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|GTM – Latin America
2
Global Market Insights Strategy Team 2
Americas Europe Asia
Dr. David P. Kelly, CFANew York
Stephanie H. FlandersLondon
Tai HuiHong Kong
Julio C. CallegariSão Paulo
Manuel Arroyo Ozores, CFAMadrid
Kerry Craig, CFAMelbourne
Samantha M. AzzarelloNew York
Tilmann Galler, CFAFrankfurt
Yoshinori ShigemiTokyo
David M. LebovitzNew York
Lucia Gutierrez-MelladoMadrid
Marcella ChowHong Kong
Gabriela D. SantosNew York
Vincent JuvynsLuxembourg
Akira KunikyoTokyo
Alexander W. Dryden, CFANew York
Dr. David StubbsLondon
Dr. Jasslyn Yeo, CFASingapore
Abigail B. Dwyer, CFANew York
Maria Paola ToschiMilan
Hannah AndersonHong Kong
John C. ManleyNew York
Michael J. Bell, CFALondon
Ian HuiHong Kong
Jordan K. JacksonNew York
Jai MalhiLondon
Shogo MaekawaTokyo
Tyler J. VoigtNew York
Nandini L. RamakrishnanLondon
|GTM – Latin America
3
|42. China economic indicators43. EM external factors44. Emerging market currencies and current accounts45. Emerging market equities
Fixed income46. Latin America fixed income: Returns47. Latin America fixed income: Valuations48. Emerging market debt49. Global fixed income: Interest rate risk50. Attractiveness of Latin American local rates51. Inflation and monetary policy52. Global default protection prices53. Global interest rate movements54. U.S. high yield bonds
Equities55. MSCI Latin America Index at inflection points56. Latin America equity returns57. Latin America equity market liquidity58. Valuation measures59. Corporate profits 60. Latin America valuations and earnings61. Latin America by sector62. Annual returns and intra-year declines
Other asset classes 63. Commodities64. Oil markets65. Global currencies 66. Global yield alternatives
Investing principles67. Life expectancy and pension shortfall68. Local investing and global opportunities69. Asset class returns70. Market timing71. Fund flows
Latin America economy4. Latin America: Economic growth and inflation5. Latin America: Composition of economic growth6. Latin America: Current accounts and fiscal balances7. Latin America structural drags8. Brazil: Economic snapshot9. Brazil: Inflation and monetary policy10. Brazil: Consumer and business dynamics11. Brazil: Fiscal policy12. Mexico: Economic snapshot13. Mexico: Inflation and monetary policy14. Mexico: Consumer and business dynamics15. Mexico: Fiscal dynamics16. Argentina: Economic snapshot17. Argentina: Inflation and monetary policy18. Colombia: Economic snapshot19. Colombia: Inflation and monetary policy20. Chile: Economic snapshot21. Chile: Inflation and monetary policy22. Peru: Economic snapshot23. Peru: Inflation and monetary policy
Global economy24. Global equity markets25. U.S. and international equities at inflection points26. International equity earnings and valuations27. Manufacturing momentum28. Global inflation 29. Global reflation30. Global monetary and fiscal policy31. U.S.: Economic growth and the composition of GDP32. U.S.: Inflation and unemployment33. U.S.: The Fed and interest rates34. U.S.: The Fed balance sheet35. U.S.: Corporate profits and valuations36. European recovery37. Europe: Revenues and earnings38. UK: Economic indicators39. UK equities40. Japan: Abenomics and markets41. China: Economic and policy snapshot
Page reference 3
|GTM – Latin America
4
|
-12%
-8%
-4%
0%
4%
8%
12%
'00 '02 '04 '06 '08 '10 '12 '14 '163%
4%
5%
6%
7%
8%
9%
10%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.Latin America aggregate GDP growth includes Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Uruguay. Inflation does not include Argentina, Ecuador or Venezuela.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Latin America: Economic growth and inflation
InflationYear-over-year % change
Latin
Am
eric
aec
onom
y
4
Real GDPQuarter-over-quarter % change at annual rate, seasonally adjusted
4Q16:0.7%
Average: 2.7%
May 2017: 4.4%
|GTM – Latin America
5
|
0% 5% 10% 15% 20% 25% 30% 35%
Mexico
Chile
Peru
Venezuela
Colombia
Brazil
Argentina
Latin America: Composition of economic growth
Latin
Am
eric
aec
onom
y
Exports% of nominal GDP, USD terms, goods, 2015
Source: IMF World Economic Outlook, J.P. Morgan Asset Management; (Left) Argentina Economy Ministry, IBGE, CBC, DANE, BCE, INEGI, BCRP, BCU; (Right) IMF Direction of Trade Statistics.Latin America aggregate GDP growth includes Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Uruguay. Argentina private consumption is excluded from 1999-2004 and 2015-2016 due to data availability. 2016 excludes Ecuador due to data availability.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
5
China
EM ex-China
U.S.
Eurozone
Other
Real GDP growthContribution to growth, year-over-year % change
Consumption
Investment
Net exports
33%
26%
17%
14%
12%
11%
9%
-4%
-2%
0%
2%
4%
6%
8%
'00 '02 '04 '06 '08 '10 '12 '14 '16
|GTM – Latin America
6
|
-4%
-2%
0%
2%
4%
6%
8%
'00 '02 '04 '06 '08 '10 '12 '14 '16-8%
-6%
-4%
-2%
0%
2%
4%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: IMF World Economic Outlook, FactSet, J.P. Morgan Asset Management.2016 figures are IMF estimates. Latin America is a GDP-weighted aggregate including Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Uruguay. EMEA is a GDP-weighted aggregate including Czech Republic, Egypt, Greece, Hungary, Poland, Qatar, Russia, South Africa, Turkey and UAE.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Latin America: Current accounts and fiscal balances
Fiscal balancesNominal deficit, % of GDP
Current accounts% of GDP
2016: -2.0%
Latin
Am
eric
aec
onom
y
6
2016: -0.2%
2016: 1.6%
2016: -5.9%
2016: -2.6%
2016: -3.5%
EMEA
EM Asia
Latin AmericaEMEA
EM Asia
Latin America
|GTM – Latin America
7
|
Indicator LATAM OECD High Income
Ease of doing business (rank, 1-189) 107 26
Days to register a new business 32 8
Days to deal w ith construction permits 181 152
Days to resolve a dispute 749 553
Recovery rate from insolvent f irm (cents) 31 73
Number of hours spent preparing taxes 343 163
Total tax rate (% profit) 46 40
47 53 54 57
116 123
187
020406080
100120140160180200
Mexico Colombia Peru Chile Argentina Brazil Venezuela
Source: J.P. Morgan Asset Management; (Top left and right) World Bank “Doing Business in 2017” survey; (Bottom left) World Trade Alert.*Measures that may involve or almost certainly do involve discrimination against foreign commercial interests.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Latin America structural drags
Protectionist trade measures*
Ease of doing business rankingOverall ranking, 1 = most ease of doing business, 2016
Number of implemented measures, 2016
Selected competitiveness indicators: 2016
Cost to export goodsUSD per container, 2016
7
Latin
Am
eric
aec
onom
y
$3,000
$2,456$2,160
$1,910$1,760
$927 $925 $788 $685 $629 $591
$0$400$800
$1,200$1,600$2,000$2,400$2,800$3,200
596
467
336274
202 201102
52 36 14 120
100
200
300
400
500
600
700
|GTM – Latin America
8
|
40
50
60
70
80
90
100
110
120
-$20
$0
$20
$40
$60
'00 '02 '04 '06 '08 '10 '12 '14 '16
-20%
-10%
0%
10%
20%
30%
40%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-16%
-12%
-8%
-4%
0%
4%
8%
12%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Real consumption and investmentYear-over-year % change
1Q17: -3.7%
1Q17: -1.9%
InvestmentConsumption
Source: IBGE (Brazilian Statistics and Geography Institute), J.P. Morgan Asset Management; (Bottom right) J.P. Morgan Global Economic Research, Central Bank of Brazil, MDIC (Ministry of Development, Industry and External Commerce).
*Real effective exchange rates (REERs) compares the value of a currency to a weighted basket of several foreign currencies. They are deflated using a producer price index.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Brazil: Economic snapshot
Real GDPQuarter-over-quarter % change at annual rate, seasonally adjusted
8
Latin
Am
eric
aec
onom
y
Trade balance and exchange rateUSD billions, accumulated past 12 months, real effective FX*
Jun. 2017: 86.9
May 2017: $57.0bn
1Q17:4.3%
Average: 2.5%
REER
Trade balance
|GTM – Latin America
9
|
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '182%
5%
8%
11%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
0%
5%
10%
15%
20%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: Central Bank of Brazil, IBGE (Brazilian Statistics and Geography Institute), J.P. Morgan Asset Management.Target inflation bands set by Central Bank of Brazil. *Focus survey conducted by Central Bank of Brazil. **Includes prices set at federal level (telephone services, petroleum derivatives, electricity, health plans) and state/municipal level (water and sewage taxes, value added and real estate taxes, public transport costs).
