Saturday, November 08, 2008

Asociación Interamericana de Contabilidad - Federación de Colegios de Contadores Públicos de Venezuela

Deseo agradecer muy sinceramente al Sr. Presidente Lic. Rafael Rodríguez Ramos y al Sr. Secretario de Estudios e Investigaciones, Lic. Rafael J. Dugarte Rivas, de la Federación de Colegios de Contadores Públicos de Venezuela, la invitación que me han cursado para brindar una conferencia sobre:

Control de Calidad de las Firmas Auditoras

en oportunidad de celebrarse el Seminario Interamericano sobre la Estandarización de la Información Financiera, en Isla Margarita, Estado de Nueva Esparta, organizado por la Asociación Interamericana de Contabilidad (AIC) y la precitada Federacíón.

Información sobre la AIC

La Asociación Interamericana de Contabilidad (AIC) se constituyó en 1949 con el objetivo principal de unir a los Contadores Públicos del continente americano, asumir el compromiso de su representación en el hemisferio y promover la elevación constante de su calidad profesional, de sus conocimientos y de sus deberes sociales. Se incorporó en 1974 bajo las leyes del estado Libre Asociado de Puerto Rico. Desde 1949 hasta esa fecha, la AIC existió con el nombre de Conferencia Interamericana de Contabilidad.

En el transcurso de su medio siglo de trabajo institucional, la AIC ha contribuido a fortalecer las organizaciones profesionales de Contadores Públicos en los países americanos que la patrocinan y participan activamente en desenvolvimiento armónico de sus conceptualizaciones y de su práctica.

A la fecha ha cumplido con su misión de ser la entidad de carácter profesional que une a los Contadores Públicos del continente americano, representados en cada país por organismos profesionales de libre agremiación.

La profesión contable debe sentirse orgullosa por haber logrado organizarse a nivel internacional y trabajado a un nivel de efectividad que es igualado por muy pocas organizaciones profesionales.

Monday, November 03, 2008

Argentina: Pension Fund Fallout

Inter-American Dialogue

Argentine President Cristina Fernandez [recently] announced a plan for the government to take over the country's approximately $26 billion in pension funds. Fernandez has said she wants to protect the funds from turmoil in the global financial markets. What other factors are motivating the government’s action? What would be the impact of the pension takeover on Argentina's economy? How would it affect government spending and Argentina's credibility among investors?

José Octavio Bordón, former Ambassador of Argentina to the United States: In 1994, the state pension system, which had reached a point of crisis, was privatized at the peak of the Washington Consensus. Many of us who believed in the necessity of democratizing both society and the economy objected to the 'anticompetitive, statist, and compulsory' design of this privatization. The high costs of administration, interferences of a number of governments, and the crisis in the international financial system have generated a significant drop in total amount of capitalized funds. The state had to back them up with budgetary resources. In Argentina, the Pension Fund Administrators (AFJPs) have earned more than $12 billion in profits. There is a broad consensus on the need to transform the Argentine pension system. However, the government should avoid passing legislation too quickly. There are many technical and political concerns, especially regarding the future use of $30 billion in stock. In addition to avoiding the errors of the past, it is necessary to act now with greater prudence and institutional quality. In play are the millions of current and future retirees, the rights of Argentines who opted for the private capitalization and legal safeguards for the companies who acted within the current legal framework. During times of crisis, it is both a necessity and a right to assure that changes guarantee the well-being of citizens, but it shouldn't be an excuse to disregard people's rights and endanger the credibility of the country. A broad debate, both respectful and transparent, needs to happen in the Argentine Congress, similar to that which occurred over the taxes on the rural sector. This is the best road toward change, with legitimacy and legality both in the international and domestic context.

Milko Matijascic, Head of the Institute for Applied Economic Research at the UN Development Program's International Poverty Center in Brasilia: Pension reform is a complex problem in South America. First, local financial markets were small and couldn't easily absorb such a large volume of funds; second, with large informal sectors and low contribution densities, large numbers of workers are not generating sufficient savings to fund their retirements; third, with defined contribution schemes, market risks fall upon the shoulders of individual workers. As one considers the current crisis, these factors are critical. By October 20, the average pension fund fell 16 percent compared to the average value in 2007. A steep market decline and a precarious labor market would lead to poor returns for the pension system. Ironically, the debate in Argentina did not touch upon these three factors. The government appears motivated by fiscal concerns. If the pension funds' resources are taken over by the government, it may provide short-term relief, but at the expense of significant problems in the long term (including loss of credibility). Such drastic reforms should be preceded by extensive public debate and deliberation. This is the approach that Chile took as the Bachelet Administration achieved consensus prior to its landmark reform earlier this year.

