Jpmorgan Brazil Investment Share Discussion Threads

[loganair] 14/3/2018 19:16

QP - Mobius has set up his own Emerging Markets Fund and is why I think he is doing the rounds.

India - I would stick with JP Morgan trusts...JII which is solely invested in India.

A number of times I have written to JII asking them if this trust could invest a small percentage in other Indian sub-continent countries in a similar way to the China trust invests in Taiwan and Hong Kong, the Brazilian trust in other Latin American Countries and Russia in other CIS states.

[loganair] 14/3/2018 18:57

QP - As you seem to like what Mark Mobius says I saw another interview being given by him, didn't mention Brazil or Latin America this time, however this is what is had to say about Emerging Markets:

Growing profitability.
Improving Governance.
US market looking toppy.
Likes India as the Indian market getting is more liquid.

[hazl] 13/3/2018 13:47

loganair Quepassa talking of tech..........AUGM floated today and I had been keeping a watch out for them.
Lots of info on the bb.

[loganair] 13/3/2018 13:15

QP - Just a couple of notes I took from a live interview that Mobius gave today.

[loganair] 13/3/2018 12:28

Mark Mobius:

Commodities, you've got to be in that space.

Recommends being in Brazil, go for the commodity producers.

Also likes the Tech companies as they are taking over some of the functions of banks.

EPS of Brazilian shares forecast to rise by 50% this year compared to 2017.

[loganair] 05/3/2018 21:26

I have just been listening to the head of strategy at UBS and he says his favourite markets for 2018 are Russia, Brazil, South Korea and Indonesia.

He went on to say, usually during a market correction Brazil and the Latin American markets fair the worse when this time they fared the best.

[yf23_1] 02/3/2018 12:26

15% discount now.

[loganair] 01/3/2018 14:22

QP - If one buys or sells directly through JP Morgan, their trades are done every working day at exactly mid-day. Being a share, there is a difference between the Bid and Ask price.

If one buys via their monthly investment scheme I think the trades go through on the 16th of each month or the first working day after the 16th.

To change investing from one trust to another they require 2 days notice before the 16th of the month which is OK for me as I am a long term investor and not a speculative trader.

[loganair] 01/3/2018 13:29

QP - It all depends on when one invests. If one invested two years ago then £100 would have grown to £200.

How much do BlackRock and Aberdeen Charge for the initial investment? As I invest in my various JP Morgan Investment Trusts on a monthly basis, apart from Stamp Duty I pay no dealing charge.

What I like about my JP Morgan monthly investment is how I am easily able to quickly swap my monthly investment between trusts.

[loganair] 01/3/2018 11:35

QP - I Invest in JPB as a Retail Investor there are few other ways to invest in Brazil.

And as you mentioned it is an easy way to invest in Brazil, especially if one has other JP Morgan Investment Trusts.

Overall the Trusts share price has doubled in the past couple of years. I do agree with you about the 2% fees that the trust charges, far too high. The excuse the trusts Mangers make is because JPB is only a small trust in value terms they have to charge a higher percentage fee.

Personally I would not invest in Unit Trusts, especially with a recession around the corner. With a Unit Trust, when investors sell their 'units' the Trust has to sell their shares to pay out whereas an Investment Trust does not have to.

Compared to other 'Vehicles' of investments, Investment trusts are easy and simple to understand and that's the way I like it. The upside may not be as much, however the downside is not as down as other Vehicles.

As far as I can see there are only 3 Investment Trusts for Latin America, JPB, Black Rock Latin America and Aberdeen Latin America Income.

[quepassa] 01/3/2018 11:05

Exactamente!

Why are they so heavily weighted towards discretionary/ consumables in a Country which -as you point out in your recent posts- is one of the wealthiest countries in the world for natural resources and poised to start exploiting them again after a decade of political woes?

Whichever you cut it, facts are facts and they have under-performed not a little but enormously.

JPM BIT put out a Benchmark to be measured against and over three years, it has to be said that they have failed miserably. By more than 50%.

