No one covering the Latin American markets could escape the impact of Argentina’s financial crisis that has dragged on for almost a year. Stock markets tumbled, currencies wavered, confidence crumbled. The Latin American analysts competing for LatinFinance’s 117 awards in 39 categories this year were once again forced to cope with growing uncertainty.
Hardly a year passes without a new crisis. In 1999, Brazil was forced to devalue the real. In 1998, Russia’s domestic debt default hit emerging markets around the world hard. In 1995, Mexico’s entire banking system collapsed when the peso plunged.
This has meant that the analyst’s job has become much more than just crunching numbers or making recommendations. Research analysis requires unraveling political, social and economic trends too. Lore Serra, Morgan Stanley’s gold medallist in the food and beverage sector says, “I stepped on the sidelines early with any stocks with any exposure to Argentina.”
“We rightly argued that a sustained recovery in asset prices would depend on evidence of improved growth and fiscal performance as well as the absence of political noise,” says Joyce Chang, global head of emerging markets research at JP Morgan. Her recommendations on Argentina included holding Global ’09s, ’08s, and ’18s if inclined to play Argentina, not for their market potential but as Argentina’s least loss-susceptible credits.
Argentina was not the only wild card. Brazilian markets, which last year showed such promise, have become far weaker than analysts expected. Brazil was this year’s make-or-break call. Ian Laming, former head of Latin American equity research at Morgan Stanley, apologized to investors for recommending Brazil aggressively. “My last call on Brazil was not one to be proud of,” said Laming in a July research report. “It was a classic example of paying too much attention to micro trends and forgetting that equity risk premium was rising all over the world.” And of course the slowing US economy was no help as it cast a cloud over the region, affecting Mexico in particular.
“One surprising thing about the crisis is the level of differentiation between countries that investors are drawing,” says Walter Molano of BCP Securities, a winner in several debt and economics categories. “There’s still a dampening effect but investors are more sophisticated now. This isn’t Latin America’s first crisis and investors are much more tolerant.” Nonetheless, investors were concerned.
“This year, the significant crash in the US [technology] sector highlighted the discipline that Latin American equity analysts have developed in covering stocks,” says José Linares, telecommunications analyst at JP Morgan and this year’s gold medallist. “Since the end of 1994 we have had a major economic collapse almost every two years in the markets we cover. This has forced us to go the extra mile in analyzing stocks and to keep our heads cool.”
Research analysts are a dime a dozen and investors do their fair share of shopping around. While investors do take research seriously, they are less and less likely to take an analyst’s recommendation at face value. The profession has come under attack in recent months from the media, regulators and even politicians concerned over analysts’ insufficient independence. Investment banks hunting for corporate finance business are suspected of massaging research notes to avoid offending clients. Analysts themselves are under suspicion for selling stocks that they are recommending their clients buy.
Walter Molano believes part of his team’s success – it won 12 medals in this year’s poll – is due to the fact that his firm does no underwriting, eliminating a wide range of conflicts of interest. Those voting for Molano in this year’s poll rated him highly for his independence and accessibility.
Institutional investors conduct internal polls, generate their own research and make individual company visits. They typically maintain direct communications with corporate investor relations officers, sometimes dispensing with sell-side research. In spite of the consolidation sweeping Wall Street and the reduction in staffing in investment banking personnel, investors still have plenty of choice and most have their favorite analysts they believe to be the most reliable and accurate.
But investors show little loyalty to investment banks or brokerages. Investors may choose Morgan Stanley for its telecommunications research, prefer JP Morgan for banking and favor Goldman Sachs for macroeconomics. And when analysts move jobs, as they often do, investors will follow them. Fund managers from asset management firms owned by investment banks do not hesitate in voting for analysts from rival banks.
Investors stress the importance of timely research. Time is money, and a good call is all about timing. Investors also expect analysts to have access to top management and decision-makers in the sectors and companies they cover. Constant country visits are the norm and investors often like analysts based in the countries they cover for the immediacy and insight of their reports. Furthermore, as institutional investors become increasingly globalized, they demand research that is able to draw on world trends in a specific industry and make comparisons between companies located in different regions. Investors value firms able to draw on larger, global pool of researchers, a trend that is mirrored in the investment banking industry.
There are pitfalls in this process. “You see either good analysts working without the support of a global research network, or insightful analyses from a given firm that are sometimes self-contradictory because of poor internal integration,” says Luis Fernando Lopes, sovereign debt analyst covering Brazil, at JP Morgan.
Industry consolidation played an major role in determining this year’s results. Merrill Lynch had been LatinFinance’s overall winner for two years running but a combined JP Morgan/Chase team proved too strong. JP Morgan is this year’s overall victor with strength in sovereign debt and economics coverage. “The integration of the JP Morgan and Chase teams has occurred smoothly despite departures at the time of the merger,” says Chang of JP Morgan, the gold medallist for sovereign debt coverage. “We began working and publishing as a team on day one [after the merger] and launched a comprehensive daily report, ‘Emerging Markets Today,’ that features sovereign, corporate, local markets and relative value research pieces from all regions.”
This year’s poll also saw the emergence of new faces in the rankings. Carlos Asilis of JP Morgan debuted with a gold medal in the highly coveted and competitive Best Equity Strategist category. Andrea Kannebley at UBS Warburg also earned a medal for the first time, a gold for her work in the pulp and paper sector. Vera Rossi, Rizwan Ali and Pablo Zuanic all debuted with silver medals in various equity categories. On the economics and debt side, the winners comprised the usual suspects, with the exception of Salomon Smith Barney’s Leo Goldstein, who made his Research Olympics debut with a silver as economist covering Colombia and also earned a bronze for Colombian debt.
| Equity |
Equity Strategy
Gold: Carlos Asilis, JP Morgan
Silver: Ian Laming, Morgan Stanley
Bronze: Damian Fraser, UBS Warburg
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Carlos Asilis |
Not only did Carlos Asilis make his Research Olympics debut this year, but the JP Morgan equity strategist also unseated Morgan Stanley’s Ian Laming, a long-time market favorite. Proud of his team’s top-down approach, Asilis and his team cover Latin America with two weekly products, one selecting and covering a major Latin American theme affecting markets, such as political trends, and another reviewing the team’s standing recommendations by sector. For Asilis, a Dominican national, his recommendations on Latin America have been all about timing. He ended 1999 bullish on Latin America but by the beginning of 2000 had cut his recommendation on what he describes as “the pending global deterioration of liquidity.” But by last October, Asilis told clients to jump back in and buy Latin American assets. He held that position until April of this year, when he advised clients to take profits and minimize holdings in the region. Asilis and his team were among the first equity teams to recommend Mexico over Brazil in December 2000. Since then, Mexican equities have outperformed Brazilian stocks by 52% year-to-date. One investor comments, “his research is solidly based on the fundamentals.”
Laming falls one notch to take a silver medal after holding to the top-ranking position for four years running. Laming has now taken a new position as associate director of European equity research in London for Morgan Stanley. Julio Zamora, Morgan Stanley’s internet/media analyst, replaced Laming in late July. “The most accessible,” and “quick to return a call,” were two investors’ words to describe Laming’s relationship with clients. In his final Latin American equity report, Laming apologized to clients for aggressively recommending the Brazilian equity markets without fully anticipating the effects of Argentina and energy shortages in Brazil.
Investors pointed to Damian Fraser’s ability to juggle political and economic issues as one of his main strengths. The Mexico City-based equity strategist points to his global UBS Warburg colleagues for much of the team’s success in coordinating regional and global views. “We have been rightly bearish on Argentina,” says Fraser. “We got Brazil wrong by being over-weight in first quarter 2001 but were willing to recognize our mistake and went under-weight in the second quarter 2001, since when it has gone down further. We warmed to Mexico over the course of the year.” Damian Fraser has since replaced Tim Baker as head of Latin American equity research at UBS.