Claudio Loser, Senior Fellow at the Inter-American Dialogue and former Head of the Western Hemisphere Department at the International Monetary Fund: The announced nationalization/expropriation of the Argentine pension funds constitutes one of the most blatant acts of financial piracy in the country's recent history. In terms of its gravity, it stands on par with the freeze on deposits of the banking system introduced at the time of the collapse of convertibility (the relation of one to one between the local currency and the US dollar). Contrary to the alleged claim that, once approved by Congress, it will protect the pension money saved by many Argentines, the action is intended to provide the government with fresh resources to solve its mounting fiscal problems. The proposed expropriation would eliminate individual savings, and convert them into a pay-as-you go system, with large funds that could be spent almost freely by the Argentine government. The transfer is equivalent to 10 percent of GDP, plus an annual flow of pension contributions equivalent to about $5 billion (1.5 to 2 percent of GDP). The unexpected and ill-designed plan has brought the financial system into crisis, with a precipitous decline in the stock market, pressures on the exchange rate, and a sustained loss of reserves at a time when Argentina is facing a drastic decline in export prices. Argentina was being shunned by foreign creditors and investors before this measure but it is now considered in virtual default, with grave and possibly unintended consequences on the country's economy.

Robert C. Helander, Managing Partner at InterConsult LLP in New York: Where to start on Argentina? After repeated demonstrations of fiscal sinverguenceria, one wonders how any government in Argentina will ever be able to convince its own citizens that their elected leaders can be trusted. Years ago, in an effort to attract foreign capital, the government guaranteed national treatment for foreign investors. Some invested on that premise, and they surely got the 'national treatment,' pesification, phony statistics, pressure to invest in government paper, etc. If Peronist government after Peronist government has mismanaged the economy and maltreated its own citizens, it is hard to think that any foreigner, save for the politically-motivated Venezuelan leader, might invest. As for lenders, there is no way to quantify the moral hazard. Absent a multinational bailout, another devaluation and default will be hard to avoid. The proposed 'protective measure' of nationalizing the private pension funds would only delay the deluge and make it that much harder for a future president to regain internal balance and respect. Do cry for Argentina; it is a sad story without a visible good ending.

Monday, April 14, 2008

Mexican Miner Takes IPO to London

Penoles, the Mexican mining giant, plans to carve out its precious metals unit, to be called Fresnillo, and list it on the London Stock Exchange. The total offering, slated for May, is estimated at roughly $2bn and will include $900m worth of primary shares, say executives close to the process. JPMorgan Cazenove is the lead on what the issuer says will create the world’s largest primary silver producer. The decision to list in London is an unfortunate one for LatAm exchanges like the Mexican Bolsa, or the Bovespa-BM&F, which would have benefited from such a high profile and sizable deal. The latter has made no secret of plans to consolidate LatAm liquidity on a single platform. “The decision to list in London was made a while ago, and based on the fact that other big mining names such as BHP Billiton, Rio Tinto and Anglo American are listed there,” says a banker familiar with the deal. Peru’s Hochschild Mining listed itself on the LSE in 2006, also via JPMorgan. The deal is timed to coincide with record highs for gold and silver, the company’s main metals. “They’re carving it out to realize untapped value in the company,” says a banker close to process. He notes that within Penoles, the operation has a lower multiple than it would on a standalone basis. Citi, Canacord Adams and UBS will be co-managers on the equity deal. Peñoles intends to retain at least 75% of the ordinary shares of Fresnillo plc on completion of the offer.

LatAm Equity Funds Make Decent Return

LatAm equity funds returned 1.28% in the week ended April 10, according to Lipper. China region funds sank 0.46%, while EM funds rose 1.26%. The biggest gains were made by gold oriented funds with 2.08%, while Japanese funds dropped the most, with a loss of 3.11%. LatAm outperformed the world equity funds group, which overall sank 0.30%. They are up 3.11% year-to-date.