I believe in Brazil as a strong investment case but I am losing faith in JPM's BIT as the right home for my money as the fund managers of the Trust have undeniably failed to come anywhere near Benchmark whilst charging an expensive 2%.

It is helpful to correspond with you loganair and helps to clarify thoughts. I may now start looking for other collective investment vehicles for Brazil (and LatAm) exposure rather than JPM's BIT.

As I start the search process (initially with TrustNet), are there any other Brazil/LatAm specialist fund managers/vehicles/units/trusts which you think highly of please?

ALL IMO. DYOR.
QP

[loganair] 01/3/2018 10:09

As I amended my post - I can see where the Trust is coming from....coming out of recession the managers hope that the young population of Brazil are going to start spending their money on Discretionary items. I would like to see at least one Gold Miner in the Trust as JRS (Russia) has two gold miners in their trust. As for investing in Kroton, I don't know where the Mangers were coming from.

If I were the Managers of JPB I would be investing in companies that will benefit from Brazil's Structural Reforms.

[quepassa] 01/3/2018 10:06

Concur on all front with what you say.

However, what do you feel specifically please about the current BIT portfolio and their very poor three year underperformance by 50% of BIT against Benchmark?





QP

[loganair] 01/3/2018 09:21

QP - One thing I do like about JPB is how a couple of years ago they amended their articles so they could and do invest some other their Trust in other Latin American Countries which I often wrote to their board members pushing very hard for JPB to do so.

I can see where the Trust is coming from....coming out of recession the managers hope that the young population of Brazil are going to start spending their money on Discretionary items. I would like to see at least one Gold Miner in the Trust as JRS (Russia) has two gold miners in their trust. As for investing in Kroton, I don't know where the Mangers were coming from.

If I were the Managers of JPB I would be investing in companies that will benefit from Brazil's Structural Reforms.

Over the past week I have been researching the emerging Market analysts who are broadly in agreement the best places to invest during 2018 are South Korea (Improving Corporate Governance), Russia (Growth) and Brazil (Increase in price of commodities and structural reform).

Where they differ is the analysts who like India tend to dislike China and those who like China tend to dislike India.

Many analysts are saying that the Developed Markets have Peaked while the Emerging Markets are based on Growth and not Fed Rate Hikes which negatively effect the Developed Markets.

Ex US Treasury Secretary, Lawrence Summers says the next recession will be longer than usual because the Central Banks will not have the 5% they usually have to cut interest rates by.

[quepassa] 01/3/2018 08:02

I like BIT because it is a convenient way to invest in Brazil equities but am never fully inspired by or comfortable with the portfolio holdings which seem to me to lack conviction. Consumer discretionary/staples has been holding the portfolio back. Seems to me to be underweight in the energy, mining and associated sectors.

January portfolio holdings:

Itau Unibanco Multiplo ADR Preference Financials 10.4%
Banco Bradesco ADR Financials 9.1%
Vale Materials 7.4%
B3 SA ­ Brasil Bolsa Balcao Financials 5.3%
Lojas Renner Consumer Discretionary 5.3%
Raia Drogasil Consumer Staples 4.4%
Ambev ADR Consumer Staples 4.2%
Kroton Educacional Consumer Discretionary 3.8%
Fleury Health Care 3.6%
Ultrapar Participacoes Energy 3.4%


They also have 25% of the portfolio in banks. That is truly unimaginative.


Drilling down and away from the macroeconomic outlook, any views please loganair on the make-up of the BIT portfolio which seems somewhat bland, feeble and lacking direction to me?

For a fund charging an overall expensive 2% pa and only yielding a prospective 1%, don't you think BIT could be and do a whole lot better in its performance AND portfolio holdings given such an increasingly favourable outlook?

BIT's performance to Benchmark says it all.

Over three years the Benchmark is up 58.4%. BIT is up a lowly 23.8%. Underfperformed by MORE THAN 50%

That is dire underperformance against their chosen Benchmark.


Just to illustrate. I also invest in JPM European Smaller Companies Trust where their chosen Benchmark is up by 71.5% over three years and the JPM Smaller has returned a massive 110% which enormously outperforms the Benchmark. They have outperformed by more than 50%. That is truly excellent performance driven by outstanding stock-picking.