Telecommunications
Gold: José Linares, JP Morgan
Silver: Vera Rossi, Morgan Stanley
Bronze: Rizwan Ali, Bear Stearns
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José Linares |
This has been a great year for Mexican telecommunications and for José Linares and his JP Morgan team. A veteran Research Olympics gold-medallist, Linares has maintained buy recommendations on both Telmex and América Móvil. So far this year, Telmex is Latin America’s best performing telecommunications stock and one of the best global performers. After JP Morgan’s upgrading of América Móvil to buy, the stock shot up 45%. In Brazil, however, the story was quite different and Linares remained underweight on the entire sector throughout the year and does not expect to change that position soon. Investors appreciated the team’s wide-ranging coverage and the support from JP Morgan’s 50-strong global telecommunications team. “They offer the broadest and most insightful coverage,” says one investor. From Rio de Janeiro’s black market for cellular handsets to the intricacies of the potential regulatory changes in Mexico City, Linares covers it all.
Vera Rossi now heads the Morgan Stanley medal winning telecommunications team after years of strong leadership under Luiz Carvalho. One investor described her as “a walking telco encyclopedia,” while another said she was “on top of all the local developments.” Rossi says much of her team’s coverage was dedicated to the consolidation of the Brazilian sector and the América Móvil spin-off from Telmex. “Last year was a difficult one for telecom stocks in general and for institutional investors in those stocks,” says Rossi. “Following the sell-off of 2000 and early 2001, we believe that the Latin telecoms sector will outperform. So far, however, the group is not doing well, but we remain hopeful that the longer-term trends and attractive valuations will drive the performance of these stocks.”
Entering the telecom winners’ circle for the first time is Rizwan Ali, telecom analyst at Bear Stearns. Unlike many of his peers who were busy aggressively plugging Brazilian wireless stocks, Ali says his team kept low price targets at half the trading prices for first quarter 2001. “In fact one of my Latin portfolio managers jokingly asked me if I was expecting stock splits because my price targets were half of where the stocks were trading,” says Ali. The sector quickly corrected itself, vindicating Ali’s bearish call.
Internet and Media
Gold: Whitney Johnson, Merrill Lynch
Silver: Chris Recouso, Bear Stearns
Bronze: Chris Hussey, Goldman Sachs
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Whitney Johnson |
A sure-fire gold medallist in the Internet and media category since it was introduced in LatinFinance’s poll two years ago is Merrill Lynch’s Whitney Johnson. Formerly of Salomon Smith Barney, Johnson is a favorite among technology investors. One client says, “She’s the most responsive analyst of the bunch.” Another investor praised Johnson for her extensive list of contacts in both Latin America’s Internet and media companies.
Chris Recouso, the Bear Stearns’ Internet and media analyst takes the silver medal for the second year running. “Vivid descriptions,” says one investor when describing Recouso’s research in this sensitive sector. Another client comments, “Recouso has the best understanding of Internet stocks in the industry, no doubt.”
Entering the winners’ circle for the first time is Chris Hussey, Latin America media and Internet analyst at Goldman Sachs, based in New York. Several investors pointed to Hussey’s monthly industry report “The Latin America Surfer” as the best resource for understanding the region’s media markets. “Looking ahead, our focus remains on the Mexican market. We believe that there is currently better visibility on Mexican television ad spending for the next six months than there is for that in the US,” says Hussey.
Retail
Gold: Marcelo Kayath, Credit Suisse First Boston Garantia
Silver: Robert Ford, Merrill Lynch
Bronze: Meredith Prichard Jensen, JP Morgan
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Marcelo Kayath |
As the only analyst left standing from last year’s winners in the retail category, Kayath jumped up one notch to capture the gold medal. Based in São Paulo and a veteran of Credit Suisse First Boston Garantia, Kayath bases his research strategy on three distinct criteria: growth prospects, infrastructure to support growth, and good management. Kayath’s team is split between Brazil and Mexico and holds weekly meetings with top-level management at Latin America’s largest retailers. Being based locally, Kayath and his team often visit the individual stores and distributions centers. “We recommended people to sell CBD in Brazil and buy Walmex in Mexico at the beginning of the year,” says Kayath. “This was a controversial call because most investors were bullish on Brazil and bearish on Mexico at that time. Since then, Walmex went up 26% and CBD went down by 32%.”
Displacing two of last year’s retail analysts and making a strong comeback after a one-year absence, Merrill Lynch’s Robert Ford re-enters the rankings to capture a silver medal. “Bob has a long track record,” says one client. Another investor says Ford, “Has the most mature and well-rounded perspective on the sector.” Like Ford, Meredith Prichard Jensen re-enters the retail winners’ circle after a one-year absence. Based in New York, Jensen reports to the JP Morgan team’s Latin American equity head, Mary Bourque.
Food and Beverage
Gold: Lore Serra, Morgan Stanley
Silver: Pablo Zuanic, JP Morgan
Bronze: Adriano Seabra, Credit Suisse First Boston
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Lore Serra |
For the second year in a row, Morgan Stanley’s food and beverage analyst, Lore Serra takes the top prize for her research in this category. Since last year, Serra has also started covering the region’s retail sector, giving her a broader view of Latin American consumer trends. Investors pointed to her monthly report “The Latin American Digest” as a useful and timely source of information regarding the region’s largest food and beverage companies. A prime example of Serra’s well-timed calls came last November when she warned investors of a possible slide in Femsa’s stock prices before the company released a low earnings report and the stock fell 20%. In Brazil, Serra started the year positive on AmBev but turned negative as the country’s economy deteriorated.
Pablo Zuanic makes his debut in LatinFinance’s Research Olympics taking a silver medal for his food and beverage coverage. Zuanic recently joined JP Morgan from Credit Suisse First Boston in Brazil. Prior to that, he had spent much of his career in Southeast Asia, giving him what one investor refers to as “a deep grasp of both regional and global trends.” During 2000, Zuanic was positive on AmBev and Coca-Cola Femsa while remaining bearish on Femsa, the parent company. He says, however, that the economic downturn in 2001 has caused him to become more defensive.
Adriano Seabra, Credit Suisse First Boston’s Mexico City-based food and beverage analyst, also enters the sector rankings for the first time, picking up a bronze medal. Throughout the year, Seabra maintained a strong buy on Femsa, even after the company warned of poor results. Subsequently, the stock fell to $26 from $34 before rallying to $45. Seabra also maintained buy recommendations on Coca-Cola Femsa, which was up 8% over 2000 compared to a 16% decline in the Mexican stock market over the same period.
Utilities
Gold: Rowe Michaels, Bear Stearns
Silver: Alexandra Strommer, JP Morgan
Bronze: José Carlos “Zeca” Mendonça, Credit Suisse First Boston Garantia
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Rowe Michaels |
Rowe Michaels once again brought home the gold for his coverage of Latin American utilities. The Bear Stearns veteran is a recurring favorite among investors. “Detail-oriented,” and “Truly the most accessible [analyst],” were some of the comments investors used to describe his research and relationship with clients. As the firm’s director of Latin American equity research, Michaels draws from his ample knowledge across different sectors in the region.
Moving up one notch to capture the silver in this year’s poll is Alexandra Strommer Farias, utilities analyst for JP Morgan based in São Paulo and previously of Chase Securities before the two firms merged. Being based in Brazil allowed Strommer to give a first-hand view of the country’s energy crisis to her clients.
“Because utilities is still a very regulated sector, especially in Brazil, we believe it is essential to keep investors updated on the latest developments on the political front,” she says. What should investors do next in Brazil? “Stay defensive,” says Strommer.
