PACIFIC ALLIANCE THE BEST KEPT SECRET

Transcription

1 PACIFIC ALLIANCE THE BEST KEPT SECRET Juan C. Botero, CIO SURA AM

2 THE PACIFIC ALLIANCE AT A GLANCE 5.1% GDP %YoY (PPP) Since 2004 (1) GDP 2016 USD 3.1 Trillion 43% of region Population 224 Million (2) FDI Net Inflows USD ADTV USD 60 Bn in Million Trade 50% LatAm Trade Pension Fund AUM USD 420 Billion (4) Market Cap USD 800 Billion (3) Listed Companies # 776 (1) , Real GDP Compound Annual Growth Rate. (2) Population as of July 2015, United Nations (3) As of May 2017 (4) As of December 2016 Sources: Bloomberg, FIAP, IMF, United Nations, World Development Indicators, World Federation of Exchanges.

3 STRONG MACROECONOMIC GROWTH GDP Growth % From 2004 to % 2.8% 2.3% 1.6% 0.7% Net FDI increased 4.3% CAGR EM Ex China Pacific Alliance Australia Brazil USA Japan GDP per capita growth % Real Export Growth 1.3% increased 3.3% CAGR Pacific Alliance Source: IMF, Bloomberg. Australia 1.3% Brazil 1.1% EM Ex China 0.8% 0.7% USA Japan

4 ECONOMICALLY ACTIVE POPULATION PACIFIC ALLIANCE Economically Active 23 Million 1.8% CAGR USA Economically Active 159 Million 0.6% CAGR AUSTRALIA Economically Active - 13 Million 1.9% CAGR 50% of the population between years old Source: International Labor Organization, United Nations World Population Prospects.

5 REAL ASSETS COMPLEMENT LISTED EQUITIES Infrastructure Real Estate 30% Equity 13% 22% 310 USD Bn 70% Debt 43% 14.3 Mn m 2 22% Chile Colombia Mexico Peru Estimated investment in infrastructure ~ 3% of GDP / annum for the next 5 years Chile Colombia Mexico Peru Office Space Market (Capital cities in AP) Source: JLL: office Market Report, IDeAL: La infraestructura en el Desarollode América Latina

6 CORRELATION FAVOURS SELECTIVITY High correlation in DM USA Europe Canada Australia Japan USA 1 Europe Canada Australia Japan Lower correlation between EM Pacific A. China India Europe EM Pacific A. 1 China India EM Europe Even lower within Pacific Alliance Colombia Chile Mexico Peru Colombia 1 Chile Mexico Peru Source: Bloomberg.

7 Average Monthly Return (%) 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% -0.2% -0.4% World PACIFIC ALLIANCE INCREASE RETURN - REDUCE RISK Pacific Alliance Chile ASIA ex Japan Perú Mexico LatAm GEM Emerging Asia MENA BRIC Colombia Emerging Europe Brazil 4% 5% 6% 7% 8% 9% 10% 11% Monthly Standard Deviation (%) Source Sura Asset Management Bloomberg Data Returns in US dollars from April 2001 to April 2017 Calculated monthly and aggregated Index MSCI PA index created 2014, simulated from underlying country indices.

8 OFFERING HIGHER RETURN/RISK RATIOS International Strategies: non-exhaustive sample of multi-asset funds managed by global asset managers. Source: Bloomberg, Local Financial Regulators

9 COMPELLING INVESTMENT OPPORTUNITIES SELECTIVITY IN STOCK SELECTION IS CRITICAL As Trump fever eases, opportunities exist based on attractive valuations Strong balance sheets to weather headwinds Net-positive USD exposure (or naturally hedged) Linked to infrastructure Base metals producers Cement companies with strong presence in US Domestic demand plays Exports to USA (% GDP) 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 3.4% 3.4% 27.0% 2.6% 14.8% Exports to US represent less than 15% of GDP of Pacific Alliance countries Source: UNCTAD.(1) Weight by market cap

10 WHY INVEST? INVESTMENT THEMES SUPPORT STRONG GROWTH Large consumer market Middle class formation Growth in domestic consumption Construction and infrastructure development Solid banking system Integration of stock exchanges (MILA) Penetration of telecom services (pay-tv, broadband) Significant reserves of raw materials

11 LONG-TERM REDUCTION IN COUNTRY RISK EMBI Benchmark 2000 was 340bps 2017 reduced to 180bps Chile Colombia Mexico Peru Sovereign Credit Rating S&P Outlook A BBB BBB+ BBB+ Source: Bloomberg as of June 2017

12 POLITICAL AND REGULATORY STABILITY Lower country risk score compared to peers 66 Strong democracies political stability independent central banks clear separation of powers rule of law 23 Advanced Economies Pacific Alliance EM Ex China BRICs Brazil Other LatAm Compares favorably in Ease of Doing Business Source: World Bank Group, Economist Intelligence Unit, Bloomberg. Advanced Economies Pacific Alliance EM Ex China BRICs Brazil Other LatAm

13 APPLICATION OF ESG NEEDS TO BE HIGHLY ACTIVE Exclusionary Investing Best-In-Class Investment Active Ownership Contamination Public health Discrimination Vulnerable communities and minorities Human Rights Pornography Weapons Corruption and bribery Shareholder rights Misrepresentation In-depth assessment of companies ESG policies Proprietary ESG screening / scoring methodology 3rd party ESG research: Sustainalytics Vigeo MSCI Proxy voting Frequent meetings with management teams Primary research along the value chain ESG Integration Combine a bottom-up (company driven) analysis, with top-down industry-wide and cross-section assessments

14 THANK YOU El Ángel de La Independencia Mexico City