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Brazil: Inflation and monetary policy
Inflation targeting and inflationIPCA, 12-month accumulated % change
Inflation breakdownIPCA, year-over-year % changeConsensus*
Target: 4.5%
Lower limit: 2.5%
Upper limit: 6.5%
ServicesGoods
Supervised**
9
3.0%
6.0%
Latin
Am
eric
aec
onom
y
BCB Selic target rate and consensus expectations, end of periodTarget policy rate and expectations
Consensus*
May 2017: 3.6%
|GTM – Latin America
10
|
6%
7%
8%
9%
10%
11%
12%
13%
14%
'12 '13 '14 '15 '16 '17
-12%
3%
18%
33%
48%
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: J.P. Morgan Asset Management; (Left) FGV/IBRE (Brazilian Institute of Economics of the Getulio Vargas Foundation); (Top right) Central Bank of Brazil; (Bottom right) IBGE (Brazilian Statistics and Geography Institute).*Non-earmarked funds are those where interest rates are determined by market conditions.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Brazil: Consumer and business dynamics
Consumer and industrial confidenceSep. 2005 = 100, avg. 1996 – 2005 = 100, seasonally adjusted
Credit growthYear-over-year % change, non-earmarked credit*
May 2017: 1.6%
May 2017: -9.3%
HouseholdsCorporates
Latin
Am
eric
aec
onom
y
ConsumerIndustrial
Unemployment rateNon-seasonally adjusted, 3-month average
May 2017: 13.3%
10
60
70
80
90
100
110
120
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
|GTM – Latin America
11
|
16%
17%
18%
19%
20%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
45%
50%
55%
60%
65%
70%
75%
80%
85%
'00 '02 '04 '06 '08 '10 '12 '14 '16-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management; (Left and bottom right) Central Bank of Brazil; (Top right) National Treasury of Brazil.Public sector includes central government, local governments and selected state-owned companies. Net revenues are revenues minus total transfers to states and municipalities.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Brazil: Fiscal policy
Central government revenues and expenditures% of GDP, 12-month sum
Public sector primary balance% of GDP, 12-month sum
% of GDPGross debt
11
Latin
Am
eric
aec
onom
y
May 2017: 72.5%
May 2017: 19.7%Net revenuesExpenditures
May 2017: 16.6%
May 2017: -2.5%
2017 target: -2.1% Average: 61.9%
|GTM – Latin America
12
|
70
80
90
100
110
120
130
140
-$20
-$15
-$10
-$5
$0
$5
'00 '02 '04 '06 '08 '10 '12 '14 '16
-15%
-10%
-5%
0%
5%
10%
15%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: INEGI (National Institute of Statistics and Geography of Mexico), J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.
*Real effective exchange rates (REERs) compares the value of a currency to a weighted basket of several foreign currencies. They are deflated using a producer price index.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Mexico: Economic snapshot
Latin
Am
eric
aec
onom
y
12
Real GDPQuarter-over-quarter % change at annual rate, seasonally adjusted
1Q17:2.7%
Average: 2.4%
USD billions, accumulated past 12 months, real effective FX*Trade balance and exchange rate
Real consumption and investmentYear-over-year % change
1Q17: 0.0%
1Q17: 3.1%
ConsumptionInvestment
Jun. 2017: 91.9
Apr. 2017: -$9.2bn
REER
Trade balance-15%
-10%
-5%
0%
5%
10%
'00 '02 '04 '06 '08 '10 '12 '14 '16
|GTM – Latin America
13
|
2%
3%
4%
5%
6%
7%
8%
9%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '191%
2%
3%
4%
5%
6%
7%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
1%
2%
3%
4%
5%
6%
7%
8%
9%
8
10
12
14
16
18
20
22
24
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: Central Bank of Mexico, J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.*Survey conducted by the Central Bank of Mexico.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Mexico: Inflation and monetary policy
Latin
Am
eric
aec
onom
y
Inflation targeting and inflationHeadline inflation, 12-month accumulated % change
Target: 3.0%
FX and goods inflationPeso per USD spot rate, monthly average, year-over-year % chg.
May 2017: 8.0%
Banxico target rate, end of periodTarget policy rate and expectations
13
May 2017: 6.2%
Lower limit: 2.0%
Upper limit: 4.0%
May 2017: 18.8
FX
Goods inflation
Consensus*
Consensus*
|GTM – Latin America
14
|
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
30
35
40
45
50
55
60
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '1765
70
75
80
85
90
95
100
105
110
115
Source: J.P. Morgan Asset Management; (Left) INEGI-Central Bank of Mexico; (Top right) Central Bank of Mexico; (Bottom right) INEGI (National Institute of Statistics and Geography of Mexico).
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Mexico: Consumer and business dynamics
Consumer and industrial confidenceComposite consumer index, mfg. producer confidence, sa Year-over-year % change, net of bad debts
Private sector credit growth
Mar. 2017: 16.0%
Latin
Am
eric
aec
onom
y
14
Mar. 2017:11.3%
Consumer confidenceIndustrial confidence May 2017: 3.5%
Unemployment rateSeasonally adjusted
HouseholdsCorporates
|GTM – Latin America
15
|
0%
10%
20%
30%
40%
50%
60%
70%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '1735%
40%
45%
50%
55%
60%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: J.P. Morgan Asset Management; (Left) IMF; (Top right) Ministry of Finance and Public Credit; (Bottom right) Central Bank of Mexico.*2016 is an IMF estimate.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Mexico: Fiscal dynamics
Latin
Am
eric
aec
onom
y
Government oil revenues% of total government revenues
Gross debt% of GDP
2016: 58%*
% of total outstandingForeign ownership of government bonds
May 2017: 56.1%
15
0%
10%
20%
30%
40%
50%
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
|GTM – Latin America
16
|
-60%
-40%
-20%
0%
20%
40%
60%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-60%
-40%
-20%
0%
20%
40%
60%
-30%
-20%
-10%
0%
10%
20%
30%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: Economic Ministry, J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Argentina: Economic snapshot
Latin
Am
eric
aec
onom
y
Real GDPQuarter-over-quarter % change at annual rate, seasonally adjusted
1Q17:4.3%Average:
2.6%1Q17:0.9%
1Q17: 3.0%
International tradeYear-over-year % change, 4-quarter moving average
ExportsImports
1Q17:0.6%
1Q17: 3.9%
Real consumption and investmentYear-over-year % change
InvestmentConsumption
16
|GTM – Latin America
17
|
20%
23%
26%
29%
32%
35%
38%
Jan '16 Apr '16 Jul '16 Oct '16 Jan '17 Apr '17
-8%
-6%
-4%
-2%
0%
2%
4%
6%
'93 '98 '03 '08 '13
4.2%
3.1%
2.0%
0.2%1.1%
2.4%
1.6%
1.2% 1.3%
2.5% 2.4%2.6%
1.3%
-2%
-1%
0%
1%
2%
3%
4%
5%
May '16 Jul '16 Sep '16 Nov '16 Jan '17 Mar '17 May '17
Source: INDEC (National Institute of Statistics and Census of Argentina), J.P. Morgan Asset Management; (Top right) Central Bank of Argentina; (Bottom right) IMF.Inflation breakdown numbers may not sum due to rounding. *2016 is an IMF estimate.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Argentina: Inflation and monetary policy
Headline inflation breakdown% change m/m, contribution to headline inflation, GBA-CPI
Latin
Am
eric
aec
onom
y
Target policy rate7-day repo rate, end of period, percent per annum
Jun. 2017:26.3%
Public sector balanceStructural balance, % of potential GDP
2016:-5.8%*
Seasonal prices
Regulated prices
Core prices
BCRA annual target range: 12-17%
May 2017, YoY% change: 24.0%
17
|GTM – Latin America
18
|
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
13%
15%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-5%
0%
5%
10%
15%
20%
25%
30%
35%
-1%
1%
3%
5%
7%
9%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-20%
-5%
10%
25%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: DANE (National Administration of Statistics), J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Colombia: Economic snapshot