José Carlos Mendonça, widely known as “Zeca,” enters the rankings for the first time. Representing Credit Suisse First Boston Garantia team, Zeca and his team maintained a strong buy recommendation on Copel, the Paraná state electric utility because the company has both generation and distribution capabilities, reducing its vulnerability during the Brazilian energy crisis. Copel is also listed for further privatization. One investor said that during the “chaos” Zeca provided the clearest coverage of the sector’s unwinding ownership structure.
Mining
Gold: Marcelo Kayath, Credit Suisse First Boston Garantia
Silver: Alberto Arias, Goldman Sachs
Bronze: Tom Meyer, UBS Warburg
Not only did Credit Suisse First Boston’s Marcelo Kayath unseat last year’s retail gold medallist, he had a repeat performance in the mining category. To pick his favorites for the year, Kayath focused on the size and quality of mineral reserves. He was bullish on Brazil’s CVRD at the end of 2000 and the stock went up 20%. “We never look at growth per se, but always in terms of growth adjusted for returns on invested capital,” says Kayath. “For us growth does not mean anything, unless it comes with higher value-added and higher returns for shareholders.”
Goldman Sachs’s Alberto Arias falls one notch to silver after a six-year stint in first place. Investors continue to praise his “unique understanding of the sector.” Arias, a firm believer in on-site visits, has accumulated a comprehensive list of contacts in the Latin American mining sector. “He’s like an insider and knows everyone in the business,” says one investor.
UBS Warburg’s mining analyst, Tom Meyer, is yet another first-time medallist. A veteran mining analyst at the firm Warburg, Meyer previously covered global gold producers from Toronto. Meyer says his team draws on UBS Warburg’s global team of, “mining and commodity researchers that regularly share ideas and allow us to put this industry into a global context.” During the past year, he remained cautious on CVRD highlighting several risks in the company such as the impact of interest rates on the industry.
Banking and Financial Services
Gold: José García-Cantera, Salomon Smith Barney
Silver: Rodrigo Quintanilla, Merrill Lynch
Bronze: Daniel Abut, Goldman Sachs
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José García-Cantera |
It should be to no one’s surprise that for the fifth year running, Salomon Smith Barney’s José García-Cantera takes the gold medal for his analysis of Latin American banks and financial services companies. Clients are quick to praise García-Cantera’s prolific research. One client describes his work as “unparalleled research,” while another praised, “his thorough and insightful reports.” In the past year alone, he and his team published 75 reports covering individual banks and financial services providers, in addition to sector reports and analyses of private pension fund managers and insurance companies. “The way we add value to clients is, in addition to giving recommendations and earnings estimates, helping them understand the general background that would enable them to make better investment decisions,” says García-Cantera. His team was the first to recommend Bancomer in Mexico when the stock was still trading between Ps. 4 and Ps. 4.50 and his competitors followed only after the stock reached Ps. 7.
Moving up one spot from a bronze last year to take silver is Merrill Lynch’s Rodrigo Quintanilla. Increasingly popular among investors, Quintanilla is moving up the ranks in one of Latin America’s most competitive categories. “Our research approach is to look for undervalued/overlooked securities among financial services stocks,” says Quintanilla. One of his best calls of the year was Banacci, the Mexican financial group. His team also continues to remain bullish on Bancomer, while remaining cautious on the Brazilian banking sector.
Daniel Abut, Goldman Sachs managing director and senior Latin American bank analyst, says consolidation was the year’s principal theme. Before the privatization of Banespa in Brazil and Serfín in Mexico, Abut and his team predicted that the sales of both banks would trigger more acquisitions in the region. After Spain’s BBVA purchased Bancomer, Abut again predicted more consolidation. Two months later, Citigroup took over Banamex. “All said and considered, we believe that we ‘owned’ an important theme that made clients money,” says Abut. “Bank consolidation was a key factor behind the strong share performance of Mexican and Brazilian bank stocks in 2000-2001.”
Cement and Construction
Gold: Gordon Lee, Goldman Sachs
Silver: Carmen Slade, Salomon Smith Barney
Bronze: Christian Audi, Morgan Stanley
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Gordon Lee |
Back after a year’s absence from the Olympics, Goldman Sachs’s Gordon Lee took the gold in one of the competition’s toughest categories. Investors continuously pointed to Lee’s global approach in covering the cement sector as one of the best aspects of his research. One fund manager says, “The cement industry in Latin America is constantly becoming more and more global and the Goldman Sachs team really puts Latin America in a global context.” While many analysts are quick to boast about taking investors on field trips to visit companies, Lee brings senior managers to meet with investors as he has done in the past year with Corporación Geo, Cemex and Consorcio Arsa.
Carmen Slade falls one notch to silver in this year’s poll. Despite losing the top position, Slade continues to have a strong following among investors. One client says, “She has the most realistic approach in covering the sector.” Beginning this year, Slade has expanded her coverage to cover a new category, transportation, with companies such as Asur in Mexico and Embraer in Brazil.
Another newcomer this year is Morgan Stanley’s cement and construction analyst, Christian Audi. Cemex’s acquisition of US-based Southdown last December was one of the local industry’s most important recent events. But Audi became increasingly skeptical of the acquisition’s timing as the US economy slowed. However, this was not enough to shake his faith in Cemex because of the strength in the US housing and construction markets.
Oil, Gas and Petrochemicals
Gold: Frank McGann, Merrill Lynch
Silver: Carlos de León, Deutsche Bank Alex. Brown
Bronze: Edmo Chagas, UBS Warburg
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Frank McGann |
“No one knows the issues better than he does,” says one investor describing Frank McGann, Merrill Lynch’s two-time gold medallist for oil, gas and petrochemicals. McGann says Merrill Lynch’s Latin American oil coverage is strongly linked to the team’s global sector coverage. “His research is always consistent and provides me with a valuable tool in making key decisions,” says another investor.
Entering the rankings for the first time this year is Carlos de León, Deutsche Bank vice president and Latin American oil and gas analyst. One investor commented, “Carlos’s oil and gas research is the most detailed out there.” In a report entitled “Accident at Roncador, the Roaring Giant,” de León and his team made an acute analysis of the sinking of Petrobras’s P-36 offshore oil rig and its impact on the Brazilian national oil company and its broader ramifications beyond Brazil. De León has also become something of an authority on Brazil’s regulatory environment, particularly on hydrocarbon legislation and special participation taxes for investors.
Edmo Chagas wins a medal for the first time since 1999 after joining UBS Warburg from Pactual in Brazil. Investors appreciate his local, on-hand experience covering the Brazilian oil and gas sector.
Steel
Gold: Thomas de Mello e Souza, Merrill Lynch
Silver: Hillary Peruzzi, Morgan Stanley
Bronze: Laura Blanco, UBS Warburg
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| Thomas de Mello e Souza |
Holding on tight to the top spot in the steel category is Thomas de Mello e Souza, Merrill Lynch’s São Paulo-based steel and paper and pulp analyst. This has been an important year for the Brazilian steel industry with the untangling of cross-shareholdings in both Cia. Vale do Rio Doce (CVRD) and Cia. Siderúrgica Nacional (CSN). “Our best call was to highlight the change that would happen to CSN once the cross-ownership structure with CVRD got untangled,” says de Mello. “We also highlighted that the company [CSN] would completely restructure the way it did business, by focusing on its core business and gradually exiting non-core divisions.” De Mello and his team were also bullish on Brazil’s Usiminas, but downgraded Argentina’s Siderar in September, downgraded Imsa of Mexico to neutral in November and initiated coverage on Hylsamex, also of Mexico, with a neutral recommendation. His research is also conscientious in providing clients with detailed financial information usually going back two years and in some cases, up to 10 due to the cyclical nature of the sector.
