you Andrew, how is this big picture impacting New Zealand equities?

Andrew Bascand: Business confidence in New Zealand is strong. So is consumer confidence. And it’s been that way for some time. What that means is, businesses have invested, and that investment is coming through in terms of company profits, and increasing dividends. So our equity market yields about five percent. That’s pretty good on the global stage. In addition, we’ve got these great new listings in the agricultural sector, companies like Fonterra, Synlait Milk – can access this protein story – and new technology companies coming to the market as well. And they’re performing strongly.

So, we’ve got this diversified ability to offer investors yield on the one hand, and growth on the other. And, while I know markets will be volatile, over the medium-term I feel quite secure in saying New Zealand’s got some good foundations for growth going forward.

World Finance: And what about the bond market? Christian?

Christian Hawkesby: Well, for the New Zealand bond market, there are two key themes really. One is that it’s been a good environment for credit. There’ve been no major credit events in New Zealand, and we’ve really got a corporate sector with very strong balance sheets, and that provides confidence for investing in credit.

Secondly, like everywhere else in the world, interest rates have been cut in New Zealand by the central bank, but not by nearly as much in New Zealand, so we still remain a relatively high-yielding country by global standards.

World Finance: Christian, Andrew, thank you both very much.

Andrew Bascand, Christian Hawkesby: Thank you.