Real GDPQuarter-over-quarter % change at annual rate, seasonally adjusted
Latin
Am
eric
aec
onom
y
1Q17:-0.9%
Average: 4.1%
1Q17: -0.7%
1Q17: 1.1%
International tradeYear-over-year % change, 4-quarter moving average
1Q17: -2.0%
1Q17: -4.8%Exports
Imports
Real consumption and investmentYear-over-year % change
InvestmentConsumption
18
|GTM – Latin America
19
|
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000$0
$20
$40
$60
$80
$100
$120
$140
$160
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Consensus*
Source: J.P. Morgan Asset Management; (Left & bottom right) Central Bank of Colombia, DANE (National Administration of Statistics); (Top right) Commodity Research Bureau, Reuters, FactSet.*Survey conducted by the Central Bank of Colombia.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Colombia: Inflation and monetary policy
Oil prices and the Colombian pesoCOP per USD (inverted); Brent US$ per barrel
Colombian peso
Oil ($/bbl)
Latin
Am
eric
aec
onom
y
Inflation targeting and inflationHeadline inflation, 12-month accumulated % change
May 2017: 4.4%
Target: 3.0%
Lower limit: 2.0%
Upper limit: 4.0%Target policy rate and expectationsBanRep repo rate, end of period, percent per annum
19
Consensus*
|GTM – Latin America
20
|
-20%
-10%
0%
10%
20%
30%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-20%-15%-10%-5%0%5%10%15%20%25%30%
-8%
-4%
0%
4%
8%
12%
16%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: Central Bank of Chile, J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Chile: Economic snapshot
Latin
Am
eric
aec
onom
y
Real GDPQuarter-over-quarter % change at annual rate, seasonally adjusted
1Q17:0.7%
Average: 3.9%
Real consumption and investmentYear-over-year % change
Consumption Investment
International tradeYear-over-year % change, 4-quarter moving average
1Q17: -1.5%
1Q17: 0.3%
ExportsImports
1Q17: 2.0%
1Q17: -2.4%
20
|GTM – Latin America
21
|
0%1%2%3%4%
5%6%7%8%9%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
400
450
500
550
600
650
700
750$4,000
$6,000
$8,000
$10,000
'11 '12 '13 '14 '15 '16 '17
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Consensus*
Consensus*
Source: J.P. Morgan Asset Management; (Left) INE (National Statistics Institute of Chile); (Top right) Reuters, INE; (Bottom right) Central Bank of Chile.*Survey conducted by the Central Bank of Chile.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Chile: Inflation and monetary policy
Latin
Am
eric
aec
onom
y
Target: 3.0%
Lower limit: 2.0%
May 2017: 2.6%
Upper limit: 4.0%
Inflation targeting and inflationHeadline inflation, year-over-year % change
Copper prices and the Chilean pesoCLP per USD (inverted), $/mt
Target policy rate and expectationsCentral Bank of Chile rate, end of period, percent per annum
Chilean peso
Copper prices
21
|GTM – Latin America
22
|
-10%
-5%
0%
5%
10%
15%
20%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-20%
-10%
0%
10%
20%
30%
40%
0%
2%
4%
6%
8%
10%
12%
14%
'00 '02 '04 '06 '08 '10 '12 '14 '16
-20%
-10%
0%
10%
20%
30%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Source: Central Reserve Bank of Peru, INEI (National Statistics Institute of Peru), J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Peru: Economic snapshot
Real GDPQuarter-over-quarter % change at annual rate, seasonally adjusted
Latin
Am
eric
aec
onom
y
1Q17:0.6%
Average: 4.9%
1Q17: -6.2%
1Q17: 2.4%
International tradeYear-over-year % change, 4-quarter moving average
ExportsImports 1Q17:
-1.8%
1Q17:10.9%
Real consumption and investmentYear-over-year % change
InvestmentConsumption
22
|GTM – Latin America
23
|
0%
5%
10%
15%
20%
25%
30%
'07 '09 '11 '13 '15 '17
0%
1%
2%
3%
4%
5%
6%
7%
'07 '09 '11 '13 '15 '17
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: J.P. Morgan Asset Management; (Left) INEI; (Top and bottom right) Central Reserve Bank of Peru.*Survey conducted by the Central Bank of Peru.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Peru: Inflation and monetary policy
Latin
Am
eric
aec
onom
y
Inflation targeting and inflationHeadline inflation, Lima, year-over-year % change
Target: 2.0%
Lower limit: 1.0%
Upper limit: 3.0%
Target policy rateBCRP official reference rate, end of period, percent per annum
May 2017: 3.0%
Jun. 2017: 4.00%
Reserve requirementsReserve requirements as a % of total deposits
23
Consensus*
May 2017: 6.9%
|GTM – Latin America
24
|
Country / Region USD USD
Regions / Broad IndexesAll Country World 9.3 11.8 9.7 8.5U.S. (S&P 500) 9.3 9.3 12.0 12.0Developed markets 8.6 11.0 9.6 8.2Europe ex-UK 10.0 18.3 3.2 0.3Emerging markets 15.0 18.6 10.1 11.6Latin America 7.4 10.3 24.7 31.5EM Asia 19.8 23.3 7.3 6.5
MSCI: Selected CountriesArgentina 41.6 41.6 5.1 5.1Brazil 5.0 3.1 37.2 66.7Chile 13.5 14.4 10.4 16.8Colombia 10.2 8.3 19.6 26.5Mexico 9.4 24.5 8.6 -9.0Peru 13.1 13.1 55.6 55.6China 25.6 25.0 1.2 1.1Russia -16.0 -14.0 35.1 55.9India 14.8 20.5 1.1 -1.4Japan 6.1 10.1 -0.4 2.7United Kingdom 4.7 10.0 19.2 0.0
Local Local
YTD 2016
23.3%
18.6% 18.3%
10.3% 10.1% 10.0%9.3%
-5%
0%
5%
10%
15%
20%
25%
EM Asia EM Europe(ex-UK)
LatinAmerica
Japan UK U.S.
Source: Standard & Poor’s, MSCI, FactSet, J.P. Morgan Asset Management.All return values are MSCI Gross Index (official) data. Multiples and earnings in sources of return calculation based on consensus expectations. Chart is for illustrative purposes only. Past performance is not indicative of future results. Please see disclosure page for index definitions.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Global equity markets
Sources of global equity returns – YTDTotal return, USD
Glob
al e
cono
my
Dividends
Earnings (local currency)
Multiples
Total return
Currency effect
24
|GTM – Latin America |
25
U.S. and international equities at inflection points
Glob
al e
cono
my
Source: MSCI, Standard & Poor’s, FactSet, J.P. Morgan Asset Management.Forward price to earnings ratio is a bottom-up calculation based on the most recent index price, divided by consensus estimates for earnings in the next twelve months (NTM), and is provided by FactSet Market Aggregates. Returns are cumulative and based on price movement only, and do not include the reinvestment of dividends. Past performance is not indicative of future returns. Dividend yield is calculated as consensus estimates of dividends for the next twelve months, divided by most recent price, as provided by FactSet Market Aggregates.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
MSCI All Country World ex-U.S. and S&P 500 IndexDec. 1996 = 100, U.S. dollar, price return
25
+106%
+258%
-62%
-57%
+216%
+101%
-52%
-49%
+48%
+106%
Jun. 30, 2017P/E (fwd.) = 14.1x
Jun. 30, 2017P/E (fwd.) = 17.5x
P/E 20 yr. avg. Div. Yield 20 yr. avg.S&P 500 17.5x 16.0x 2.1% 2.0%ACWI ex-U.S. 14.1x 14.7x 3.2% 2.9%
|GTM – Latin America
26
|
Source: FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management. *Valuations refer to NTMA P/E for Europe, U.S., Japan and Developed Markets and P/B for emerging markets. Valuation and earnings charts use MSCI indices for all regions/countries, except for the U.S., which is the S&P 500. All indices use IBES aggregate earnings estimates, which may differ from earnings estimates used elsewhere in the book.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
International equity earnings and valuations
Glob
al e
cono
my
26
0.0x
0.4x
0.8x
1.2x
1.6x
2.0x
2.4x
2.8x
3.2x
3.6x
4.0x
4.4x
4.8x
5.2x
0x
5x
10x
15x
20x
25x
30x
35x
40x
U.S. DM Europe Japan EM
Price-to-book
Pric
e-to
-ear
ning
s
Global valuations Current and 25-year historical valuations*
Global earningsEPS, U.S. dollar, NTMA, Jan. 2009 = 100
Japan
Europe
U.S.
EM
Axis75x
17.8x
25-year range25-year average
16.7x
14.2x15.2x
1.7x
Current
|GTM – Latin America |
27
Manufacturing momentum
Source: Markit, J.P. Morgan Asset Management.