It was a tough year for Latin America and commodity prices, says Morgan Stanley’s Hillary Peruzzi, this year’s silver medallist covering steel. Peruzzi also picked up a silver medal in the pulp and paper category. In steel, Peruzzi and her team made three important calls. In Argentina, they recommended Siderca, a key supplier to the oil industry, which later outperformed the MSCI Argentina index by 27%. “The positive call on Siderca was based on recovery in the global steel market and a safe haven from continued domestic recession and positive currency crisis in Argentina,” she says. In Mexico she downgraded Hylsamex to neutral and in doing so saved investors from that stock’s 38% under-performance of the bolsa. She recommended Grupo Imsa with an outperform recommendation and the company has since been one of the best performing stocks in Mexico.
UBS Warburg’s Laura Blanco, a new entrant, says covering the sector was particularly challenging over the past year due to the decline in global steel prices, which hit a 20-year low in October 2000. Prices are still low and global demand continues to fall, affecting Brazilian producers already struggling with power rationing. “The most challenging aspect is to understand the differences and integrate the similarities of the Latin American steel industry versus the global steel industry,” says Blanco. “Today it is impossible to forecast what is going to happen to steel prices in Brazil if you don’t know the current fundamentals of the steel industry in Asia.”
Conglomerates
Gold: Mary Bourque, JP Morgan
Silver: Bond Snodgrass, UBS Warburg
Bronze: Juan Carlos Mateos, Merrill Lynch
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Mary Bourque |
A favorite among investors and a strong performer in LatinFinance’s Research Olympics for years, Mary Bourque, JP Morgan’s director of Latin American equity research again takes the gold in the conglomerates category. Bourque is known among investors as one of the most critical analysts when looking at management practices among Mexico’s conglomerate groups. “Insightful” and “very responsive,” were terms used by investors to describe Bourque’s research.
Bond Snodgrass from UBS Warburg in Mexico enters the winners’ circle for the first time. One important recommendation by Snodgrass and his team was on the initial public offering for Asur, a group of nine southern Mexican airports on the New York Stock Exchange and the Mexican bolsa. The stock came to the market in September 2000 at $15.13 and closed the month at $16.63, a gain of 10%.
Merrill Lynch’s conglomerates analyst Juan Carlos Mateos takes this year’s bronze medal. One client commented, “He produces the most insightful and in-depth understanding of these Mexican companies.” Being based in Mexico City gives Mateos easy access to most of Latin America’s conglomerates, predominantly Mexican sector. Before joining Merrill Lynch, Mateos himself worked for a Mexican retailer in charge of investor relations. “I had to take a lot of heat from both analysts and investors,” he says. “Perhaps that is why, in my view, I understand management’s perspective better than other analysts have who never worked in the industry.” Mateos recommended Grupo Carso after a favorable resolution of CompUSA’s lawsuit and since then its stock price has jumped 12% while the Mexico City bolsa rose a mere 2% from May 21 through August 2001.
Pulp and Paper
Gold: Andrea Kannebley, UBS Warburg
Silver: Hillary Peruzzi, Morgan Stanley
Bronze: Sebastián Luparia, JP Morgan
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Andrea Kannebley |
Making an entrance with a bang, UBS Warburg’s Andrea Kannebley makes her debut on LatinFinance’s poll by snatching the gold in the pulp and paper category. One client comments, “UBS presents clear, concise valuation models on the Brazilian pulp and paper producers.” Kannebley also covers oil, gas and petrochemicals. Being based in Rio de Janeiro gives her close access to Brazil’s largest pulp and paper producers.
Retaining her silver medal position again this year is Morgan Stanley’s Hillary Peruzzi. She works hard to bring investors and senior management closer by arranging trips and onsite visits. Peruzzi and her team expanded regular coverage this year by introducing “Latin Pulp & Paper: Monthly Wrap Up,” a new product including statistics on commodity prices and detailed valuation data. Two of Peruzzi’s more successful calls of the year included Brazil’s Aracruz which has outperformed the market by 28.4% and Brazil’s VCP, which has also outperformed the market by 15.6%.
JP Morgan’s Sebastián Luparia also debuts in the pulp and paper category with his bronze medal. Last November, Luparia published a 200-page report describing the most important trends in the pulp and paper sector called, “The Roadmap to the Region.” “The call for the year was VCP. After the listing in New York the stock had a great rally,” says Luparia. “This year I have been pushing Aracruz, which has been working well as a hedge against a declining Brazilian currency.”
Equity Team Covering Argentina
Gold: Merrill Lynch
Silver: Santander Central Hispano Investment
Bronze: Morgan Stanley
Merrill Lynch takes the top slot for the best equity team covering Argentina for the fourth year in a row. The team consists of country head Roberto Guevara and analyst Santiago Quintana. “Over the last six to eight months it has been difficult to focus on anything other than the evolution of the financial situation in Argentina,” says Guevara. “I can’t remember any other time, after covering this market for the last 10 years, in which there was such a long-lasting uncertain situation as today. I imagine that productivity and quality suffer a lot under these circumstances but there is little we can do.” Investors didn’t seem to agree and cited Guevara’s research as the most comprehensive in guiding investors through Argentina’s bumps over the last year. “Argentina’s best,” and, “the most reliable,” were words used by two investors to describe the Merrill Lynch team.
Santander Central Hispano Investments keeps its number two position as the best equity team covering Argentina for the third year running. “I think the big lesson learned during 2000 and 2001 is that stock picking matters a lot even in a country with a difficult macro situation,” says Darío Lizzano, senior vice president and head of equity research, based in Buenos Aires. “While one would say the top-down approach was the only strategy to apply to Argentina given its macro situation, the reality was different.” Lizzano, who handles the strategy while individual analysts cover specific companies, placed great emphasis on a combined top-down and a bottom-up approach. The team recommended Perez Compánc, Siderca and Cresud, while downgrading Capex to sell over the past year.
The Morgan Stanley Argentina team enters the winners’ circle for the first time, capturing the bronze medal. The team provides strong coverage of various equity sectors in Argentina. One client commented, “The Morgan Stanley team reports on Argentina are first-class, easy to read and understand.”
Equity Team Covering Brazil
Gold: Credit Suisse First Boston Garantia
Silver: UBS Warburg
Bronze: Merrill Lynch
Moving up one step to oust Morgan Stanley from the gold medal position on the podium is Credit Suisse First Boston Garantia’s equity team headed by Andrew Shores. Clients not only praise its current research but they also seem to appreciate the team’s Garantia heritage. One fund manager comments, “It’s hard to beat the old Garantia team.” Garantia was the preeminent Brazilian investment bank until its 1998 sale to CSFB. And indeed according to Shores, his team has consistently outperformed the Bovespa index throughout the year. “This was achieved by rotating into defensive names earlier in the year when the Argentine crisis erupted and the contagion threatened Brazil,” says Shores. “More recently, we have shifted the portfolio into a higher beta mix to reflect Brazil’s orthodox response to the crisis, and the cheap valuations, in particular in the relatively ?crisis-insulated’ telecommunications sector.”
UBS Warburg’s Brazilian equity team is headed by Executive Director Marcelo Mesquita and based in São Paulo. Being based directly in Brazil gives the team an advantage over competitors based in New York and allows it to maintain close relationships with the companies it covers. “Even with the Internet and better telecommunications, the locally based analyst is living the same life as the companies,” says Mesquita. “You are using a Telemar phone, buying your food at CBD, receiving your electricity bill from Light and going to Abamec meetings. Not to mention the closer relationship it forms with those you cover simply because you can visit them more often.”
