Henderson

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Henderson

  1. 1. This document is solely for the use of professionals and is not for general public distributionHenderson for Latin AmericaHenderson Gartmore Latin American Fund October 2011HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  2. 2. Delivering a Decade of Returns Latin America Ten Year PerformanceThis document is solely for the use of professionals and is not for general public distribution 10 year performance 1200 S&P 500 Index 1000 MSCI EM Latin America Gold 800 US Treasuries Henderson Gartmore Latin American Fund 600 400 200 0 Jul-02 Nov-05 Jul-07 Nov-10 May-03 Jan-05 May-08 Jan-10 Sep-01 Mar-04 Sep-06 Mar-09 Sep-11 Source: Bloomberg 30 September 2011, in USD 1 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  3. 3. This document is solely for the use of professionals and is not for general public distribution Henderson Gartmore Latin American Fund: Outlook 2 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  4. 4. Latin America – Outlook summaryThis document is solely for the use of professionals and is not for general public distribution Latin America’s growth rate for 2012 remains attractive. Recent downgrades to economic growth expectations are in line with reduced export demand. Brazilian Central Bank Policy is now at a crossroads; further interest rate rises deemed unlikely to affect structural inflation – there is evidence that further rate rises have had a negative impact on growth and endanger economic stability. The recent rate cut comes as no surprise to us, and we expect more monetary efforts in this area. Mexican risk aversion has diminished, however the economy continues to underperform versus its historic potential. The domestic economy is weaker than expected as domestic wages and lower incomes from US remittances have stagnated incomes – exports are a strong point and drive many of our stock picks. Chile continues to enjoy high levels of domestic growth but sentiment is on a knife edge due to lower copper prices. Local pension funds are becoming more risk averse. Strategy - recent economic turmoil has impacted a variety of global cyclical industries thus we are shifting towards domestic themes such as consumption related shares and select exporters. However, Petrobras’ capital investment plans, World Cup and Olympic investment will accelerate capital investment into the second half of 2012. 3 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  5. 5. Latin America - outlook High expected economic growth forecastsThis document is solely for the use of professionals and is not for general public distribution Latin America will enjoy a high growth rate Consensus real GDP growth forecasts* in 2011 and 2012 % 10 2010 Mexico experienced a strong recovery in 2011 2012 2010-2011 based on exports – further 8 momentum has been maintained on strong FDI and improved competitiveness 6 Brazil growth should stabilise at current 4 forecast levels, only higher fixed asset investment and productivity gains can 2 boost growth rate 0 Chile’s growth rate appears to have OECD Chile Mexico Colombia Emerging Brazil Lat Am Asia recovered to historic trend levels Source: Thomson Datastream / Consensus Economics, as at 31 August 2011 *Note: There is no guarantee that forecasts will be achieved 4 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  6. 6. Latin America - outlook Falling risk aversionThis document is solely for the use of professionals and is not for general public distribution Fewer signs of panic in fixed JP Morgan Latin Sovereign Spreads income markets than in 2008 800 Brazil 700 Mexico Brazil and Mexico offer similar 600 risks 500 Basis points 400 300 200 100 0 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Source: Bloomberg, as at 12 October 2011 5 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  7. 7. This document is solely for the use of professionals and is not for general public distribution 0 4 8 12 16 20 Mexico Morocco Colombia Malaysia Taiwan Philippines Indonesia US Relative value Japan Source: Thomson Datastream, as at 12 October 2011 IndiaHDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt World China Asia Chile Latam Czech Republic Brazil and Peru offer attractive valuations Emerging Markets South Africa Thailand Brazil Mexico’s valuations are supported by strong growth 12 month forward consensus P/E Turkey Poland Germany Israel Korea Peru Egypt Argentina Hungary EMEA Pakistan Russia 6