Heatmap colors are based on PMI relative to the 50 level, which indicates acceleration or deceleration of the sector, for the time period shown.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Global Purchasing Managers’ Index for manufacturing
27
Glob
al e
cono
my
Jul'1
5
Aug
'15
Sep'
15
Oct
'15
Nov
'15
Dec
'15
Jan'
16
Feb'
16
Mar
'16
Apr
'16
May
'16
Jun'
16
Jul'1
6
Aug
'16
Sep'
16
Oct
'16
Nov
'16
Dec
'16
Jan'
17
Feb'
17
Mar
'17
Apr
'17
May
'17
Jun'
17
Global 50.8 50.5 50.4 51.0 51.0 50.7 50.9 50.0 50.6 50.2 50.1 50.4 51.0 50.8 51.1 52.0 52.1 52.7 52.8 53.0 53.0 52.7 52.6 52.6Developed Markets 52.5 52.4 52.1 53.0 52.6 52.0 52.3 50.9 50.9 50.4 50.2 50.9 51.5 51.3 51.6 52.8 53.2 54.0 54.4 54.4 53.9 54.0 54.6 53.7Emerging Markets 48.8 48.3 48.3 48.9 49.1 49.2 49.2 48.8 50.0 49.5 49.5 49.3 50.1 49.9 50.0 50.7 50.7 51.3 50.8 51.2 51.4 50.8 50.6 50.8U.S. 53.8 53.0 53.1 54.1 52.8 51.2 52.4 51.3 51.5 50.8 50.7 51.3 52.9 52.0 51.5 53.4 54.1 54.3 55.0 54.2 53.3 52.8 52.7 52.0Canada 50.8 49.4 48.6 48.0 48.6 47.5 49.3 49.4 51.5 52.2 52.1 51.8 51.9 51.1 50.3 51.1 51.5 51.8 53.5 54.7 55.5 55.9 55.1 54.7UK 52.3 51.8 51.5 54.5 52.5 51.2 52.5 50.9 51.1 49.5 50.4 53.1 48.3 53.5 55.3 54.2 53.5 55.9 55.6 54.6 54.0 57.0 56.3 54.3Euro Area 52.4 52.3 52.0 52.3 52.8 53.2 52.3 51.2 51.6 51.7 51.5 52.8 52.0 51.7 52.6 53.5 53.7 54.9 55.2 55.4 56.2 56.7 57.0 57.4Germany 51.8 53.3 52.3 52.1 52.9 53.2 52.3 50.5 50.7 51.8 52.1 54.5 53.8 53.6 54.3 55.0 54.3 55.6 56.4 56.8 58.3 58.2 59.5 59.6France 49.6 48.3 50.6 50.6 50.6 51.4 50.0 50.2 49.6 48.0 48.4 48.3 48.6 48.3 49.7 51.8 51.7 53.5 53.6 52.2 53.3 55.1 53.8 54.8Italy 55.3 53.8 52.7 54.1 54.9 55.6 53.2 52.2 53.5 53.9 52.4 53.5 51.2 49.8 51.0 50.9 52.2 53.2 53.0 55.0 55.7 56.2 55.1 55.2Spain 53.6 53.2 51.7 51.3 53.1 53.0 55.4 54.1 53.4 53.5 51.8 52.2 51.0 51.0 52.3 53.3 54.5 55.3 55.6 54.8 53.9 54.5 55.4 54.7Greece 30.2 39.1 43.3 47.3 48.1 50.2 50.0 48.4 49.0 49.7 48.4 50.4 48.7 50.4 49.2 48.6 48.3 49.3 46.6 47.7 46.7 48.2 49.6 50.5Ireland 56.7 53.6 53.8 53.6 53.3 54.2 54.3 52.9 54.9 52.6 51.5 53.0 50.2 51.7 51.3 52.1 53.7 55.7 55.5 53.8 53.6 55.0 55.9 56.0Australia 50.4 51.7 52.1 50.2 52.5 51.9 51.5 53.5 58.1 53.4 51.0 51.8 56.4 46.9 49.8 50.9 54.2 55.4 51.2 59.3 57.5 59.2 54.8 55.0Japan 51.2 51.7 51.0 52.4 52.6 52.6 52.3 50.1 49.1 48.2 47.7 48.1 49.3 49.5 50.4 51.4 51.3 52.4 52.7 53.3 52.4 52.7 53.1 52.4China 47.8 47.3 47.2 48.3 48.6 48.2 48.4 48.0 49.7 49.4 49.2 48.6 50.6 50.0 50.1 51.2 50.9 51.9 51.0 51.7 51.2 50.3 49.6 50.4Indonesia 47.3 48.4 47.4 47.8 46.9 47.8 48.9 48.7 50.6 50.9 50.6 51.9 48.4 50.4 50.9 48.7 49.7 49.0 50.4 49.3 50.5 51.2 50.6 49.5Korea 47.6 47.9 49.2 49.1 49.1 50.7 49.5 48.7 49.5 50.0 50.1 50.5 50.1 48.6 47.6 48.0 48.0 49.4 49.0 49.2 48.4 49.4 49.2 50.1Taiwan 47.1 46.1 46.9 47.8 49.5 51.7 50.6 49.4 51.1 49.7 48.5 50.5 51.0 51.8 52.2 52.7 54.7 56.2 55.6 54.5 56.2 54.4 53.1 53.3India 52.7 52.3 51.2 50.7 50.3 49.1 51.1 51.1 52.4 50.5 50.7 51.7 51.8 52.6 52.1 54.4 52.3 49.6 50.4 50.7 52.5 52.5 51.6 50.9Brazil 47.2 45.8 47.0 44.1 43.8 45.6 47.4 44.5 46.0 42.6 41.6 43.2 46.0 45.7 46.0 46.3 46.2 45.2 44.0 46.9 49.6 50.1 52.0 50.5Mexico 52.9 52.4 52.1 53.0 53.0 52.4 52.2 53.1 53.2 52.4 53.6 51.1 50.6 50.9 51.9 51.8 51.1 50.2 50.8 50.6 51.5 50.7 51.2 52.3Russia 48.3 47.9 49.1 50.2 50.1 48.7 49.8 49.3 48.3 48.0 49.6 51.5 49.5 50.8 51.1 52.4 53.6 53.7 54.7 52.5 52.4 50.8 52.4 50.3
|GTM – Latin America |
28
Global inflation
Glob
al e
cono
my
Source: Federal Reserve, Statistics Canada, UK Office for National Statistics (ONS), ECB, Melbourne Institute, Japan Ministry of Internal Affairs & Communication, National Bureau of Statistics China, Statistics Indonesia, Korean National Statistical Office, DGBAS, India Ministry of Statistics & Programme Implementation, Bank of Mexico, Goskomstat of Russia, IBGE, FactSet, J.P. Morgan Asset Management.
Heatmap colors are based on z-score of year-over-year inflation rate relative to five year history, for the time period shown.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Year-over-year headline inflation by country and region
28
Jun'
15
Jul'1
5
Aug
'15
Sep'
15
Oct
'15
Nov
'15
Dec
'15
Jan'
16
Feb'
16
Mar
'16
Apr
'16
May
'16
Jun'
16
Jul'1
6
Aug
'16
Sep'
16
Oct
'16
Nov
'16
Dec
'16
Jan'
17
Feb'
17
Mar
'17
Apr
'17
May
'17
Global
Developed Markets
Emerging Markets
U.S.
Canada
UK
Euro Area
Germany
France
Italy
Spain
Greece
Ireland
Australia
Japan
China
Indonesia
South Korea
Taiwan
India
Mexico
Russia
Brazil
1.5% 1.5% 1.6% 1.4% 1.4% 1.6% 1.6% 1.9% 1.7% 1.6% 1.6% 1.6% 1.6% 1.5% 1.5% 1.7% 1.9% 1.9% 2.1% 2.5% 2.3% 2.1% 2.2% 2.0%
0.6% 0.6% 0.6% 0.3% 0.5% 0.7% 0.8% 0.9% 0.6% 0.5% 0.6% 0.5% 0.6% 0.6% 0.7% 0.9% 1.1% 1.2% 1.6% 2.0% 2.2% 1.9% 2.0% 1.7%
3.5% 3.5% 3.7% 3.5% 3.4% 3.5% 3.4% 3.4% 3.6% 3.3% 3.3% 3.2% 3.2% 3.1% 2.8% 3.0% 3.1% 3.1% 2.9% 3.2% 2.4% 2.5% 2.6% 2.6%
0.1% 0.2% 0.2% 0.0% 0.2% 0.5% 0.7% 1.4% 1.0% 0.9% 1.1% 1.0% 1.0% 0.8% 1.1% 1.5% 1.6% 1.7% 2.1% 2.5% 2.7% 2.4% 2.2% 1.9%
1.0% 1.3% 1.3% 1.0% 1.0% 1.4% 1.6% 2.0% 1.4% 1.3% 1.7% 1.5% 1.5% 1.3% 1.1% 1.3% 1.5% 1.2% 1.5% 2.1% 2.0% 1.6% 1.6% 1.3%
0.0% 0.1% 0.0% -0.1% -0.1% 0.1% 0.2% 0.3% 0.3% 0.5% 0.3% 0.3% 0.5% 0.6% 0.6% 1.0% 0.9% 1.2% 1.6% 1.8% 2.3% 2.3% 2.7% 2.9%
0.2% 0.2% 0.1% -0.1% 0.1% 0.1% 0.2% 0.3% -0.2% 0.0% -0.2% -0.1% 0.1% 0.2% 0.2% 0.4% 0.5% 0.6% 1.1% 1.8% 2.0% 1.5% 1.9% 1.4%
0.2% 0.1% 0.1% -0.1% 0.2% 0.2% 0.2% 0.4% -0.2% 0.1% -0.3% 0.0% 0.2% 0.4% 0.3% 0.5% 0.7% 0.7% 1.7% 1.9% 2.2% 1.5% 2.0% 1.4%
0.3% 0.2% 0.1% 0.1% 0.2% 0.1% 0.3% 0.3% -0.1% -0.1% -0.1% 0.1% 0.3% 0.4% 0.4% 0.5% 0.5% 0.7% 0.8% 1.6% 1.4% 1.4% 1.4% 0.9%
0.2% 0.3% 0.4% 0.2% 0.3% 0.2% 0.1% 0.4% -0.2% -0.2% -0.4% -0.3% -0.3% -0.2% -0.2% 0.1% -0.2% 0.1% 0.5% 1.0% 1.6% 1.4% 2.0% 1.6%
0.0% 0.0% -0.5% -1.1% -0.9% -0.4% -0.1% -0.4% -1.0% -1.0% -1.2% -1.1% -0.9% -0.7% -0.3% 0.0% 0.5% 0.5% 1.4% 2.9% 3.0% 2.1% 2.6% 2.0%
-1.1% -1.3% -0.4% -0.8% -0.1% -0.1% 0.4% -0.1% 0.1% -0.7% -0.4% -0.2% 0.2% 0.2% 0.4% -0.1% 0.6% -0.2% 0.3% 1.5% 1.4% 1.7% 1.6% 1.5%
0.4% 0.2% 0.2% -0.1% -0.1% -0.1% 0.2% 0.0% -0.2% -0.6% -0.2% -0.2% 0.1% 0.1% -0.4% -0.3% -0.4% -0.2% -0.2% 0.2% 0.3% 0.6% 0.7% 0.0%
1.5% 1.6% 1.7% 1.9% 1.8% 1.8% 2.0% 2.3% 2.1% 1.7% 1.5% 1.0% 1.5% 1.0% 1.2% 1.3% 1.5% 1.5% 1.8% 2.1% 2.1% 2.2% 2.6% 2.8%
0.4% 0.2% 0.2% 0.0% 0.2% 0.3% 0.1% -0.1% 0.2% 0.0% -0.3% -0.4% -0.3% -0.5% -0.5% -0.5% 0.2% 0.5% 0.3% 0.5% 0.2% 0.2% 0.4% 0.4%
1.4% 1.6% 2.0% 1.6% 1.3% 1.5% 1.6% 1.8% 2.3% 2.3% 2.3% 2.0% 1.9% 1.8% 1.3% 1.9% 2.1% 2.3% 2.1% 2.5% 0.8% 0.9% 1.2% 1.5%
7.3% 7.3% 7.2% 6.8% 6.2% 4.9% 3.4% 4.1% 4.4% 4.4% 3.6% 3.3% 3.5% 3.2% 2.8% 3.1% 3.3% 3.6% 3.0% 3.5% 3.8% 3.6% 4.2% 4.3%
0.7% 0.7% 0.7% 0.5% 0.8% 0.8% 1.1% 0.6% 1.1% 0.8% 1.0% 0.8% 0.7% 0.4% 0.5% 1.3% 1.5% 1.5% 1.3% 2.0% 1.9% 2.2% 1.9% 2.0%
-0.6% -0.6% -0.4% 0.3% 0.3% 0.5% 0.1% 0.8% 2.4% 2.0% 1.9% 1.2% 0.9% 1.2% 0.6% 0.3% 1.7% 2.0% 1.7% 2.2% -0.1% 0.2% 0.1% 0.6%
5.4% 3.7% 3.7% 4.4% 5.0% 5.4% 5.6% 5.7% 5.3% 4.8% 5.5% 5.8% 5.8% 6.1% 5.0% 4.4% 4.2% 3.6% 3.4% 3.2% 3.7% 3.9% 3.0% 2.2%