Tuesday, April 08, 2008

UK Manager Readies New LatAm Funds

BlueCrest Capital Management, a London-based asset manager with $14bn under management – $2bn of which is in EM – is preparing to raise two new funds to take advantage of the opportunities it sees in EM. "Its a combination of market technicals, driven by balance sheet repair in the global financial system, as well as solid fundamentals in EM," Robert Enserro, portfolio manager at BlueCrest, tells LatinFinance, explaining the timing for the two new funds. Bluecrest which invests in multiple asset classes, is raising $150m for a 5-year targeted opportunity in LatAm fund and $250m for a 3-year opportunities investment pool focused on LatAm and EEMEA. They will invest in private debt and equity. BlueCrest has invested in a number of pre-IPO companies in LatAm.

Monday, April 07, 2008

IIF Sees Moderate Growth Deceleration

New data from the Institute of International Finance (IIF) predicts a moderate slowdown in growth across the board in LatAm through 2009. Regional expansion is forecast to ease to 4.4% in 4.1%, respectively, in 2008 and 2009, from 5.3% last year. This includes a decline this year to 2.7% in Mexico (versus 3.2% in 2007) and 4.6% Brazilian growth, from 5.4% last year. However, the IIF foresees a pickup in Mexico to 3.5% next year. Peru is set to fall from 8.5% in 2007 to 6.5% and 6.0% in the next few years, while the corresponding figures for Argentina are 8.7%, 6.8% and 4.2%, and for Colombia 7.1%, 5.1% and 4.5%. Inflation is meanwhile set to hit 6.4% this year, up from 6.0% in 2007 and 4.8% in 2006, says the IIF. It expects monetary policy to hold or tighten in coming months in Brazil, Chile, Colombia and Peru. Mexico meanwhile looks set to ease in the second half. “Most of the countries have shown solid growth in their economic activities and most of it comes from the domestic demand. Investors are optimistic,” says Carola Sandy, analyst at Credit Suisse.

Saturday, April 05, 2008

Equity Markets Face Challenging Months

LatAm equity has outperformed other EM in the past month and quarter, but the next two quarters may be more challenging. “The short term outlook is more uncertain for LatAm equities,” says Geoff Dennis, head of equity strategy at Citi, referring to a 3-4 month timeframe. “If the global market continues to be weak, LatAm stands a chance of underperforming because it’s done so well until now,” adds the strategist. Bearish and volatile trading would keep the roughly 20 equity issuer hopefuls – mostly from Brazil – stuck in the pipeline. In the longer run, however, Citi maintains a bullish call on the region. It is constructive on EM and global equities if the US economy manages to turn around in the second half. The outlook for a continued up trend in commodities is still very positive, says Dennis. He notes that despite strong improvements in the region’s fundamentals, LatAm strength is largely supported by firm commodities, with oil, iron ore, copper, gold and pulp among the chief benefactors. LatAm stocks outperformed global EM in March for a seventh consecutive month, according to Citi, which points out the last time that happened was 1997. Brazil’s main equity index, the Bovespa, underperformed LatAm in March, falling 7.8% on the heels of an 11.9% surge in February. Peru dropped 5.1%, while Chile was the region’s strongest riser, gaining 7.7%, says Citi. Argentina and Mexico also had a positive March, rising 5.8% and 5.7% respectively.

Wednesday, April 02, 2008

DLJ Raises $300m for South America PE

DLJ South American Partners has started allocating from a new $300m private equity fund. The firm’s main principals, Buenos Aires-based Carlos Garcia and Marcelo Medeiros in Sao Paulo, are heading the effort and have already spent $82m across three deals. “Capital markets liquidity has dried up recently in Latin America and we believe that enhances our opportunities to identify investments going forward,” Garcia tells LatinFinance. The firm will employ various strategies, including buyout and growth capital, across all sectors. It will look to take controlling stakes in companies in order to gain greater influence over management and the exit strategy, says Garcia. The executive declines to specify by when he expects the $300m to be spent, though he speculates that given the number of opportunities, it may be a lot sooner than the fund’s mandated 5-year horizon. DLJ has invested in LatAm for several years from its global fund, but this is its first dedicated vehicle. DLJ South America Partners is a joint venture between Credit Suisse and the management team that was set up in late 2006 to target deals in South America. Since then, the entity’s three deals have been: Arcos Dorados, the LatAm McDonald’s business; Fispal, a food and beverage trade show promoter, of which it acquired 100%; and EBEC, an educational company in Brazil. DLJ joins a number of other PE shops raising new funds for the region, including Advent International and the Carlyle Group.