  8. 8. Earnings growth outlookThis document is solely for the use of professionals and is not for general public distribution 12 month forward EPS growth % 48 40 32 24 16 8 0 -8 South Africa Indonesia Japan Taiwan India Thailand Israel Turkey Mexico Russia Colombia Argentina China Asia Korea Peru Pakistan Malaysia Morocco Chile Poland Brazil Latam EMEA Emerging Markets United States Egypt Philippines Hungary Germany Czech Republic World Mexico’s growth rate remains attractive despite recent downgrades Brazilian earnings are constrained by high real estate rates Source: Thomson Datastream, as at 12 October 2011 7 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  9. 9. Latin America - outlook Brazil – interest rates and inflationThis document is solely for the use of professionals and is not for general public distribution Overnight Brazil interest rate1 IPCA inflation rate2 % % 30 20 25 15 20 10 15 10 5 5 0 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Inflation has been stable over the past five years – however tendency is for inflation to rise with domestic growth – the central bank remains cautious despite easing Domestic demand and investment highly influenced by monetary policy and high domestic liquidity – cars, housing and retail are historically sensitive to changes in liquidity and rates 1 Source: Bloomberg, as at 13 September 2011 2 Source: Bloomberg, as at 31 August 2011 8 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  10. 10. Latin America - outlook Iron ore volume recoveryThis document is solely for the use of professionals and is not for general public distribution Iron Ore export volumes1 Iron Ore price2 - China Tons USD per Tonne 40000 250 35000 30000 200 25000 150 20000 15000 100 10000 50 5000 0 0 Nov-08 Feb-09 May-09 Nov-09 Feb-10 May-10 Nov-10 Feb-11 May-11 Aug-09 Aug-10 Aug-11 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Brazil iron ore export volumes have recovered to 2008 levels Project delays, ore quality problems, logistics and a lack of finance have hampered proposed expansions elsewhere China demand initial driver – Global demand growth playing a more important role in 2011 1 Source: Bloomberg, as at 30 September 2011 2 Source: Bloomberg, as at 12 October 2011 9 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  11. 11. Latin America - outlook Brazil: export machine - economic and markets viewsThis document is solely for the use of professionals and is not for general public distribution OECD Brazil foreign trade exports FOB1 China imports from Brazil2 USD bn USD bn 24000 6400 20000 5600 4800 16000 4000 12000 3200 2400 8000 1600 4000 800 0 0 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Global demand for Brazilian goods has been increasing for past decade China has now become a significant importer of Brazilian goods – but volatility persists! Foreign direct investment by China and India in Brazilian export sector bodes well for further trade flows 1 Source: Bloomberg, as at 31 August 2011 FOB – Free On Board 2 Source: Bloomberg, as at 31 August 2011 10 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  12. 12. Latin America - outlook Fiscal RectitudeThis document is solely for the use of professionals and is not for general public distribution Net debt to GDP 65% 2010 1H 2011 40% 15% -10% Brazil Mexico Chile Columbia Peru Euro Area Source: Morgan Stanley as at 31 March 2011 11 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  13. 13. Latin America - outlook Brazil: vehicle salesThis document is solely for the use of professionals and is not for general public distribution Brazilian automobile sales and new Brazil new vehicle registrations per month registrations are a good indication of 400,000 household income levels and sentiment 350,000 Automobile industry remains a key 300,000 driver for Sao Paulo state’s enormous economy 250,000 Brazil’s automobile industry is 200,000 vertically integrated, enabling the development of a wide range of 150,000 supplier industries 100,000 This growth rate will moderate in Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 2011 as “pent-up” demand from earlier years is satisfied and some credit measures take hold Source: Bloomberg, as at 31 August 2011 12 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt
  14. 14. Latin America - outlook Brazil: retail salesThis document is solely for the use of professionals and is not for general public distribution Brazil retail sales have been Brazil Retail Sales (%) – Not a one year phenomenon expanding rapidly in real terms 20 since 2003 15 10 Expanding middle class and rising wages are creating more 5 opportunities for commercial 0 activity -5 -10 A unique moment for first movers to gain a substantial lead over -15 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 foreign firms Source: Bloomberg, as at 31 August 2011 13 HDS.IntDataDistGlobBSPresEqGlobEmergMarkLatAmSICAV Lat Am - October 2011 final.ppt

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