2.9% 2.7% 2.6% 2.5% 2.5% 2.2% 2.1% 2.6% 2.9% 2.6% 2.5% 2.6% 2.5% 2.7% 2.7% 3.0% 3.1% 3.3% 3.4% 4.7% 4.9% 5.4% 5.8% 6.2%
15.3% 15.6% 15.8% 15.7% 15.6% 15.0% 12.9% 9.8% 8.1% 7.3% 7.3% 7.3% 7.5% 7.2% 6.8% 6.4% 6.1% 5.8% 5.4% 5.0% 4.6% 4.3% 4.1% 4.1%
8.9% 9.6% 9.5% 9.5% 9.9% 10.5% 10.7% 10.7% 10.4% 9.4% 9.3% 9.3% 8.8% 8.7% 9.0% 8.5% 7.9% 7.0% 6.3% 5.4% 4.8% 4.6% 4.1% 3.6%
|GTM – Latin America
29
|
Source: J.P. Morgan Asset Management; (Left) IMF; (Top right) Bloomberg Finance L.P.; (Bottom right) MSCI, FactSet, J.P. Morgan Global Economic Research.Nominal GDP used is based on purchasing power parity (PPP) valuation of country GDP. *2017 global GDP data is an IMF forecast. **Inflation breakevens are calculated by subtracting 10-year inflation-protected securities from 10-year nominal yields. Germany inflation breakeven data begins in June 2009.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Global reflation
Components of global growthNominal GDP growth broken down into real GDP growth and inflation
InflationReal GDPNominal GDP
Global GDP growth and corporate profitsYear-over-year growth, nominal GDP, MSCI AC World trailing EPS
Glob
al e
cono
my
29
Global inflation breakevens10-year inflation breakevens**
8.6%8.3%
4.9%
0.3%
6.6%6.2%
5.1% 5.0%5.2%
4.3% 4.4%
5.7%
-4%
-2%
0%
2%
4%
6%
8%
10%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*
-0.2%
0.6%
1.4%
2.2%
3.0%
3.8%
4.6%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
UK
U.S.
Germany
EPS
Nominal GDP
|GTM – Latin America
30
|
0.41%
0.72%0.91%
1.17%
1.45% 1.70%
-0.32%-0.03%
0.23%-0.03% -0.02%
0.00%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
Sep '17 Sep '18 Sep '19
4.3%
3.0%
3.6%
2.9%
-1.8%
0.6%
1.9% 2.0%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
U.S. Eurozone Japan UK
Global monetary and fiscal policy
2017 – 2021***
Global central bank balance sheet expansion* USD billions, balance sheet expansion planned for next 12 months
Fiscal dragReduction in structural deficits, % of potential GDP
Mor
e fis
cal d
rag
Less
fisc
al d
rag
2011 - 2016
30
Glob
al e
cono
my
Market expectations for target policy rate**
UK
Eurozone
U.S.
Japan
-$500
$0
$500
$1,000
$1,500
$2,000
$2,500
'09 '10 '11 '12 '13 '14 '15 '16 '17
Forecast*
Source: J.P. Morgan Asset Management; (Top left) Bank of England, Bank of Japan, European Central Bank, FactSet, Federal Reserve System, J.P. Morgan Global Economic Research; (Bottom left) Bloomberg; (Right) IMF.*Includes the Bank of Japan (BoJ), Bank of England (BoE), European Central Bank (ECB) and Federal Reserve. Balance sheet expansion assumes no more quantitative easing (QE) from the BoE, tapering of ECB QE to 0 from end of 2017 over one year, tapering of BoJ QE to 20trn JPY by end of 2018, 0 by mid-2019, and tapering of Fed QE per the June FOMC statement. **Target policy rates for Japan are estimated using EuroYen 3m futures contracts less a risk premium of 6bps. ***Eurozone forecasts past 2018 are JPMAM estimates calculated by aggregating individual country data. Government deficits are calculated by the IMF as the general government structural balance. The structural balance excludes the normal impact of the business cycle, providing a clearer measure of the independent impact of changes in government spending and taxation on demand in the economy. Guide to the Markets – Latin America. Data are as of June 30, 2017.
|GTM – Latin America
31
|
Source: BEA, FactSet, J.P. Morgan Asset Management.Values may not sum to 100% due to rounding. Quarter-over-quarter percent changes are at an annualized rate. Average represents the annualized growth rate for the full period. Expansion average refers to the period starting in the second quarter of 2009.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
U.S.: Economic growth and the composition of GDP
Glob
al e
cono
my
Real GDP
Real GDPYear-over-year % change
1Q17
Components of GDP1Q17 nominal GDP, USD trillions
Average: 2.8%
Expansion average:
2.1%
31
YoY % chg: 2.1%
QoQ % chg: 1.4%
-$1
$1
$3
$5
$7
$9
$11
$13
$15
$17
$19
$21
12.6% Investment ex-housing
68.9% Consumption
17.5% Gov’t spending
3.9% Housing
- 3.0% Net exports
|GTM – Latin America
32
|
'70 '80 '90 '00 '100%
2%
4%
6%
8%
10%
12%
Source: BEA, BLS, J.P. Morgan Asset Management.CPI used is CPI-U and values shown are % change vs. one year ago and reflect May 2017 CPI data. Core CPI is defined as CPI excluding food and energy prices. The Personal Consumption Expenditure (PCE) deflator employs an evolving chain-weighted basket of consumer expenditures instead of the fixed-weight basket used in CPI calculations.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
U.S.: Inflation and unemployment
Civilian unemployment rate and growth in wagesSeasonally adjusted, year-over-year growth in wages and salaries
CPI and core CPI% change vs. prior year, seasonally adjusted
50-yr. avg. May 2017
Headline CPI 4.1% 1.9%Core CPI 4.1% 1.7%Headline PCE 3.6% 1.4%Core PCE 3.5% 1.4%
Glob
al e
cono
my
Average: 4.2%
May 2017: 4.3%
Oct. 2009: 10.0%
May 2017: 2.4%
Average: 6.2%
Wage growth
Unemployment
32
|GTM – Latin America |
33
1.38%
2.13%
2.94% 3.00%
1.13% 1.24%1.48% 1.66%
0%
1%
2%
3%
4%
5%
6%
7%
'99 '02 '05 '08 '11 '14 '17 '20
U.S.: The Fed and interest rates
Source: FactSet, Bloomberg Finance L.P., Federal Reserve, J.P. Morgan Asset Management.Market expectations are the federal funds rates priced into the fed futures market as of the date of the June 2017 FOMC meeting.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Federal funds rate expectationsFOMC and market expectations for the fed funds rate
Federal funds rate
FOMC long-run projection
FOMC year-end estimatesMarket expectations on 6/14/17
Glob
al e
cono
my
33
FOMC June 2017 forecasts Percent
2017 2018 2019 Long run
Change in real GDP, Q4 to Q4 2.2 2.1 1.9 1.8
Unemployment rate, Q4 4.3 4.2 4.2 4.6
PCE inflation, Q4 to Q4 1.6 2.0 2.0 2.0
Longrun
|GTM – Latin America |
34
$0
$1
$2
$3
$4
$5
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
U.S.: The Fed balance sheet
Source: Federal Reserve, FactSet, J.P. Morgan Asset Management.*Balance sheet reduction assumes reduction from current level, beginning October 2017 and lasting four years, concluding in October 2021. Reduction of Treasuries and MBS is per FOMC guidelines from the June 2017 meeting minutes: Treasury securities will be reduced $6 billion per month initially and reduction rate will increase in steps of $6 billion at three-month intervals over 12 months until reaching $30 billion per month; MBS will be reduced $4 billion per month initially and reduction rate will increase in steps of $4 billion at three-month intervals over 12 months until reaching $20 billion per month; Other assets are reduced in proportion. Forecasts do not take into account months where maturing assets do not exceed the stated cap nor do they consider the reinvestment of principal or interest repayment in excess of the stated cap.Guide to the Markets – Latin America. Data are as of June 30, 2017.
