BBVA Asset Management Latam Equity - Latibex - November 2014
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BBVA Asset Management Latam Equity Latibex - November 2014
BBVA Asset Management
Latam Equity
Investment Setting
US growth Strong USD
Global cycle EM slow but China
Global QE gradually sustained sustainable
improving growth growth
Demand for
EM assets Global QE
yielding
appealing & flows
assets
Internal
sources of Latam China &
growth Asset Cycle commodities
Regional
integration
2BBVA Asset Management
Latam Equity
Investment Considerations
Domestic
Consumption
Infrastructure
Regional
Integration
• Built up necessities of the new middle class
• Space for monetary and fiscal stimulus
• Over USD 200 Bn in infrastructure projects
• Regional M&A and free trade agreements
3BBVA Asset Management
Latam Equity
Domestic consumption
Emerging middle class
• According to the World Bank, during the commodities
boom (2003-2012), the middle class in Latam grew
by over 50%. This trend should continue until 2020
• Higher needs were created for:
− consumer goods;
− healthcare;
− education;
− savings; and
− housing
• Support for consumption through:
− Monetary policy
− Fiscal stimulus
− Use of stability funds
• The positive interconnection between investment in
infrastructure and consumption would boost
development
4BBVA Asset Management
Latam Equity
Infrastructure
Civil engineering projects, mining and energy
Infrastructure Investment (US$bn)
• Investment in infrastructure in Latam (oil, toll roads, So urce: Go vernments and B B VA Research
railways and ports) for the next few years is estimated Country Brazil Mexico* Chile Colombia Peru
at over USD1.3trn 2014-17 2014-18 2014-17 2014-18 2012-21
Energy 73.1 27.2 33.0
Industrial 58.2 1.7
Quality of infrastructure* Non Residential Construction 15.8 2.9
Source: WEO Mining 42.8
120 107 108 111 Public Infrastructure 21.4 2.8 43.5 14.8
Transportation 147.0 100.0 1.1 12.7 21.0
100
Telecommunications
80 Oil & Gas 224.1 485.0
65
60 Others 20.0 3.0
Latin America 559.6 585.0 81.5 56.2 68.8
40 31
20 * Mexico’s figures could significantly rise depending on the success of the
Energy Reform. Pemex’s CEO has been quoted expecting investments close
0
to US$ 1 trillion
Mexico Brazil Chile Colombia Peru
*Ranking of 144 countries
5BBVA Asset Management
Latam Equity
Regional integration
M&A and international greenfield projects
• The development of the "multi-Latina" company. Presence of Multi-Latam companies in the world
Source: América Economía
• Businesses follow their clients throughout Latam,
enhancing development. Copa and Avianca-Taca
increased routes to Central America on the back
of the M&A activity of the three largest banks in
Colombia. Falabella is registering double digit
EBITDA growth thanks to its organic expansion in
Peru and Colombia.
• New alliances are being formed, which stimulates
innovation and the exchange of management
practices. MILA is a stock exchange comprising
Note: Average number of countries
Chile, Peru and Colombia. Mexico will join soon.
6BBVA Asset Management
Latam Equity
Sector Allocation
Domestic consumption Commodities Defensives
(N-OW) (N-OW) (UW)
Consumption and
Oil and fuel
services
• Gasoline & Diesel stations
• Education companies in
in Brazil, Chile and
Brazil Electric Utilities
Colombia
• Banks in Mexico, Peru and
Brazil Construction materials • Chilean companies with
• Insurers in Brazil • Cement in Colombia and operations in the Andean
Mexico region
Consumer Staples
• Casual Dinning in Mexico Mining
• Iron Ore mining in Brazil
Infrastructure - Real
estate
• Airports in Mexico
• Concessions in Mexico and
Peru
• Industrial parks in Mexico
• Airlines in Panama and
Colombia.
7BBVA Asset Management
Latam Equity
Latam Portfolio: Bottom-up key factor
Top Picks
Mayores OW OW-UW Weight Bmk Sector
Grupo Aeroportuario del Centro 4.3% 4.3% 0.0% Industrials
Cemex SAB de CV 4.2% 6.2% 2.0% Materials
BR Malls Participacoes SA 3.6% 4.1% 0.5% Financials
Itau Unibanco Holding SA 3.5% 9.0% 5.5% Financials
Corp Inmobiliaria Vesta SAB de 3.3% 3.3% 0.0% Financials
Banco Davivienda SA 3.1% 3.3% 0.2% Financials
BB Seguridade Participacoes SA 3.1% 4.3% 1.2% Financials
Kroton Educacional SA 3.1% 4.2% 1.2% Consumer Discretionary
Alsea SAB de CV 3.0% 3.0% 0.0% Consumer Discretionary
Copa Holdings SA 3.0% 3.0% 0.0% Industrials
Mayores UW OW-UW Weight Bmk Sector
America Movil SAB de CV -5.6% 0.0% 5.6% Telecommunication Services
Vale SA -4.4% 0.0% 4.4% Materials
AMBEV SA -4.2% 0.0% 4.2% Consumer Staples
Fomento Economico Mexicano SAB -2.4% 0.0% 2.4% Consumer Staples
Grupo Televisa SAB -2.3% 0.0% 2.3% Consumer Discretionary
Itausa - Investimentos Itau SA -1.7% 0.0% 1.7% Financials
Wal-Mart de Mexico SAB de CV -1.7% 0.0% 1.7% Consumer Staples
Ecopetrol SA -1.0% 0.0% 1.0% Energy
SACI Falabella -1.0% 0.0% 1.0% Consumer Discretionary
Grupo Financiero Inbursa SAB d -0.9% 0.0% 0.9% Financials
8
Figures as of September 30th, 2014BBVA Asset Management
Latam Equity
Contact details
BBVA Asset Management
Juan José García Petit
Head of Asset Allocation Latam
juan.garcia1@bbva.com
Tel +34 91 5375454
9BBVA Asset Management
Latam Equity
Disclaimer
This document and the information, opinions, estimates and recommendations expressed herein, have been prepared by BANCO BILBAO VIZCAYA
ARGENTARIA, S.A. (BBVA) to provide its customers with general information as of its date and are subject to changes without prior notice. BBVA is not liable for
giving notice of such changes or for updating the contents hereof.
This document and its contents do not constitute an offer, invitation or solicitation to purchase or subscribe to any securities or other instruments, or to undertake or
divest investments. Neither shall this document nor its contents form the basis of any contract, commitment or decision of any kind.
Investor who have access to this document should be aware that the securities, instruments or investments to which it refers may not be appropriate for them due to
their specific investment goals, financial positions or risk profiles, as these have not been taken into account to prepare this report. Therefore, investors should make
their own investment decisions considering the said circumstances and obtaining such specialized advice as may be necessary.
The contents of this document must be considered confidential. However, no warranty, either express or implicit, is given regarding its accuracy, integrity or
correctness. BBVA accepts no liability of any type for any direct or indirect losses arising from the use of the document or its contents. No part of this document may
be (i) copied, photocopied or duplicated by any other form or means (ii) redistributed or (iii) quoted, without the prior written consent of BBVA.
Past performance of securities or instruments or the historical results of investments do not guarantee future performance.
No part of this report may be copied, conveyed distributed or furnished to any person or entity in any country (or persons or entities in the same) in which its
distribution is prohibited by law. Failure to comply with these restrictions may breach the laws of the relevant jurisdiction.
BBVA ASSET MANAGEMENT is a business unit of BBVA which includes different companies each of them subject to specific laws and supervisors depending of
the jurisdiction in which is located and/or the activity of the company.
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