To conclude a complete shake-up of the winners’ circle from last year’s results in the Brazilian equity team category, Merrill Lynch enters the ranking for the first time. “The Merrill Lynch team in Brazil has the most extensive knowledge on Brazilian companies and the best in-country contacts,” says one investor.
Equity Team Covering Chile
Gold: Santander Central Hispano Investment
Silver: Merrill Lynch
Bronze: UBS Warburg
In keeping with Santander Central Hispano Investment’s strong coverage of Latin America’s secondary markets, the team moves up one notch to capture gold in this year’s poll. The team, led by Heinrich Lessau, takes advantage of Santander’s local banking presence in Chile to provide clients with the best possible research and up-to-date information on the country’s publicly listed companies.
Jane Winslow, head of Merrill Lynch’s Chile equity team, also based in Santiago, is another long-time favorite among investors. One client says, “She’s the best and most informed source on Chile out there.” Because most Chilean companies fall into specific sector categories, most are covered out of New York by sector specific analysts. However, Winslow often hosts investor trips to Chile, introducing investors to the country’s big players. “As a country analyst, I’m looking more at the general picture within the country while trying to give investors my two cents worth on specific companies or stocks,” she says.
Ben Laidler joined UBS Warburg’s equity team in July 2000 and promptly took third place in the the Research Olympics poll. Perhaps this is because Laidler worked on the buy side prior to becoming an analyst. He spent six years as a Latin American fund manager at Rothschild Asset Management. “Being from the buy side, I think, gives me a slightly different perspective, as does being based in Chile, where only one other international brokerage house has local coverage,” he says.
Equity Team Covering Colombia
Gold: Santander Central Hispano Investment
Silver: UBS Warburg
Bronze: Merrill Lynch and ABN AMRO (tie).
“Rue Swabey’s knowledge and insight are the heart of this team,” comments one investor about Santander Central Hispano Investment’s London-based Andean equity team. And indeed, Rue Swabey and her team showed no sign of relinquishing the gold medal they have worn for three years running. The team covers Colombian stocks often ignored by many Wall Street investors who are unaware of the opportunities that exist in the Andean region. The team turned bearish on Bavaria, the Colombian conglomerate, in February 2001 after the company continued to suffer from a prolonged strike and a poor outlook for Colombian fundamentals. Since Santander’s call, the stock has gone down 10% in dollar terms.
Ben Laidler, who also heads the UBS Warburg team in Chile, takes the silver for his coverage of Colombian stocks. “In Colombia we have almost no weighting, driven by illiquidity, which makes the market almost impossible to invest in for all investors,” says Laidler. “We did take some time to analyze alternative, and non-traditional ways to play Colombia.”
Merrill Lynch and ABN AMRO tied for third place in equity team coverage in Colombia. Both teams enter the winners’ circle for the first time.
Equity Team Covering Mexico
Gold: UBS Warburg
Silver: Merrill Lynch
Bronze: Santander Central Hispano Investment
UBS Warburg’s Mexico City-based team moved up one notch to take the gold medal for its coverage of Mexican equities. Several investors praised the team, headed by Damian Fraser, for providing the most comprehensive coverage of Mexican stocks available. Damian Fraser, a former Financial Times correspondent in Mexico, is now UBS Warburg’s director of Latin American equity research. One investor comments, “The UBS team has the best connections in Mexico.” Another fund manager says, “I appreciate not only the timely material but the great level of detail and attention given to covering the financials and political environment.”
Despite losing its gold medal position for the first time since 1997, the Merrill Lynch equity team in Mexico continues to gain praise from investors. In May, Carlos Peyrelongue replaced former Mexico country strategist Pablo Riveroll. One client says, “The Merrill Lynch team is the best at combining relevant political coverage along with individual company analysis.” And indeed the team was the first to predict in May that Vicente Fox would win the July 2000 presidential election. The team also predicted Mexico’s fiscal reform law would not be approved as easily as the government had claimed. The Merrill Lynch team has recommended Mexico’s banking and cement sectors, particularly Banacci, Bancomer and Cemex.
Santander Central Hispano Investment’s Mexico equity team, headed by Francisco Rivero, enters the winner’s circle for the first time this year. Investors praised Santander’s individual country coverage, citing proximity and local flavor as key to bringing in-depth understanding of Mexico. Rivero and his team remained positive on Mexico despite, “signs of a down-turn in the US economy, because most of the negative factors were already factored into the mix. With stronger democratic institutions, the country’s economic fundamentals remain strong and wage increases should keep demand high.”
Equity Team Covering Peru
Gold: Santander Central Hispano Investment
Silver: JP Morgan and Goldman Sachs (tie)
Bronze: UBS Warburg
Jumping one notch to capture gold, Rue Swabey’s London-based Santander Central Hispano Investment’s Andean team along with Lima-based analyst Manuel Salazar, made the most of an increasingly positive political environment. “We monitor the economic and political fundamentals closely and are quick to identify trading opportunities,” says Swabey. Beginning in January 2001, the team placed a buy on Peruvian equities with local Banco de Crédito del Perú (Credicorp) as top choice. The team’s favorable political output proved correct for the Peruvian market, which outperformed other Latin American markets by 10% in real dollar terms. Credicorp was up 37% through April.
The JP Morgan team entered the Peru equity rankings for the first time this year. The team uses the bank’s wider economic and debt coverage to provide investors with a broader analysis of the local equity market. One investor says JP Morgan has, “The most comprehensive equity coverage for the country.” The Goldman Sachs team also enters the ranks for the first time to tie for silver.
As he did in Chile and Colombia, UBS Warburg’s Ben Laidler brought his team a first-time bronze medal for coverage in Peru. “In Peru we had been recommending Buenaventura, which worked, with the company performing well, in absolute and relative terms,” he says. “However, we did cut the company from our strategy list before the second quarter results and switched to Credicorp as we became more comfortable with President Toledo and his new team.”
Equity Team Covering Venezuela
Gold: Santander Central Hispano Investment
Silver: UBS Warburg
Bronze: BBO Servicios Financieros
As in Colombia and Peru, the Santander Central Hispano Investment Andean team took top prize for its coverage in Venezuela. “Despite widespread investor cynicism towards Venezuela we were positive on the market all of 2000,” says Rue Swabey, head of the Andean region, based in London. Venezuela’s Bolsa rose 16.8% in dollar terms over 2000 and 26% in local currency. The team’s top call for the year was Venezuela’s Banco Mercantil. Its shares increased 309% in dollar terms and 320% in local currency last year.
Ben Laidler of UBS Warburg and his Andean equity team took the silver medal in Venezuela, breaking into the rankings for the first time in the country category. As in Colombia, liquidity played an important factor in covering equities in the country. Liquidity was a problem in Venezuela says Laidler. “Once again we spent more time highlighting attractive stocks, such as Cemex Venezuela and Banco Mercantil to clients who were less liquidity sensitive, even if those stocks could not make it into our Latin strategy portfolio.”
BBO Servicios Financieros, a Caracas-based local investment banking firm, again takes the bronze for its coverage of the Venezuelan equity market. “Miguel Octavio is unique,” comments one investor on the team’s leader. Another clients says, “BBO adds the perfect mix of local flavor and insightful, dependable equity models to its coverage.”
| Debt |
Overall Sovereign Debt Analyst
Gold: Joyce Chang, JP Morgan
Silver: Walter Molano, BCP Securities
Bronze: José Luis Daza, Deutsche Bank Alex. Brown
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Joyce Chang |
JP Morgan’s Joyce Chang is the doyenne of emerging market debt analysts and as such once again received overwhelming investor backing. Chang’s sovereign debt team was the top winner in the debt categories, taking 10 medals in all, nine of which were gold. In last year’s poll, Chase Securities ? pre-merger ? was overall winner in the sovereign debt category, followed by JP Morgan in second place. Their merger has created an outstanding Latin American team. Investors often described the team as the “best” and “most on-target” in the business.