Balance sheet reduction scenario(current balance sheet = $4.460 trillion)
Beginning balance ($ trillion)
End balance ($ trillion)
Treasuries $2.465 $1.170
MBS $1.770 $0.929
Treasuries
MBS
Other
Dec. 2008:QE1 begins
Jun. 2010:End of QE1;
balance sheet stands at $2.1T
Oct. 2014:End of QE3; balance sheet stands at $4.5T
Nov. 2010:QE2 begins
Jun. 2011:End of QE2; balance sheet
stands at $2.8TSep. 2012:QE3 begins
Jan. 2014:Tapering of
purchases begins
The Federal Reserve balance sheetUSD trillions
34
Glob
al e
cono
my
Forecasted reduction*
|GTM – Latin America
35
|
Source: Standard & Poor’s, J.P. Morgan Asset Management; (Left) Compustat; (Right) FactSet.EPS levels are based on operating earnings per share. Earnings estimates are Standard & Poor’s consensus analyst expectations. *1Q17 earnings are calculated using actual earnings for 98.6% of S&P 500 market cap and earnings estimates for the remaining companies. Past performance is not indicative of future returns. Price to earnings is price divided by consensus analyst estimates of earnings per share for the next 12 months as provided by IBES since December 1989, and FactSet for June 30, 2017. Average P/E and standard deviations are calculated using 25 years of FactSet history.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
U.S.: Corporate profits and valuations
S&P 500 earnings per shareIndex quarterly operating earnings
Glob
al e
cono
my
S&P 500 Index: Forward P/E ratio
35
Average: 16.0x
Current: 17.5x
+1 std. dev.: 19.2x
-1 std. dev.: 12.8x
-$1
$3
$7
$11
$15
$19
$23
$27
$31
$35
'02 '05 '08 '11 '14 '17
1Q17*: $28.81
S&P consensus analyst estimates
|GTM – Latin America
36
|
Source: J.P. Morgan Asset Management; (Top left) Markit, Eurostat; (Bottom left) Eurostat; (Right) ECB.SAAR – Seasonally adjusted annual rate. *Eurozone composite PMI is a flash estimate. Eurozone shown is the aggregate of the 19 countries that currently use the euro.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
European recovery
Markit PMI and GDP growth in the eurozoneEurozone Markit Composite PMI index and real GDP q/q SAAR
Eurozone unemploymentPersons unemployed as a percent of labor force, seasonally adjusted
Eurozone credit demandNet % of banks reporting positive loan demand
Glob
al e
cono
my
36
Real GDP
Composite PMI
Stronger loan demand
Weaker loan demand
May 2017: 9.3%
Jul. 2013: 12.1%
1Q17: 2.3%
Jun. 2017*: 55.7
|GTM – Latin America
37
|
20
30
40
50
60
70
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Europe55%
Africa & Middle East5%
Americas26%
Asia/Pacific
15%
Source: FactSet, MSCI, J.P. Morgan Asset Management; (Top left) Markit. Revenue growth reflects last 12-month actual figures and EPS reflects next 12-month forward estimates from FactSet for the MSCI Europe Index.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Europe: Revenues and earnings
Economic growth and revenue growth estimates12-mo. revenue growth & manufacturing PMI (advanced 12-months)
Earnings per shareNext 12-month consensus EPS
Geographical source of revenuesMSCI Europe
'00 '02 '04 '06 '08 '10 '12 '14 '16€4
€5
€6
€7
€8
€9
€10
€11
€12
€13
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
$150MSCI Europe S&P 500
Manufacturing PMIRevenue growth
Glob
al e
cono
my
37
|GTM – Latin America
38
|
-4%
-2%
0%
2%
4%
6%
8%
'02 '04 '06 '08 '10 '12 '14 '16
0%
2%
4%
6%
8%
10%
12%
14%
Source: FactSet, J.P. Morgan Asset Management; (Top left) FactSet, GFK, ONS; (Bottom left) Bloomberg Finance L.P., ONS; (Right) Eurostat, ONS. *Nominal wages include bonuses.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
UK: Economic indicators
Unemployment rate and consumer confidenceOverall index level
Trade with the UK% of GDP, 2015
Glob
al e
cono
my
38
'08 '10 '12 '14 '16-50
-40
-30
-20
-10
0
10
4%
5%
6%
7%
8%
9%Consumer confidence
Unemployment rate
Inflation and wage growth% change year-over-year
Headline CPI
Nominal wage growth*
EU countries’ exports to the UK
Regions’ exports to the UK
UK exports to the EU
|GTM – Latin America
39
|
18%
11%
9%7%
5%
10%
15%
20%
FTSEAll-Share
MSCI Europeex-UK
S&P 500 MSCI Japan
0%
20%
40%
60%
80%
100%
Hom
ebu
ilder
s
RE
ITS
Ret
ail
Util
ities
Bank
s
Trav
el
Hea
lth c
are
Pers
onal
good
s
Ener
gy
Min
ing
Toba
cco
Source: J.P. Morgan Asset Management; (Left) Thomson Reuters Datastream, FTSE; (Top right) FactSet, MSCI, Standard & Poor’s; (Bottom right) J.P. Morgan Global Economic Research.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
UK equities
FTSE All-Share earnings and performanceNext twelve months earnings estimates
Commodities weights% of Index
Source of UK company revenues% of total revenues
39
Glob
al e
cono
my
International
UK
Index levelEarnings
|GTM – Latin America
40
|
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: J.P. Morgan Asset Management; (Top left) FactSet, Japan Ministry of Internal Affairs & Communications, Japan Ministry of Health, Labor and Welfare; (Bottom left) Nomura; (Right) Nikkei.*Core CPI is defined as CPI excluding food and energy. **Share buyback data is for repurchases of common stock, excluding repurchases from Resolution and Collection Corp. and repurchases of preferred stock. This data was collected by Nomura.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Japan: Abenomics and markets
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17¥70
¥80
¥90
¥100
¥110
¥120
¥130
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
Japanese yen and the stock market
Japanese ¥ per U.S. $ Nikkei 225 Index
Nominal wage growthCore CPI*
Inflation and wage growth% change year-over-year, 6-month moving average
¥0
¥4
¥8
¥12
¥16
¥20
'90 '95 '00 '05 '10 '15
DividendsShare buybacks**
Companies’ dividend payouts and share buybacks Yen trillions
Glob
al e
cono
my
40
|GTM – Latin America
41
|
-10%
-5%
0%
5%
10%
15%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: FactSet, J.P. Morgan Asset Management; (Left and top right) CEIC; (Bottom right) People’s Bank of China.*Core CPI is defined as CPI excluding food and energy.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
China: Economic and policy snapshot
China real GDP contributionYear-over-year % change
InvestmentConsumptionNet exports
Monetary policy toolsPolicy rate on 1-year renminbi deposits
'08 '09 '10 '11 '12 '13 '14 '15 '16 '170%
1%
2%
3%
4%
5%
0%
5%
10%
15%
20%
25%Reserve requirementInterest rates
Inflation% change year-over-year
41
Glob
al e
cono
my
May 2017Headline CPI 1.5%
Core CPI* 0.5%
Headline PPI 5.5%
0.3%
-4.0%
-1.3% -0.8%
0.2%
-0.1%
0.3%
-0.1%-0.5%
0.3%
4.3% 5.3% 4.8%5.9%
4.3%3.6% 3.6% 4.1% 4.3%
5.3%
5.1%
8.1%
7.1% 4.4%
3.4%4.3% 3.4% 2.9% 2.8%
1.3%
9.7%
9.4%
10.6%
9.6%
7.9% 7.8%7.3% 6.9% 6.7% 6.9%
-4%
0%
4%
8%
12%
16%
2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17
|GTM – Latin America
42
|
40
45
50
55
60
65
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
-4.0%-3.5%-3.0%-2.5%-2.0%-1.5%-1.0%-0.5%0.0%0.5%1.0%
'95 '00 '05 '10 '15
Source: J.P. Morgan Asset Management; (Left) Caixin/Markit; (Top right) CEIC, FactSet, National Bureau of Statistics of China; (Bottom right) FactSet, National Bureau of Statistics of China.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
China economic indicators
Manufacturing and services PMIsCaixin/Markit Indices, 3-month moving average
Fixed asset investment% change year-over-year
Central government fiscal deficit% of GDP
Jun. 2017:52.0
Jun. 2017:50.1
Manufacturing
Services
2016: -3.8%
Glob
al e
cono
my
42
Public
Private
Overall
|GTM – Latin America
43
|
90
100
110
120
130
140
'11 '12 '13 '14 '15 '16
$10
$30
$50
$70
$90
$110
$130
40
50
60
70
80
90
100
'11 '12 '13 '14 '15 '16
98
99
100
101
102
'11 '12 '13 '14 '15 '16 '17
-$30
-$10
$10
$30
$50
$70
'11 '12 '13 '14 '15 '16 '17
Source: J.P. Morgan Asset Management; (Top left) Federal Reserve, FactSet; (Bottom left) Bloomberg Finance L.P., FactSet; (Top right) OECD; (Bottom right) IIF. DM currencies represented by the Federal Reserve Major Currency index and EM currencies represented by the Federal Reserve Other Important Trading Partners index. OECD composite leading indicators are comprised of several high-frequency statistics on economic growth specific to each country’s economic structure and data availability. CLIs are designed to provide an advance indication of turning points in the business cycle. 100 represents the long-run average level of the index. Oil prices shown are Brent crude.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
EM external factors
EM currencies
DM currencies
Oil ($/bbl)
Bloomberg Commodity IndexIndustrial Metals Index
U.S.
