Itaú BBA has reclaimed the top spot in Institutional Investor’s ranking of Brazil’s best equity sales teams, after falling to fourth place last year.
The Brazilian bank unseated another São Paulo-based provider, BTG Pactual, which dropped to third place below No. 2 Bradesco BBI. A further reshuffling of the rankings saw UBS crack the top five to take fourth place and Credit Suisse slip from third to fifth.
Nearly 400 buy-side analysts and money managers responsible for almost $100 billion in Brazil equities voted in the seventh-annual survey.
Rodrigo Magalhães, Itaú BBA’s global head of equities, attributed his group’s outperformance to the premium investors place on the local bank’s insight. (Itaú BBA’s research division placed second in II’s All-Brazil Research Team.)
While the local edge may be more pronounced during an election year — Brazilians will head to the polls in October for their country’s general election — the relevance and size of the market, as a top 10 global economy and the biggest in Latin America, cannot be ignored.
“From an international perspective, Brazil remains the most important market from a liquidity standpoint and depth/breadth of the market,” said Magalhães. “Whether the politics or macro scenario are looking clear or not, investors in [Latin America] need to first decide whether to be overweight or underweight Brazil.”
Currently, there is little clarity around the political climate, according to Frederico Monnerat, head of U.S. Sales at BTG Pactual. “We are seeing more volatility than we have in the past, and it all hinges on the elections and how friendly the next government in Brazil will be for foreign capital. This is why it is such a big wait and see.”
Monnerat credits a good research product — BTG Pactual having placed first in the All-Brazil Research Team as well as in II’s broader Latin America Research Team — as a distinguishing factor for the firm. “A good product to sell is what differentiates us from our competitors and gives us something to go out to our clients with,” he said.
“Imagine the sales desk as a restaurant,” he continued. “The kitchen is the research team that provides me with a menu for my clients. It’s up to me to understand, after years of learning their priorities, what is important and relevant to them each day.”
Knowledge and effective communication of the research product is one of the 8 attributes participants were asked to consider when ranking salespeople. The other seven were: providing special services, understanding of client needs and customized service, proactivity in facilitating and integrating access to analysts, quality of idea generation, quality of relationship, quality of service intensity and responsiveness, and providing a global context for Latin America portfolios.
It’s not just international clients who are looking for that context, said Magalhães. “Local clients have become more and more diligent throughout the past years, adapting to the amount of detail and level of granularity available surrounding each investment case,” he said. “There is a constant search for new sources of information to help build their theses.”
Faced with historically low interest rates, local investors have supported the Brazilian market this year, according to Luiz Cherman, head of Brazil equity strategy for Itaú BBA.
“The net buyers this year have been local investors.” he added. “Meanwhile, foreign investors, who in contrast are seeing higher interest rates, have on net withdrawn their investments from Brazil since the beginning of the year.”
