Tuesday 24th May 2016
News ticker: Chubb today announced the appointment of Joe Fernandez, formerly D&O and Financial Institutions Product Manager for legacy ACE in Continental Europe, to the new role of financial lines product manager for Eurasia and Africa for Chubb, as it continues to invest in building its insurance capabilities in its newest business region. In his new role, Joe will be responsible for the development and implementation of financial lines underwriting strategies in Eurasia and Africa. He will also be responsible for employee financial lines products training. Joe will continue to be based in London, reporting to Grant Cairns, financial lines manager for Chubb in the UK and Ireland. His appointment is effective immediately. Fernandez has 18 years of insurance industry experience. He joined ACE in 2004 as corporate manager for Commercial D&O. Previously he held the position of corporate manager for Commercial D&O at AIG— Commenting on Royal Dutch Shell PLC’s Annual General Meeting, Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said: “The senior executive pay awards last year are not sufficiently justified by the company’s financial performance. We remain disappointed that the chief executive received very close to the maximum possible bonus in a year when overall financial performance was weak. Whilst the board did exercise some discretion in reducing the awards, we believe they could have done more. We also think the peer group of four companies that Shell uses to benchmark its long term incentive plans (LTIPs) is too narrow. However, we do acknowledge that despite a tough operating year, the company has had several successes in 2015, including the completion of the BG Group deal. We also appreciate that Shell has made very positive steps in responding to the concerns raised by its investors and we will be engaging with the company going forward.” Royal London Asset Management holds shares in Royal Dutch Shell worth £936m - UBS AG has opened a stock-index futures brokerage service in China. The brokerage will support clients wanting to trade on futures on the CSI 300, SSE 50 and CSI 500 indexes as well as treasury futures say local press reports - Tuesday, May 24th: Pakistan reportedly plans to sell a 40% stake in its stock exchange according to its managing director Nadeem Naqvi who announced the sale at an investment conference organised by Renaissance Capital in London yesterday. The exchange has approached the London, Shanghai, Istanbul and Qatar stock exchanges he said, explaining that a further 20% share will be sold in the local stock market. The sell-off is part of a government led privatisation program, involving some 70 companies following the disbursement of a $6.7bn IMF rescue package back in 2013. The terms of the loan end in September - Moody's Investors Service (Moody's) has confirmed the Ba3 corporate family rating (CFR) and Ba3-PD probability of default rating (PDR) of Russian vertically integrated steel and mining company Evraz Group S.A. (Evraz), and the B1 (LGD 5) senior unsecured ratings assigned to the notes issued by Evraz and Raspadskaya Securities Ltd. The outlook on all the ratings is negative – According to defence title Janes, The China Nuclear Engineering and Construction Corporation (CNEC) - one of China’s 10 key defence industrial enterprises - has entered an agreement with China's Minsheng Banking Corp to support its impending initial public offering (IPO) of 2.6bn shares on the Shanghai Stock Exchange, which is expected to raise around $250m. China's State Administration of Science, Technology and Industry for National Defense (SASTIND), which oversees the development of the country's aerospace and defence industry, said on 23 May that the agreement with the bank will support CNEC's "leap forward" towards "strategic development" - Thailand-based developer of integrated e-logistics trading and e-business service solutions Netbay says it is planning to offer 40m shares, equivalent to 20% of the registered and paid-up capital, in an initial public offering (IPO) and expects to get listed on the Market for Alternative Investment (MAI) next month. The company has the registered capital of THB200m. The firm has reportedly s appointed Maybank Kim Eng (Thailand) as financial advisor and underwriter. Netbay CEO Pichit Viwatrujira-pong says that the proceeds would be used to expand its business and increase the working capital. It targets the revenue growth of 20% this year, up from THB223m last year – Old Mutual has moved closer to the IPO of Old Mutual Wealth next year as it confirmed in a JSE announcement today that it was close to selling its stake in Old Mutual Asset Management (OMAM) to Affiliated Managers’ Group in a deal valued at $1bn - Zhouheiya Food Co. is expected to file an application for a Hong Kong listing in the next couple of weeks, looking to raise up to $500m, reports the Wall Street Journal today - UK operator Vodafone has announced its Group Chief Commercial Operations and Strategy Officer, Paolo Bertoluzzo, is going to step down after 17 years with the company to take a CEO role at payment and general financial services company Istituto Centrale delle Banche Popolari Italiane (ICBPI). Vodafone says it will announce a successor in ‘due course’ - The number of money laundering convictions and confiscations is relatively low given the size and characteristics of Jersey’s financial sector according to the latest report on the UK’s Crown Dependency of Jersey from the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), adopted in December 2015. Apparently, this is the last in a cycle of MONEYVAL evaluation reports based on methodology set out by the Financial Action Task Force (FATF) in 2004. MONEYVAL is currently evaluating its members according to the FATF’s updated 2013 methodology.

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Investors come back to the markets in search of returns Photograph © Xy/ Dreamstime.com, supplied March 2013.