China
Eurozone
U.S. dollar performanceNominal trade-weighted exchange indices, weekly, Aug. 2011 = 100
Leading economic indicatorsOECD composite leading economic indicators
Commodity pricesFor indices: Aug. 2011 = 100; oil prices: USD/barrel
EM net flows by asset classUSD billions, monthly
Glob
al e
cono
my
43
DebtEquities
Total
|GTM – Latin America
44
|
60
70
80
90
100
110
120
'07 '09 '11 '13 '15 '17
Source: J.P. Morgan Asset Management; (Left) J.P. Morgan Global Economic Research; (Right) IMF.*Fragile Five includes Brazil, India, Indonesia, South Africa and Turkey. 2017 is an IMF forecast.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Emerging market currencies and current accounts
EM FX versus U.S. dollarIndex level
-1 std. deviation: 76.9
+1 std. deviation: 104.4
Average: 90.6
EM currencies appreciating
EM currencies depreciating
EM current account balance for “Fragile Five”*Current accounts as a % of GDP, GDP weighted
External vulnerabilities increasing
External vulnerabilities decreasing
44
Glob
al e
cono
my
Current: 68.7
2017: -2.0%
|GTM – Latin America
45
|
40
60
80
100
120
140
160
180
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
1.0x1.2x1.4x1.6x1.8x2.0x2.2x2.4x2.6x2.8x3.0x
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: FactSet, MSCI, J.P. Morgan Asset Management; (Left) Consensus Economics.“Growth differential” is consensus estimates for EM growth in the next 12 months minus consensus estimates for DM growth in the next 12 months, provided by Consensus Economics.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Emerging market equities
EM vs. DM growthMonthly, consensus expectations for GDP growth in 12 months*
EM earnings by regionEPS for next 12-month consensus, USD, rebased to 100
Latin America
EM AsiaEMEA
Average: 1.7x
Jun. 2017: 1.6x
EM price to book ratioLast 12 months actual
Glob
al e
cono
my
45
DM growthEM growthGrowth differential
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
|GTM – Latin America
46
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD Cum. Ann.
Colombia Bra zil Arge ntina Argentina Ve ne zue la Ve ne zue la Arge ntina Arge ntina Arge ntina Vene zue la Mexic o Arge ntina Arge ntina
9 .1% 5 .8 % 13 2 .8 % 3 5 .4 % 18 .0 % 4 7 .0 % 19 .0 % 19 .1% 2 6 .6 % 5 3 .2 % 8 .0 % 13 1.3 % 8 .7 %
Bra zil Chile Ve nezue la Ve ne zue la Pe ru USD EMD
USD EMD
Pe ru Ve ne zue la Bra zil Bra zil Pe ru Pe ru
9 .1% 4 .5 % 6 2 .1% 16 .1% 17 .1% 17 .4 % - 5 .3 % 13 .3% 16 .9 % 2 0 .6 % 7 .1% 10 3 .8 % 7 .4 %
Pe ru Me xic o USD EMD
La tin Ame ric a
Colombia Pe ru Chile Me xico USD EMD
Arge ntina La tin Ame rica
Ve ne zue la Ve nezue la
7 .1% 0 .7 % 2 9 .8 % 13 .3 % 14 .6 % 17 .0 % - 6 .6 % 10 .9% 1.2 % 15 .4 % 7 .0 % 9 4 .8 % 6 .9 %
Me xic o Colombia La tin Ame ric a
USD EMD
Me xic o La tin Ame ric a
Me xic o Colombia La tin Ame ric a
La tin Ame ric a
Pe ru USD EMD
USD EMD
6 .9 % 0 .5 % 2 5 .8 % 12 .2 % 14 .3 % 16 .0 % - 7 .1% 10 .5% - 2 .0 % 13 .5 % 6 .8 % 9 4 .6 % 6 .9 %
Chile Pe ru Pe ru Pe ru Brazil Bra zil La tin Americ a
Chile Chile Colombia Colombia La tin Ame ric a
La tin Ame ric a
6 .4 % - 5 .1% 2 2 .2 % 11.6 % 13 .8 % 12 .5 % - 7 .7 % 10 .5% - 2 .8 % 13 .1% 6 .3 % 8 7 .0 % 6 .5 %
USD EMD
USD EMD
Chile Colombia La tin Ame rica
Colombia Colombia Bra zil Pe ru Chile USD EMD
Bra zil Bra zil
6 .2 % - 12 .0 % 13 .1% 11.4 % 12 .3 % 12 .3 % - 8 .8 % 8 .5 % - 3 .5 % 10 .5 % 6 .2 % 8 1.8% 6 .2 %
La tin Ame ric a
La tin Ame ric a
Me xic o Me xic o Chile Mexic o Peru La tin Ame ric a
Me xic o Pe ru Chile Chile Chile
4 .9 % - 13 .5 % 12 .3 % 10 .5 % 10 .7 % 11.7 % - 11.1% 8 .1% - 5 .5 % 10 .4 % 6 .1% 7 7 .4 % 5 .9 %
Arge ntina Ve ne zue la Bra zil Bra zil USD EMD Chile Bra zil USD
EMD Colombia USD EMD Arge ntina Me xic o Me xic o
- 11.1% - 3 9 .9 % 11.4 % 9 .7 % 7 .3% 8 .7 % - 11.2 % 7 .4 % - 7 .0 % 10 .2 % 5 .8 % 7 7 .2 % 5 .9 %
Ve ne zue la Arge ntina Colombia Chile Arge ntina Arge ntina Ve ne zue la Ve ne zue la Bra zil Me xic o Ve ne zue la Colombia Colombia
- 11.2% - 5 7 .9 % - 14 .3 % 5 .9 % - 12 .4% 8 .2 % - 12 .3 % - 2 8 .7 % - 13 .4 % 6 .9% 2 .5 % 4 3 .2 % 3 .7 %
2007-2016
Latin America fixed income: Returns
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.
All returns represent EMBI Global Diversified regional and country subindices, which are USD-denominated sovereign bond indices.All returns are unhedged and shown in USD. Past performance is not indicative of future returns.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Fixe
d in
com
e
46
|GTM – Latin America |
47
783
238 224 219 199166
432
282252
200
145 132
0
100
200
300
400
500
600
700
800
900
1,000
Argentina Brazil Mexico Colombia Peru Chile
Latin America fixed income: Valuations
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.