With BIT, personally I feel their poor underperformance against Benchmark is unacceptable performance and that JPM could and should with all its LatAm expertise do much, much, much better.


ALL IMO. DYOR.
QP

[loganair] 28/2/2018 23:03

Brazil’s Coming Oil Boom:

It has been an appalling few years for Brazil’s energy patch. Weaker oil prices, sweeping corruption scandals and the worst economic downturn ever have sharply impacted the nation’s oil industry — but improvement might finally be in sight.

The aforementioned factors triggered a steep decline in investment, notably from foreign energy majors, preventing Brazil from fully exploiting its sizable oil reserves.

The potential held by the pre-salt belt is tremendous. Its basins have some of the highest drilling success rates globally, and the national petroleum agency, the ANP, believes that if effectively exploited, the pre-salt area could easily double Brazil’s oil reserves.

Industry insiders estimate that the largest oil field in the pre-salt acreage, the Libra field, alone, has recoverable oil resources of up to 15 billion barrels.

2016 and 2017 offshore drilling activity and the number of discoveries declined significantly. This occurred due to the near-collapse of Petrobras, which was mandated as the sole operator in the pre-salt belt. After gorging itself on debt and becoming embroiled in a far-reaching corruption scandal, it slashed spending on exploration as well as drilling activities as it focused on shoring up its balance sheet and resolving costly litigation.

Other factors which deterred investment were high operating costs created by local content rules, costly logistics and overbearing regulation. These, in conjunction with substantially lower oil prices, made Brazil’s pre-salt fields an unattractive investment for foreign energy companies. By December 2017, the volume of active rigs was less than half of what it was two years earlier, while the number of development wells completed during 2017 was a seventh of what it was in 2015.

Nonetheless, after years of mismanagement, there are signs that this is about to change, and the world is on the cusp of witnessing the emergence of a Latin American petroleum superpower.

A combination of reforms, including a formalized bidding process, relaxed local content rules, and the elimination of Petrobras’ exclusive rights to operate in the pre-salt area have made it far more appealing for foreign oil companies to invest in Brazil’s energy sector. This, in conjunction with firmer oil prices, falling lifting costs, and high demand for the commercially appealing light sweet crude produced from the pre-salt area has stimulated considerable interest among foreign businesses.

Let’s not forget about Petrobras, which owns and operates around 30% of all the pre-salt projects. There are signs that the Brazilian state-controlled energy major is on the cusp of emerging from the maelstrom of crises that swept across the company over the previous two years. This will free it up to focus on boosting its drilling activity and production. Petrobras says it intends to invest over $60 billion between 2018 and 2022 to target production growth through a combination of exploration, well development and infrastructure improvements.

The appreciable level of interest — as well as investment — coming online from the foreign energy majors for the pre-salt area will drive material increases in oil reserves and production over the coming years. Because of their low operating costs, the pre-salt oil fields are extremely appealing to oil companies in an operating environment where Brent is trading at less than $70 a barrel.

Shell is confident that it can produce oil for as low as $40 per barrel from its pre-salt holdings, while the Libra field, which commenced production in November 2017, is estimated to have breakeven costs of a mere $20 per barrel.

The tremendous scale of the potential production increases is highlighted by ANP estimates that oil output from the Libra field alone will reach 1.4 million barrels daily.

With the pre-salt region measuring 800 km by 200 km and containing three oil basins, there is considerable scope for the area’s oil output to grow. That means as the pre-salt acreage is developed, Brazil’s oil production will undergo enormous growth which will be boom for Brazil’s economy — and see it become a major player among petroleum-producing nations.

[loganair] 28/2/2018 22:53

Brazilian stocks to shine in 2018? By Adam Patterson:

Brazil seems to have gotten back on a positive trajectory in 2017. According to Angela Bouzanis Senior Economist at FocusEconomics, recently released data “indicates that GDP grew for the first time in over three years in Q2, confirming that the [Brazilian] economy has turned a corner”, led by falling inflation and export growth. Indeed these factors, together with historic lows in the benchmark SELIC interest rate (currently at 7%), emerging discourse over political and fiscal reform and positive economic growth, have fuelled investor optimism and capital flows into Brazilian equities.

