Global Banking & Finance Awards® 2018 Winner – PPI, Portfolio Personal Inversiones – Exclusive interview on the investment opportunities in Latin America
Paula Premrou, CEO of Portfolio Personal Inversiones talks to Global Banking & Finance Review about the current investment landscape in Latin America and the year ahead.
In your opinion, what are the challenges and opportunities investors should be aware of in 2019?
2019 will be a challenging year and full of opportunities for Latin American’s markets. The first couple of weeks of the year, expectation for a Fed’s dovish monetary policy gave emerging market’s assets a strong impulse, trend that should continue throughout 2019 if global inflation keeps a low path and developed economies slower growth pursue. This would also help to revert the “fly-to-quality” outflow suffered by emerging markets during last year. If we look into Latin America, two of the main economies, Brazil and Mexico, has just begun new political cycles with Bolsonaro and López Obrador to taking office of their respective governments with electoral promises to carry out, especially in the first case, critical structural reforms. In the particular case of Argentina, this year will be highlighted by a busy political agenda, as presidential elections will be held on October 27th, within a negative economic environment and after a downturn in 2018. Market expectations are binomial regarding election’s results; if the actual President of Argentina, Mauricio Macri, manages to get re-elected, the asset’s prices should benefit from the odds that the IMF economic program will continue and the chances that, in the mid run, government could put in place the structural reforms that the country needs to reach a sustainable economic growth path. If Macri is defeated, everything will depend on which candidate’s party is elected, and so far, we won’t know who he will run against until this June. This implies that local assets will be operating at high volatility throughout the year, as the progress of the economic program is measured, and the elections uncertainties are clarified.
How are the markets responding to the current political and economic situation in Latin America?
The unstable political scenario is gaining attention in Latin America. While Bolsonaro’s arrival brought great enthusiasm thanks to his more pro-market view and his structural reforms agenda, in Mexico, López Obrador –a left side politician- took office under cautious eyes. The rough situation in Venezuela is looked at more closely. Not only because of the impact on its asset’s prices – that represent a very low percentage of the region’s debt-, but also because of the political impact on the region. Argentina, as already mentioned, has entered into an election year where the chances of the current President, Mauricio Macri, of being re-elected have fallen in recent months due to the country’s economic crisis. However, we expect that orthodox economic approach imposed by the IMF will begin to deliver positive results in terms of inflation and growth, starting on the second quarter. Moreover, the absence – so far – of an attractive opposition’s candidate would improve Macri’s odds of a second term.
However, the improvement of financial markets conditions has driven the emerging’s assets positive behavior. The Federal Reserve has adopted a newly dovish approach and decided to postpone the next rate hike until clearer signs of inflation appears. Furthermore, markets have started to expect a slowdown in the American economy towards 2020.
What investment solutions do you offer clients?
Portfolio Personal Inversiones (PPI) offers investment solutions to individual and institutional clients through the combination of its three basic pillars: information, advice and technology. With more than 20 years market’s experience PPI has established itself as one of the leading specialists in Argentine financial market products offering, and in-depth analysis of the macroeconomic fundamentals and their implications on the asset’s prices. Also, either through our Operations Desk or our Operations Platform we offer our clients a fast and transparent execution of their orders.
Can you tell us more about your research department and the valuable information they provide?
Our Research Department is one of the most respected in Argentina’s market, with over 20 years of experience in reporting our customers, and also as a consulting source for numerous local and foreign media. The service we provide to our clients is based on the analysis of the economic and political situation, both local and international, necessary for the construction of projected scenarios, in order to deepen the specific analysis of each of the different investment products. We prepare periodic reports on sovereign, sub-sovereign and corporate fixed income, as well as the trailing of the main stocks listed on the local market. We make projections of the main financial variables, and we also recommend arbitrage opportunities between instruments and currencies.
Portfolio Personal has always been leader in technological innovations. What advantage does this provide investors and do you have any new advancements coming out?
As a company, one of our main objectives is to be at the forefront in the application of technological solutions. Our clients can operate, in real time, all the financial products available in the Argentine market, and have tools and information that helps them on the decision making process, that are in line with their risk profiles and investment objectives. In recent months, we have been increasing our product offering, adding products from abroad that help to build a more diversified portfolio. Throughout 2019 we will continue this path and begin to apply some artificial intelligence solutions to improve the investment decision-making process.
What does the year ahead look like for Portfolio Personal Inversiones?
As always, election’s years will imply high volatility, and 2019 won’t be an exception and, hence, much more investment opportunities (considering the highly negative performance of 2018). Argentina has a chance to be one of the great players of the year. Our goal is to be focused on expanding our services and growing in number of clients, along with a product-based strategy providing even more investment products, and also improve our advisory and research sections.