“We have managed to preserve the best aspects of both teams, keeping the strong fundamental research and strategy calls that characterize, Chase’s emerging markets research as well as the strong analytical approach from JP Morgan,” says Chang. “While we lost a number of individuals from JP Morgan immediately following the merger in our analytical area, we were able to rebuild quickly.”
Chang emerged from the merger as JP Morgan’s global head of emerging markets research and is responsible for overseeing the firm’s research strategy and asset allocation recommendations for emerging market sovereign and corporate credits. Her team has also been responsible for developing new and innovative research products such as the euro-EMBI index introduced in March, which provides investors with a new benchmark for the growing number of euro-denominated emerging market issues.
Keeping his silver medal position for Latin American sovereign debt coverage is BCP Securities’ Walter Molano. “Sovereign analysis has forced us to keep our ears tuned to Argentina and Brazil,” says Molano. “Before, we were all used to the IMF and the US Treasury department coming in to help but now you need to look at domestic conditions.” He says the emergence of large domestic institutional investor bases, particularly privately managed pension funds, is drastically changing the Latin American bond market.
Rebounding from the shake-up following the merger of JP Morgan and Chase, José Luis Daza quit the merged JP Morgan after a brief stint as co-head with Chang. He moved to Deutsche Bank as global head of emerging markets strategy, and brought many of his clients with him.
Overall Quantitative Analyst
Gold: Jonathan Bayliss, JP Morgan
Silver: Arvind Rajan, Salomon Smith Barney
Bronze: Filippo Nencioni, Credit Suisse First Boston
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Jonathan Bayliss |
Although he only joined JP Morgan only in June of this year, Jonathan Bayliss and his team still managed to take the gold in this year’s poll for quantitative analysis. As the firm’s global head of quantitative emerging markets research based in London, Bayliss coordinates quantitative and relative value trade strategy. Over the past year, the team has expanded the breadth of research by including credit derivatives, led by Eric Beinstein, and euro-denominated products, led by Stuart Sclater-Booth. Bayliss says his team has developed a real-time model portfolio that takes full account of transaction costs and is benchmarked against the Embi rather than the Embi+, allowing a wider range of potential trade recommendations. Some of the team’s top calls included highlighting the poor technical situation in Argentina’s domestic bond market and recommending investors trade around the June $29.7 billion bond exchange by setting up long positions in older bonds.
Arvind Rajan, director and head of quantitative analysis at Salomon Smith Barney, once again captures the silver. He covers all emerging markets, and draws on his wider global perspective for his coverage of Latin American bond performance. Says Rajan: “We showed how to create a net present value-based restructuring for defaulted securities and Salomon pioneered the first successful exchange of defaulted debt based on this methodology for Ecuador.”
Filippo Nencioni, director and sovereign strategist for Credit Suisse First Boston enters the quantitative analysis rankings for the first time after joining the company’s New York office in March of this year. Before joining CSFB, Nencioni spent six years as JP Morgan’s head of emerging market analytic research.
Overall Corporate Debt Analyst
Gold: Ignacio Ponce de León, JP Morgan
Silver: Matthew Peck, Salomon Smith Barney
Bronze: Juan Villanueva, Merrill Lynch
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Ignacio Ponce de León |
For the second year running, Ignacio Ponce de León, director of corporate strategy at JP Morgan for Latin America and Europe, takes the gold medal. One investor described his research as “top-notch” and “the most comprehensive out there.”
He says much of his team’s success stems from JP Morgan’s wider bond research team. Sector-specialized senior analysts included Aaron Holsberg, Victoria Miles, Douglas Krehbiel, Jeanne Desjardins and Anne Milne. “This year, with due concern about the impact of a US economic slowdown, our focus has been on Mexico’s top-tier names, notably Telmex,” he says. “Taking the view that current income would be an important component to the total return this year, we advised investors to position defensively in high coupon, short duration bonds of reasonably strong issuers such as the Azteca Holdings ’02 and Durango’03.”
A newcomer to the corporate debt ranking is Salomon Smith Barney’s Matthew Peck. Peck is responsible for the firm’s coverage of Latin American media and telecommunications credit under John Melesius, Salomon Smith Barney’s head of emerging market corporate bond research.
The JP Morgan/Chase merger left the door open for yet another newcomer in the corporate debt category. Juan Villanueva, now at Merrill Lynch debuts with a bronze medal.
Debt Team Covering Argentina
Gold: JP Morgan
Silver: BCP Securities
Bronze: Santander Central Hispano Investment
The JP Morgan Argentina debt team, headed by Eva Sánchez, takes top prize for its coverage of Latin America’s most turbulent market. Returns for Argentine bonds are down an average 26% for the year, making the credit the worst performer in Latin America. The team remained underweight on Argentina before and after the mega-swap in June 2001. Sánchez and her team maintained that the old Brady pars, discounts, FRBs and the new Global ’09s, ’08s and ’18s issued following the June $29.7 billion exchange had the smallest downside potential.
With its two gigantic competitors, JP Morgan and Chase Securities joining forces, BCP Securities was able to move up one step to the take the silver medal this year in the Argentina debt category.
With its strong local presence, the Santander Central Hispano Investment team takes the bronze medal for its analysis of Argentina. “With the political situation in Argentina changing daily, it’s comforting having someone on the ground to report events first-hand,” said one investor describing Santander’s Argentine team.
Debt Team Covering Brazil
Gold: JP Morgan
Silver: Credit Suisse First Boston Garantia
Bronze: BCP Securities
The combined JP Morgan-Chase team takes gold for its reading of the Brazilian sovereign debt market. The Brazil team, coordinated by Graham Stock in New York and Luis Fernando Lopes in São Paulo, maintained an overweight position on Brazil until April 17 and Brazil returned 17% during the period. The team then downgraded the sovereign on fears that foreign direct investment inflows were slowing fast from $33 billion last year. Since then, Brazil has fallen 5%. The team has since remained underweight on Brazil fearing increased political uncertainty with campaigning to start soon for the October 2002 presidential elections, tougher external financing conditions and contagion from Argentina. “On the other hand, we also bet on a firm economic policy response, rising interest rates and tightening fiscal policy. And since that is what actually happened, Brazilian bonds had a reasonable performance,” says Lopes.
A long-time favorite among investors and with a fine pedigree following its 1998 acquisition of Banco de Investimentos Garantia, the CSFB team took a silver medal for its Brazil debt coverage this year. The team, led by Rodrigo Acevedo in São Paulo and Javier Murcio in New York, counts on CSFB’s global team of debt strategist and a strong presence throughout Latin America.
BCP Securities enters the winners’ circle for debt coverage of Brazil for the first time. Molano says, “This crisis is less about hype and much more about technical factors.” Conditions for the sovereign can only recover once global conditions improve, commodity prices recover and foreign flows pick up. One fund manager says, “BCP offers unsurpassed coverage of Brazil and how the economy there affects the rest of Latin America.”
Debt Team Covering Chile
Gold: Merrill Lynch and BCP Securities (Tie)
Silver: Salomon Smith Barney
Bronze: Santander Central Hispano Investment
The Merrill Lynch Chile debt team moves up two notches to share the gold medal for its incisive coverage of the sovereign, with BCP Securities. The Merrill Lynch office in Santiago serves to host investors and provides in-country analysis to complement the bank’s broader regional sovereign coverage.
This the first time BCP Securities has won an award for its Chile coverage. It has concentrated much of its efforts in Chile on identifying positive trends in the economy and predicting the country’s return to strong macroeconomic fundamentals.
