The Research Investors Depend on in Latin America

JPMorgan leads equity research providers in II’s Latin America Research Team.

Brazil's Marine Corps soldiers in downtown Rio de Janeiro, Brazil. (Andre Coelho/Bloomberg)

Brazil’s Marine Corps soldiers in downtown Rio de Janeiro, Brazil.

(Andre Coelho/Bloomberg)

When the world was upended, equity research analysts got down to work.

As the coronavirus causing Covid-19 spread around the globe, unleashing a crippling pandemic, Latin America’s top equity research providers, like the rest of the workforce, were forced to take their operations completely online.

“The new reality is that we are working from home — 100 percent of LatAm equity research,” said Pedro Martins Jr., a managing director at JPMorgan Chase & Co. “We learned that our remote connectivity was very robust: We can perform at home as if we were at the office, our internal/external interactions have gone virtual, and we could do a few things even better than before.”

Exactly what one might expect from Latin America’s No. 1 equity research provider.

Shortly before the start of the global market turmoil, investment professionals voted for JPMorgan as the region’s top research firm in Institutional Investor’s 28th annual Latin America Research Team survey. This year, the global bank beat out local leader BTG Pactual, which placed second in the 2020 ranking of research teams, after tying for first with JPMorgan last year.

More than 600 investment professionals at 400 asset management firms with major Latin American holdings participated in the survey, rating research providers across 23 industries, regions, and economic sectors. Each vote was weighted based on how much respondents spent on sell-side research.


This year, Bank of America Securities improved one position to take third, Bradesco BBI dropped one spot to fourth, and Citi was bumped down to fifth.

[II Deep Dive: BTG Pactual Stays on Top]

In addition to this commission-weighted ranking of Latin America’s top research teams, respondents also rated individual analysts and strategists to form a second commissions-weighted leaderboard. The analyst leaderboard mirrored the team ranking with one exception: Fifth place went to Credit Suisse.

Two additional leaderboards weighted responses based on voter assets under management instead of commissions. In these, too, JPMorgan took the top spot, followed by BTG Pactual in second and BofA Securities in third.

In the wake of the coronavirus outbreak, institutional and corporate clients are beginning to place more value on virtual corporate access, according to Martins, who serves as head of Latin America equity research at JPMorgan.

“First, there is greater availability since no one needs to travel to these meetings,” he said. “Second, we are able to cover several geographies at once.” Agendas can also be filled more easily with the firm’s global clients, he said.

BTG Pactual has similarly transitioned to remote meetings and events, according to the firm’s research head Carlos Sequeira.

“Our decision was that to help our clients navigate the crisis, we need to give them as much of information as possible to help them make better decisions,” he said.

For example, the Brazilian firm has started broadcasting day-long web sessions and live virtual events for proprietary clients and for a wider audience via the firm’s YouTube channel.

“We are holding full days of debates for different sectors,” Sequeira said. “We’ve had one with Brazil’s economic minister, and the CEOs of companies in the country such as IBM and Google. We bring in authorities, national experts, and heads of hospitals.” According to Sequeira, BTG Pactual has been better able to cultivate these connections because it is based locally.

“It has been non-stop and welcomed by clients in ways we could never have imagined,” he said. “Analysts have more information to work with than ever, transforming it into high quality research.”

The shift to remote work has meant that research departments have had to adapt now that interactions between analysts, their sales teams, and institutional investor clients are no longer in-person. Still, the overall goals and objectives for research providers haven’t changed, according to Martins.

“First and foremost is not to lose focus of our corporate mission despite a lot of moving parts around us,” the JPMorgan managing director said. “We are devoted to building the best and most respected financials services in the world, serving our clients and growing our communities globally.”

Prior to the crisis, the Latin America equity markets were well positioned to benefit from tactical and structural tailwinds, according to Martins. These included a low interest rate environment, positive developments from trade talks between the U.S. and China, and relative emerging market growth acceleration into 2020.

“There was the sense that the whole region was doing better,” BTG Pactual’s Sequeira said. “In Latin America there can be big differences between the countries and governments, but in general 2019 was a good year for the region. The markets were booming any way you wanted to look at it in both debt and equities.”

Now all eyes will be on the governments ushered in after the region’s historic 2018 election cycle. “Elected presidents in the region range from those supporting ultra-liberal macroeconomic agendas to ‘bigger states’ supporting those in need by social transfer and protecting more fragile businesses,” Martins said.

Most important will be how those governments perform post-pandemic. “Budget balances were already an issue in LatAm before Covid-19, and all the measures/stimulus implemented to sustain the economies should cause a bigger deterioration in the fiscal accounts,” Martins said.

Looking forward, Martins sees changes on the horizon for both the region and sell-side. “COVID-19 and social distancing reinforce the low global growth, low rate equilibria,” he said. “This should support the search for income-producing assets: carry trades on LatAm currencies, corporate bonds, high-dividend yield stocks, and growth companies in the region.”