Investors come back to the markets in search of returns

Tuesday, 19 March 2013
Investors come back to the markets in search of returns The markets this year have started with a bullet. The current bull market hints that investor confidence might be rising as the debt crisis in Europe looks to be under control and the US is managing its fiscal cliff. What are the implications of this sea-change? Carey Olsen, which advises on the largest total number of funds and assets under management in Guernsey, believes there will be slow and steady growth in both fund creation and the breadth of investments they adopt. Corporate partner, Graham Hall, examines where this growth will come from and what innovations investors and private equity houses are employing to realise returns. http://www.ftseglobalmarkets.com/media/k2/items/cache/e37cb185c8f2dc5dd52ce2fc045570ec_XL.jpg

The markets this year have started with a bullet. The current bull market hints that investor confidence might be rising as the debt crisis in Europe looks to be under control and the US is managing its fiscal cliff. What are the implications of this sea-change? Carey Olsen, which advises on the largest total number of funds and assets under management in Guernsey, believes there will be slow and steady growth in both fund creation and the breadth of investments they adopt. Corporate partner, Graham Hall, examines where this growth will come from and what innovations investors and private equity houses are employing to realise returns.

Equities have started to move this year. Having locked up money for four years, keeping their money in ‘safe’ investments, investors now look to be interested again in assets which they think offer potential for higher yields. There is, of course, some residual skittishness but recent movement in the markets indicates there is a lot more confidence and enthusiasm.


There have been rallies in the past which have not stuck and there is still a question mark as to whether (or how long) this one will hold. However, the market does seem to think there is a way to go before there will be any sort of correction.




If the past four years has taught anything it is that it often pays to be innovative and funds are seeking unusual opportunities where the risk is seen as manageable. With interest rates remaining at historic lows, investors are chasing yield and the focus is firmly on emerging, or high growth markets, particularly those with a history of under-investment. Eastern Europe is a particular case in point. Bulgaria, Hungary, Czech Republic, Slovenia, Poland, Slovakia, Estonia, Lithuania and Latvia joined the European Union club in the past eight years while Montenegro, Serbia, the Republic of Macedonia and Turkey remain in the wings, with EU membership only a function of time.


In spite of some structural economic problems, growth figures across the region remain attractive. The Polish economy, for instance, grew by 3.8% in 2011; Austria grew by 3.3%, while Moldova, Estonia and Lithuania all grew between 6% and 7% in real gross domestic product (GDP) terms.


These figures compare to Germany’s 2.7% growth and the Eurozone’s blended growth rate of around 1.6%, over the same year. The growth rates in the eastern European zone points to opportunities in the development of infrastructure and commercial property (where property values remain low, but high returns are predicted); it is an attractive combination for investors recently starved of promising investments in Western Europe and the United States.


Graham HallGraham Hall, corporate partner, Carey Olsen, Guernsey.Debt is also attractive as banks get rid of their loan books and finance houses adjust their loan-to-asset ratios. Much of this debt is now being sold off, sometimes their whole debt portfolios.  Debt books can be picked up relatively cheaply by smaller operators at significantly reduced rates. Of particular interest, but not openly discussed, are lease car debt books. These books are sold at significant discounts and it is an area of significant potential returns as the economy improves and the risk of holding this debt reduces.


Hedge funds also have appeal right now. They are performing better than they have in a long while and investors are beginning to recoup, or certainly looking to, the losses of the past. Whether it means more money being invested in hedge funds remains to be seen. It is difficult to give a time frame on when we might see a return to more halcyon days because, while there are individuals and select funds rallying, it is the big institutional pension funds that are needed to ensure a true return to performance. This sector is traditionally cautious and, having been severely hit in the crisis, their return will be slow and steady. It is really only 10% of the market that is prepared to take a risk and they appear to be a lot more open to the idea this year.


There was a flight to Luxembourg by many hedge funds during the economic crisis thinking they needed to be seen to be onshore. Many are now realising this was a false perception as Luxembourg is an expensive and bureaucratic place to do business which has an impact in the efficiency of the funds and the returns that can be made. These funds are starting to look at other jurisdictions that offer ­stability and pragmatic regulation without the expense or bureaucracy. As ever, Guernsey is ideally placed to reap these opportunities. According to the Guernsey Financial Services Commission, the net asset value of total funds under management and administration increased in the third quarter (Q3) in 2012 by £3.6bn (1.3%) to reach £274.4bn.


For the year since 30th September 2011, total net asset values increased by £3.3bn (1.2%). Guernsey is indicative of the worldwide trend where the interest in open-ended funds has decreased by £1.6bn (-3.2%) over the quarter to £51.5bn. The closed-ended sector increased over the quarter, by £4.2bn (3.3%) to reach £130.3bn. This represents an increase of £4.6bn (3.7%) over the year since 30th September 2011.


The market recognises Guernsey’s proven operating model with highly skilled professionals across the board. It is up to Guernsey to ensure it does not become too expensive but this is a secondary consideration to investors with the level of expertise and experience being far more important. Investors and funds, now more than ever, want to know that a jurisdiction has breadth and depth.


It would be overstating the case to suggest the fund markets are entirely out of the woods; but there are definitely strong ‘green shoots’. Guernsey certainly remains the most popular jurisdiction for private equity albeit with fewer funds being created. There is activity from global private equity houses investing in infrastructure (Terra Firma, Permira, and Apex). They continue to invest but at lower levels. For example, the focus has been on global farmland as a sound investment for some of these closed-ended funds with investments being made in cattle stations in Australia and New Zealand (beef and dairy) and in China.


It is tighter market and funds are looking much harder at efficiencies and costs. It is harder to raise the money and it takes longer and funds are launching with lower expectations which, arguably, is no bad thing.


Closed-ended funds are the majority of the market now and will continue to grow. 2013 has started as a bull market. The driving sentiment is one of optimism. There is a movement away from bonds and corporate gilts but there will not be a return the pre-2008 activity for a long time—slow and steady seems to be this year’s watchwords.

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