JPMorgan Chase & Co. is the top provider of Latin
American research in Institutional Investors
2017 survey of the regions best sell-side analysts.
The bank emerged No. 1 in a reshuffling of
IIs research team rankings, with JPMorgan and
second place Bank of America Corp. toppling last years
champion, Itaú BBA. BTG Pactual tied Itaú BBA for
The shakeup comes after investment banks and brokers were
forced to cut back on research efforts, as several years of
political upheaval, economic slowdowns, and devalued currencies
made for difficult business conditions in the region.
We are constantly on our heels, trying to detect
changes faster and measure with precision their final impact on
stocks, said Pedro Leduc, a senior food sector analyst at
JPMorgan. We like to serve our clients with both fresh
information and frequent new investment ideas.
JPMorgan, which last year tied for second with Bank of
America Merrill Lynch, clinched the No. 1 spot by scoring in 25
of 39 categories in IIs survey of buy-side analysts and
money managers. The banks research teams were rated the
best in cement and construction, food and beverages, and
non-bank financial sectors.
[II Deep Dive: Itaú BBA Is No. 1 on 2016 Latin America
There were other changes in this years list of best
Latin America research teams. UBS Group rose to No. 5 from No.
7, switching rankings with Credit Suisse Group. Santander
climbed two spots to sixth place, while Morgan Stanley fell
from No. 6 to ninth.
Analysts recognized in the survey said the industry is
downsizing while seeing a juniorization shift where
firms are dropping veteran analysts in favor of cheaper,
less-experienced staff. Firms that ranked highest said
theyve prioritized keeping talented teams intact, with
analysts including Bank of America Merrill Lynchs
Mauricio Fernandes saying the effort is a driving force behind
Investors tend to perceive us as one of the more
senior teams on the street, Fernandes said.
Its important that you have seasoned analysts
that makes a difference for clients.
Asked about their climb to the top, JPMorgan analysts
credited the breadth and depth of their research, with LeDuc
noting the importance of work ethic and Domingos Falavina, the
head of Latin America financials for the firm, pointing to his
research teams holistic approach.
Thiago Duarte, who was honored this year for his teams
coverage of agribusiness and food and beverages at BTG Pactual,
noted the firms depth of experience as a key
We care about the quality of our job and we invest in
that so we do have a lot of very experienced analysts a part of
the team people with deep industry knowledge who we take
care of so that they stick with us and keep working hard with
the team, he said.
Although market conditions have made downsizing a necessity
for most firms, many of the top-ranking analysts were upbeat
about current market prospects.
Pedro Martins, head of Latin America equity research at JP
Morgan, highlighted strong earnings growth as a driver of
interest in regional equities, singling out Chile as having a
particularly favorable investment outlook.
Martins said Latin American countries have benefited from
the ongoing heavy flow of cash into emerging
markets an observation shared by BTG Pactuals
Alonso Aramburu, who added hes seen investors returning
to Latin America as local politicians help create more
Another big contributor has been getting past the
period of a stronger dollar and devalued currencies, and
economies adjusting from the slowdown in growth, Aramburu
Aramburu, who focuses mainly on Chile, Argentina, Peru, and
Colombia, said most countries in South America are around the
bottom of the economic cycle and poised for better growth in
the near future.
Colombia, for example, has been very out of favor with
investors, he said, but is showing good growth prospects
for the next two to three years. Still, theres reason for
investors to be cautious, according to JPMorgans Martins,
who warns that weak oil prices will continue to contribute to
the countrys lackluster macroeconomic
Meanwhile, Brazil is showing signs of recovery, said BTG
Pactuals Duarte, adding that its outlook depends on the
results of its upcoming elections and whether the Brazilian
government can address key economic policy issues.
Carlos Capistran, who covers Mexico for Bank of America
Merrill Lynch, said the countrys economy has been
very resilient and has been growing above
expectations. Although investors may have been concerned
at the start of the year about U.S. President Donald
Trumps potentially harmful campaign promises such
as the proposal that Mexico pay for a border wall new
policies have not yet materialized and investor sentiment
remains positive, according to Capistrans colleague
Still, Capistran said Mexicos growth is likely to
decelerate due to tightening fiscal and monetary policies, as
well as uncertainty surrounding the renegotiation of the North
American Free Trade agreement and the 2018 electoral
Tighter fiscal and monetary policies are helping the
country to deal with several negative external shocks such as
lower oil prices and oil production as well as higher
short-term interest rates in the U.S., Capistran said.
But tightening is not a free lunch and will have impact
in terms of growth later this year and next.