Salomon Smith Barney’s Chile team is led by Andrés Lederman based in New York. This is the first time the team has won a prize for its Chile debt analysis.
Santander Central Hispano Investment counts on the team’s local banking presence to capture its first bronze medal for debt coverage in Chile.
Debt Team Covering Colombia
Gold: JP Morgan
Silver: BCP Securities
Bronze: Salomon Smith Barney
JP Morgan’s strong Andean coverage under the leadership of Luis Oganes made the team investors’ top pick in the Colombian sovereign debt market. Colombia has become much more active on the international market this year, making well-informed, sensitive analysis all the more important. Colombia’s civil conflict means that conventional macroeconomic and credit analyses are inadequate on their own. “In general, Latin America is not a straightforward place to understand for many investors, where there are major limitations on economic policymaking,” says Oganes. “The Andean region is probably an extreme case of this. As such I always try to incorporate political and social issues in my sovereign risk analysis.”
BCP Securities takes the silver medal in Colombia for the second consecutive year. “The Colombian bond market is dominated by local pension funds,” says Walter Molano, “which are more attuned to the risk, able to differentiate between economic and political issues.”
Salomon Smith Barney’s emerging markets bond team, led by Thomas Trebat, takes third place for coverage in Colombia.
Debt Team Covering Mexico
Gold: JP Morgan
Silver: BCP Securities
Bronze: UBS Warburg
JP Morgan takes top prize in Mexico. The team, headed by Eva Sánchez, maintained an overweight recommendation on Mexico throughout the year. The sovereign returned 14.6% last year and 7.9% year-to-date 2001, while the Latin EMBI+ has declined 6.15% year-to-date. This shows the extent to which Mexico has decoupled from the rest of the region. The team was convinced that Mexico would continue to outperform despite the fears of overheating at the end of last year and the perception that there was little upside left given Mexico’s strong performance during 2000, when it had returned 18% vs. the EMBI+ return of 15.6%. This led one investor to comment, “The JP Morgan team in Mexico delivered concise and timely research on Mexico and if you ask me, it’s the best out there.”
Entering the Mexican category’s winners’ circle for the first time is BCP Securities and the Walter Molano gang. “I enjoy the level of objectivity in Molano’s research,” says one client. “He was one of the first to begin warning about a possible slowdown in the Mexican economy.”
Drawing from its strength and prominent local coverage in Mexico, the UBS Warburg team takes the bronze for sovereign debt coverage in Mexico.
Debt Team Covering Panama
Gold: Morgan Stanley
Silver: JP Morgan
Bronze: Salomon Smith Barney
This is the first time that LatinFinance has included Panama in its Research Olympics poll and Morgan Stanley takes the debut gold medal. Whitney Kane is the firm’s key analyst covering the sovereign, which she says has become a safe haven for many investors fleeing Argentina. Kane and the Morgan Stanley emerging markets team have therefore maintained an overweight recommendation for most of the year. Because Panama receives little press coverage, Kane and her team need to work harder to keep investors informed of current affairs there, such as a national debate on the wisdom of using the country’s $1.3 billion privatization receipts to buy back its external debt, particularly Brady bonds.
The JP Morgan debt team takes the silver for its coverage of Panamanian debt. The team recently lowered its recommendation for Panama to underweight from market-weight because of the government’s failure to convince the opposition of its plan to buy back outstanding Bradys.
The Salomon Smith Barney team under Thomas Trebat takes third place in Panama. The team maintains an overweight recommendation on Panamanian long-term foreign currency debt.
Debt Team Covering Peru
Gold: JP Morgan
Silver: Bear Stearns
Bronze: Goldman Sachs
After tying last year, the Chase and JP Morgan analysts remained ahead of the crowd, taking the gold again in this year’s Research Olympics. Luis Oganes leads JP Morgan’s Andean team. Oganes has retained an overweight recommendation on Peru since December when he thought the worst of the political crisis was over. “The team kept its recommendation until early March when we warned investors to take the profits by moving to market-weight and bracing for a volatile election process,” says Oganes. The team shifted to underweight in April after first round presidential elections and Peru sold off 11%. The team then reverted back to an overweight recommendation after the June 4 second round vote, which Toledo won. Peru has appreciated 4.5% since then.
Bear Stearns takes second place for its coverage of Peruvian debt under the leadership of José Cerriteli. Goldman Sachs takes third place for its coverage of Peru. “Insightful and comprehensive,” commented one investor describing the team’s work.
Debt Team Covering Venezuela
Gold: JP Morgan
Silver: UBS Warburg
Bronze: Salomon Smith Barney
Strong in the Andean region, the JP Morgan sovereign bond team headed by Luis Oganes takes the gold medal in Venezuela. The team initiated coverage for the year with an overweight thanks to high oil prices. The team later moved the sovereign to market-weight, advising investors to take profits, given uncertainty over oil prices and the political scene. Venezuela was up 10% until the team changed its recommendation and the sovereign has since has delivered flat returns.
Michael Gavin and his economics team at UBS Warburg took the silver prize for their in-depth coverage of Venezuela.
Seth Antilles of Salomon Smith Barney and his team take the bronze in Venezuela. The team maintains neutral recommendations on Venezuela’s local currency, long-term foreign currency and interest rates. Before joining the Salomon Smith Barney team, Antilles was an equity strategist at Merrill Lynch.
| Economics |
Economist Covering Latin America
Gold: Gray Newman, Morgan Stanley
Silver: Walter Molano, BCP Securities
Bronze: Michael Gavin, UBS Warburg
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Gray Newman |
After making a name for himself for his economic coverage of Mexico, Gray Newman this year takes the top prize for best overall Latin American economist category. Newman joined Morgan Stanley last year from Merrill Lynch and quickly built up his team with Claudia Castro in Brazil and Fergus McCormick in Argentina. Newman says his approach is to provide clients with a framework to understand the inner working of each country’s economy. “Clients are overwhelmed with information,” says Newman.
Newman refers to it as elevator economics, with a plethora of rising and falling indicators. In Mexico, Newman warned investors of an inevitable economic slow-down, which investors should see as the arrival of a normal business cycle. In Brazil, Newman has changed his call from “As Good as it Gets,” to “As Good as it Got.”
Remaining strong in second place is BCP Securities’ Walter Molano. BCP and Molano remained favorites among investors, especially smaller investors who appreciated the firm’s personal client service and accessibility to analysts. “The best” and, “the most timely,” were some of the terms investors frequently used to describe Molano’s research. Much of his work focused on presenting investors with original insights into the Argentine crisis and its ramifications throughout the rest of the region. His team’s best call came at the end of 2000 when they forecast Mexico’s growth at 2.6% while the Wall Street consensus was still around 6%. Molano was also quick to adjust forecasts in Brazil and Argentina after the first quarter while looking at both economies in a broader context of falling commodity prices and decreasing capital inflows to emerging markets.
Michael Gavin, based in Stamford, Connecticut for UBS Warburg takes the bronze medal for his meticulous economic coverage of the region. Investors describe him as “serious,” and “detail oriented.”
Economist Covering Argentina
Gold: Vladimir Werning, JP Morgan
Silver: Walter Molano, BCP Securities
Bronze: Michael Gavin, UBS Warburg
JP Morgan’s Buenos Aires-based Vladimir Werning reclaims the top position as best economist covering Argentina after falling one spot in last year’s poll. Several investors praised him for the clearest and most concise reporting on the country’s turbulent economic and political panorama. “Following three years of recession and a volatile political situation, markets are understandably sensitive to every twist and turn stemming from policy makers’ initiatives,” says Werning. And indeed, one investor comments, “JP Morgan was the best research house tackling the economic issues while walking the investor through the political challenges faced in Argentina.”