A “Major upside trigger”

Since the impeachment of President Dilma Rousseff in August 2016, political stress – closely related to corruption investigations – has been a constant theme. One of the biggest discussion points for the markets has been the potential candidacy of Lula, Dilma’s predecessor and a central figure in the Car Wash corruption scandal that has captivated the nation. Fears over the return of the left-wing Workers’ Party in October’s presidential election have kept markets on egg shells over the last few months.

This uncertainty however, which was potentially holding back further upside pressure both in financial markets and the real economy, was cleared up in an appeals courtroom on 24th January, where Lula was condemned to 12 years in prison on corruption and money laundering related charges, therefore ruling him out as a presidential candidate. This eventuality, although widely expected, was greeted warmly by the markets. The Bovespa rose to a record high (almost 4% on the day the decision was announced), pushing year-to-date gains to more than 9% and taking the index to a historic high.

The trial will be a “major upside trigger” for Brazilian assets, said James Gulbrandsen, a Rio de Janeiro-based money manager at NCH Capital, which oversees $3.5 billion. “The Brazilian economy is already in major recovery mode. The first movement will be flows into Bovespa futures, but domestic economy-related companies will roar past the market once dedicated small and mid-cap flows overtake large cap flows.”

XP Investimentos, the largest security broker in the country, projects the index to reach close to 90,000 points by year end 2018 (and 95,000 points in the upside scenario).

Bulltick expect GDP growth to be 2.2% this year with investment mood set to risk-on.

A “festa” in Brazilian equities:

Good earnings growth and an above average (but correcting) valuation discount compared to developed world equities should continue to support Brazilian equities. The Brazilian central bank’s aggressive rate cuts have not only supported aggregate demand but also anticipated expected monetary policy normalisation from developed market central banks. The Car Wash corruption investigations are also having a positive impact on corporate governance and compliance.

As a result of the improved outlook, country risk (as measured by JPM EMBI Brazil) is also seeing downward pressure. The relative bond spread of a basket of emerging market sovereigns is down 30% year-on-year, positively impacting equity valuations and supporting the consensus bullish view on Brazilian assets.

Geoff Dennis, head of global emerging markets equity strategy at UBS, argues that “Brazil is still a market that investors love to love. When markets move, they tend to buy Brazil.” How long the rally can last, and the acuteness of future gains is harder to quantify though. For now, valuations are more attractive than India, China and broad Latin American markets based on forward PEs.

[loganair] 02/1/2018 22:24

Brazil's road to economic recovery has passed another milestone with official data showing Tuesday that the country finished 2017 with a record trade surplus 40.5 percent higher than in the previous year.

The $67 billion surplus was in line with market projections and within the $65 billion to $70 billion range forecast by the government.

Brazil's economy is projected to grow two percent this year, according to an annual report by the United Nations-backed Economic Commission for Latin America and the Caribbean (CEPAL) released last month.

That is unspectacular but solid -- and far better than the 0.2 percent expected for 2017, or the two years of of its worst-ever recession preceding that.

The government's own projections are slightly more optimistic: three percent in 2018 and 1.1 percent in 2017.

Economy Minister Henrique Meirelles said last month that the improvement was owed to better "fiscal control, the approval of a freeze on public spending and reforms in general."

The country's key interest rate is now at a record low of seven percent, half of what it was in late 2016. Inflation is now considered a minimal risk.

Brazil's center-right president, Michel Temer, has spearheaded austerity cuts, looser labor laws and a big privatization program to boost the economy, Latin America's largest.

But Temer remains unpopular with voters, clouding the political outlook ahead of presidential election this year.

The frontrunners for the election so far are leftist former president Luiz Inacio Lula da Silva and rightwing former army officer Jair Bolsonaro. Neither man is much welcomed by investors.