Despite dropping to silver from gold, BCP Securities’ Walter Molano continues to be a favorite among investors. “Timeliness is his trademark,” comments one client. And indeed, covering Argentina over the last year has been nothing but a story of shrewd timing as events changing unpredictably. “Argentina was really difficult this year,” says Molano. “At the end of 2000 we thought the worse was over and we had a favorable forecast for Brazil. But we had a worsening global condition and a lot of false starts in Argentina. I don’t see the environment changing until global conditions begin to improve.”
Entering the Argentina winners’ circle for the first time is Michael Gavin of UBS Warburg, who takes the bronze medal for his coverage of Argentina. Gavin is also the bronze medallist for overall coverage of Latin America. Gavin argued that problems in Argentina stemmed not only from powerful external factors, such as falling global commodity prices, but also from internal aspects such as political discord. Gavin works with Matias Silvani on Argentina.
Economist Covering Brazil
Gold: Marcelo Carvalho, JP Morgan
Silver: Paulo Leme, Goldman Sachs
Bronze: Walter Molano, BCP Securities
| Marcelo Carvalho |
JP Morgan’s Marcelo Carvalho moves up two steps to take the gold medal for his economic coverage of Brazil from a bronze in last year’s poll. One investor described Carvalho’s research as “superb,” while another fund manager says his writing, “Is timely, concise and easy to digest.” Carvalho believes one of JP Morgan’s selling points is the bank’s ability to analyze the country in a global context, relying on the house’s global economists. “The JP Morgan economics research in Brazil was ahead of the crowd in calling for a weaker currency this year, and correctly argued that foreign exchange devaluation in the first half of the year was more than just a temporary bubble,” says Carvalho.
Goldman Sachs’s Paulo Leme falls one place to silver for his coverage of Brazil. In spite of this, he continues to attract a long and loyal list of followers. Investors commented on Leme’s ability to hold the entire Goldman Sachs economics research team together and make use of his deep understanding of his home country.
Entering the Brazil economics category for the first time is BCP Securities’ Walter Molano. One investor says that when it comes to Brazil, “Molano has the deepest knowledge.” Molano says much of his focus on Brazil was colored by problems in Argentina and deteriorating global conditions. One problem facing the country, he says, is that Brazil is a large commodity exporter and so highly susceptible to commodity price swings. He says the outlook may change for the better if there is an Asian turnaround, driving increased demand for Brazilian exports.
Economist Covering Chile
Gold: Vladimir Werning, JP Morgan
Silver: Walter Molano, BCP Securities
Bronze: Federico Kaune, Goldman Sachs
Vladimir Werning, who moved up the ranks in the Argentina category to take the gold this year, has done the same in Chile. Werning says covering the country is not so much a question of identifying financial problems but rather setting the Chilean economy in a global context. “Indeed, our forecast on Chile’s business cycle dynamics has been at the low end of the consensus and has been based on pressures seen to be stemming from external sources,” he says.
Walter Molano and his team at BCP Securities hold on to its silver position in covering Chile. “We’ve been concerned about tight monetary policy over the past few years,” says Molano. “But now the country is reversing its pessimistic view and Chile is returning to strong macroeconomic values.”
Goldman Sachs’s economist for the Andean region, Federico Kaune, holds on to his third place position for coverage of Chile.
Economist Covering Colombia
Gold: Walter Molano, BCP Securities
Silver: Leo Goldstein, Salomon Smith Barney
Bronze: Michael Gavin, UBS Warburg
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Walter Molano |
Holding on strong to his gold medal standing for economic coverage in Colombia is BCP Securities’ Walter Molano. He remains optimistic about Colombia, citing fiscal adjustment and agreement with local government over fund transfers.
Entering the winners’ circle for the first time is Leo Goldstein, Salmon Smith Barney’s vice president and Colombia analyst. He says his group’s approach is to look at economic fundamentals in relative value terms and always maintain a forward looking approach. “I am happy about our overweight call on this country last February,” says Goldstein. “We were just returning from Bogotá and determined that the domestic political consensus on fiscal reform was stronger than market perceptions and that economic recovery was underway.” He also says that despite the ongoing conflict in Colombia, there is no real threat to the country’s political system.
UBS Warburg’s Michael Gavin, for his coverage of Colombia, entered the rankings for the first time with a bronze. “UBS offers the best coverage in Colombia,” remarked one investor. In Colombia, Gavin and team work to unravel not only the economics of the country but also the political plays affecting policy, such as the constitutional amendment capping government spending pushed by Finance Minister Juan Manuel Santos.
Economist Covering Mexico
Gold: Alfredo Thorne, JP Morgan
Silver: Gray Newman, Morgan Stanley
Bronze: Walter Molano, BCP Securities
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Alfredo Thorne |
For the second year running, JP Morgan’s Alfredo Thorne takes the top prize for his coverage of the Mexican economy. Thorne says one of his most important calls of the year was to advise clients of Mexico’s imminent economic slowdown. One client comments that, “JP Morgan’s Mexico coverage is always right on the money.” Being based in Mexico City also allows Thorne to follow political and economic trends closely.
Although Gray Newman of Morgan Stanley, who once again wins this year’s silver medal for his coverage of Mexico, has warned of the country’s slowdown, he has also stressed Mexico’s ability to absorb shocks. He has maintained that economic deceleration is a direct consequence of problems in the US, and not the result of domestic imbalances or political turbulence that traditionally accompany the six-year election cycle. He says banks are lending more, consumer purchasing power should stay high and the peso should remain strong, despite adverse economic conditions.
Once again, Walter Molano of BCP Securities takes the bronze in Mexico. Molano says his best call of the year was to predict early that the Mexican economy would begin slowing although he says he also made his worst call of the year in Mexico, when he forecast a sharp depreciation in the peso.
Economist Covering Peru
Gold: Alfredo Thorne, JP Morgan
Silver: Federico Kaune, Goldman Sachs
Bronze: Pablo Secada, Santander Central Hispano Investment
Matching his gold-winning performance in Mexico, JP Morgan’s Alfredo Throne takes top prize for his analysis of the Peruvian economy. Covering Peru over the past year has certainly been a challenge, given the country’s uncertain and often blurry political transition. Thorne bet on a Toledo victory in this year’s elections and highlighted his strengths in combating corruption, placing strong emphasis on social sector development and commitment to economic reform. He also warned of the risks of the challenge from Alán García. “Our coverage of Peru has been 90% political,” says Thorne.
Goldman Sachs’s Andean economist Federico Kaune takes the silver medal in Peru for the third year in succession. Investors praised his ability to weigh political and economic issues, and his views on Peru’s democratic transition.
Pablo Secada, Santander Central Hispano Investment’s Lima-based Peru economist fell two positions to take the bronze this year. Many Santander clients appreciate his team’s proximity to the markets covered. “Santander is in the middle of everything happening in Peru and the research shows the team’s closeness to all aspects of the market,” says one client.
Economist Covering Venezuela
Gold: Luis Oganes, JP Morgan
Silver: Michael Gavin, UBS Warburg
Bronze: Federico Kaune, Goldman Sachs
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Luis Oganes |
“Venezuela is probably the most difficult country to analyze in the Andean region due to the lack of up to date economic figures, particularly on the fiscal front,” says Luis Oganes, emerging market research analyst at JP Morgan, based in New York. “Official fiscal data tends to come with a significant lag, and this poses a challenge when trying to monitor the performance of public accounts.” One client comments, “The research is a perfect blend of political trends and economic data.”
Rounding out a stellar performance on this year’s poll, UBS Warburg’s Michael Gavin takes his fourth medal for his coverage of Venezuela. Goldman Sachs’s Federico Kaune takes bronze this year, his first-ever prize for covering Venezuela. LF