All returns represent EMBI Global Diversified regional and country subindices, which are USD-denominated sovereign bond indices.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
EMD spreads by countryUSD-denominated sovereign debt, spread to worst
Fixe
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10-yr. averageLatest
10-yr. range
47
2,000
|GTM – Latin America
48
|
0
100
200
300
400
500
600
700
800
900
1000
'10 '11 '12 '13 '14 '15 '16100
150
200
250
300
350
400
450
500
550
600
'10 '11 '12 '13 '14 '15 '16
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management. EM sovereigns represent the Emerging Market Bond Index Global Diversified (EMBI Global Diversified) Index and subindices and EM corporates represent the Corporate Emerging Market Bond (CEMBI Broad Diversified) Index and subindices.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Emerging market debt
Regional EMD spreads: SovereignsUSD-denominated sovereign debt, basis points over Treasuries
Regional EMD spreads: CorporatesUSD-denominated corporate debt, basis points over Treasuries
Average LatestEM 332 309EM Asia 217 168EM Europe 312 236EM LATAM 378 371
48
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Average LatestEM 347 254EM Asia 284 179EM Europe 488 335EM LATAM 393 317
|GTM – Latin America |
49
-1.9%
-4.7%
-8.4%
-17.6%
-0.1%
-4.2% -4.4%
-6.3%-7.5%
-6.6%-6.0%
-0.6%
-2.9%
-6.3%
-14.9%
1.8%1.1%
0.2%
-0.2%-1.2% -1.7%
-3.5%
-22%
-17%
-12%
-7%
-2%
3%
2-yearTreasury
5-yearTreasury
10-yearTreasury
30-yearTreasury
Floating rate Global highyield
USD EMDcorporates
USD LatinAmerica
aggregate
USD LatinAmerica
sovereigns
USD EMDsovereigns
U.S.aggregate
Source: Barclays, Bloomberg Finance L.P., FactSet, J.P. Morgan Asset Management.2 – 30 year Treasury, Global high yield, Floating rate (BBB), USD EMD corporates, USD Latin America aggregate, USD Latin America sovereigns USD EMD sovereigns and U.S. aggregate are based on Bloomberg Barclays US Treasury indices, Bloomberg Barclays Global High Yield, Bloomberg Barclays U.S. Floating Rate Notes (BBB), Bloomberg Barclays Emerging Markets USD Aggregate – Corporate, Bloomberg Barclays Emerging Markets USD Aggregate – Latin America, Bloomberg Barclays Emerging Markets USD Sovereigns – Latin America, Bloomberg Barclays Emerging Markets USD Aggregate – Sovereign and Bloomberg Barclays U.S. Aggregate, respectively. For illustrative purposes only. Change in bond price is calculated using both duration and convexity.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Global fixed income: Interest rate risk
Fixe
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Impact of a 1% rise in interest ratesAssumes a parallel shift in the yield curve and spreads are maintained
Total returnPrice return
49
|GTM – Latin America
50
|
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
2
160
172
174
248
399
471
473
474
587
611
841
-100 100 300 500 700 900
Korea
China
Chile
Malaysia
Peru
Colombia
India
Mexico
Indonesia
S. Africa
Russia
Brazil
Source: J.P. Morgan Asset Management; (Left) J.P. Morgan Global Economic Research; (Right) Bloomberg Finance L.P.EM local currency debt is represented by GBI-EM index and regional subindices.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Attractiveness of Latin American local rates
Global – U.S. Treasuries 5-year spreadBasis points, local currency debt, as of Jun. 2017
Regional EMD yieldsLocal currency sovereign debt
Average LatestEM 6.8% 6.9%EM Asia 3.8% 4.0%EM Europe 6.2% 4.7%EM LATAM 7.7% 8.1%
50
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|GTM – Latin America
51
|
3%
4%
5%
6%
7%
8%
9%
10%
'11 '12 '13 '14 '15 '16 '17-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
'11 '12 '13 '14 '15 '16 '17
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management; (Right) IBGE (Brazilian Statistics and Geography Institute), INE (National Statistics Institute of Chile), DANE (National Administration of Statistics of Colombia), Central Bank of Mexico, INEI (National Statistics Institute of Peru).*Latin America index excludes Argentina, Ecuador and Venezuela.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Inflation and monetary policy
Headline inflationYear-over-year % change, Latin America* and EM Asia aggregates
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Latin America inflation vs. targetsLast 12 months’ CPI – central bank mid-point target
51
EM AsiaLatin America
Brazil
ColombiaPeru
Mexico
Chile
Policy ratesPercent per annum, nsa, Latin America* and EM Asia aggregates
EM AsiaLatin America
0%1%2%3%4%5%6%7%8%9%
10%
'01 '03 '05 '07 '09 '11 '13 '15 '17
|GTM – Latin America |
52
'10 '11 '12 '13 '14 '15 '16 '170
100
200
300
400
500
600
700
Global default protection prices
Source: Credit Market Analysis, FactSet, J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Credit default swap spreads Yield, basis points, 5-yr. senior corporate credit, USD
52
Fixe
d in
com
e
LatestBrazil 238Russia 168Colombia 135Mexico 112Peru 86Chile 66
|GTM – Latin America
53
|
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
'11 '12 '13 '14 '15 '16 '174%
5%
6%
7%
8%
9%
10%
11%
'11 '12 '13 '14 '15 '16 '17
Source: J.P. Morgan Asset Management; (Left) Barclays Capital, Tullett Prebon, FactSet; (Right) Barclays Capital, FactSet, J.P. Morgan Global Economic Research. U.S. investment-grade yields: Barclays U.S. Corporates – Investment Grade Index yield to worst. Treasury yields are yield to maturity. U.S. high yield yields: Barclays U.S. Corporates - High Yield index yield to worst. EM sovereigns: J.P. Morgan EMBIG yield to maturity. EM Corporates: J.P. Morgan CEMBI yield to maturity.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Global interest rate movements
U.S. ratesYield
10-year Treasury
Investment gradeJun. 2017:
3.19%
Jun. 2017: 2.31%
U.S. high yield and emerging market debtYield
LatestU.S. high yield 5.62%
EM corporates (USD) 5.09%
EM sovereigns (USD) 5.37%
Fixe
d in
com
e
53
2-year Treasury
Jun. 2017: 1.38%
|GTM – Latin America
54
|
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
4.5x
'08 '09 '10 '11 '12 '13 '14 '15 '16
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management. (Left) Federal Reserve.Default rates are defined as the par value percentage of the total market trading at or below 50% of par value and include any Chapter 11 filing, prepackaged filing or missed interest payments. Spreads indicated are benchmark yield to worst less comparable maturity Treasury yields. Yield to worst is defined as the lowest potential yield that can be received on a bond without the issuer actually defaulting and reflects the possibility of the bond being called at an unfavorable time for the holder. High yield is represented by the J.P. Morgan Domestic High Yield Index. Investment grade is represented by the J.P. Morgan U.S. Liquid Index.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
U.S. high yield bonds
Fixe
d in
com
e
54
Fed funds and default rate% rate
Historical high yield and high grade net leverageNet debt/EBITDA
Spread to worstHigh yield spreads
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0%
2%
4%
6%
8%
10%
12%
'87 '91 '95 '99 '03 '07 '11 '15
Default ratesFed funds
30-yr. avg. Latest
Fed funds rate 3.4% 1.3%
Default rate 3.9% 1.3%
0%
4%
8%
12%
16%
20%
'86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
Average: 5.8%
Jun. 2017: 4.4%
High yield
Investment grade
|GTM – Latin America |
55
MSCI Latin America Index at inflection points
Source: MSCI, FactSet, J.P. Morgan Asset Management.Index levels are in local currency. Dividend yield is calculated as consensus estimates of dividends for the next 12 months divided by price as provided by FactSet. Forward price to earnings is a bottom-up calculation based on the most recent MSCI Latin America price, divided by consensus estimates earnings in the next 12 months (NTM), and is provided by FactSet market aggregates. Returns are cumulative and based on price movement only, in local currency, and do not include the reinvestment of dividends. Past performance is not indicative of future returns. Guide to the Markets – Latin America. Data are as of June 30, 2017.
MSCI Latin America price index
May 28, 2008P/E (fwd.) = 13.5x
8,469,116
Oct. 27, 2008P/E (fwd.) = 7.2x
3,669,031
Nov. 8, 2010P/E (fwd.) = 12.4x
8,098,266Jun. 30, 2017
P/E (fwd.) = 13.4x7,611,042
+411% -57% +121%
-32%
Dec. 29, 2000P/E (fwd.) = 12.0x
1,657,431
Characteristic May 2008 Nov. 2010 Jun. 2017Index level 8,469,116 8,098,266 7,611,042P/E ratio (fwd.) 13.5x 12.4x 13.4xDividend yield 2.5% 2.8% 3.1%
Equi
ties
55
+39%
Jan. 26, 2016P/E (fwd.) = 12.2x
5,474,927
|GTM – Latin America
56
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD Ann. Vol.
Pe ru Colombia Bra zil Argentina Colombia Colombia Arge ntina Arge ntina Arge ntina Bra zil Argentina Pe ru Arge ntina
9 4 .7 % - 25 .1% 12 8 .6% 7 7 .4 % - 5 .0 % 3 5 .9% 66 .2% 19 .2% - 0 .4% 6 6 .7 % 4 1.6 % 9 .1% 42 .1%
Bra zil Chile La tin Ame rica Pe ru Mexic o Mexic o EM Asia Peru EM Asia Pe ru Me xic o EM Asia Pe ru
8 0 .0 % - 3 5 .4% 10 4 .2% 5 3 .3 % - 12 .1% 29 .1% 2 .3 % 10 .5% - 9 .5% 5 5 .6 % 2 4 .5 % 3 .8% 3 0 .9 %
La tin Ame ric a Pe ru Chile Chile EM Asia EM Asia Mexico EM Asia Me xic o La tin
Ame ric a EM Asia Colombia Chile
5 0 .7 % - 40 .1% 8 6 .7 % 4 4 .8 % - 17 .2 % 21.2 % 0 .2 % 5 .3 % - 14 .2 % 3 1.5 % 2 3 .3 % 3 .2% 2 5 .6 %
EM Asia Me xic o Colombia Colombia EM Equity Pe ru EM Equity EM Equity EM Equity Colombia EM Equity Chile EM Equity
4 1.6 % - 4 2 .9% 8 4 .3 % 4 3 .4 % - 18 .2 % 2 0 .2% - 2 .3 % - 1.8 % - 14 .6 % 2 6 .5 % 18 .6 % 2 .3% 2 4 .5 %
EM Equity La tin Ame rica EM Equity Me xic o La tin
Ame ric a EM Equity La tin Americ a Me xico Chile Chile Chile EM Equity Bra zil
3 9 .8 % - 51.3 % 7 9 .0 % 2 7 .6 % - 19 .1% 18 .6 % - 13 .2 % - 9 .2% - 16 .8 % 16 .8 % 14 .4 % 2 .2% 2 2 .4 %
Chile EM Asia EM Asia EM Asia Chile La tin Ame ric a Bra zil La tin
Ame ric aLa tin
Ame ric a EM Equity Pe ru Brazil EM Asia
2 3 .7 % - 5 2 .8% 7 4 .2 % 19 .4 % - 2 0 .0 % 8 .9 % - 15 .8 % - 12 .0 % - 3 0 .8 % 11.6% 13 .1% 0 .8% 19 .6 %
Colombia EM Equity Pe ru EM Equity Pe ru Chile Colombia Chile Pe ru EM Asia La tin Ame rica
La tin Ame ric a
La tin Ame ric a
15 .0 % - 5 3 .2% 7 2 .1% 19 .2 % - 2 1.4 % 8 .3 % - 2 1.1% - 12 .2 % - 3 1.7 % 6 .5 % 10 .3 % 0 .5% 19 .0 %
Me xic o Argentina Argentina La tin Ame rica
Bra zil Bra zil Chile Bra zil Bra zil Arge ntina Colombia Me xic o Colombia
12 .2 % - 5 4 .4% 6 4 .0 % 14 .9 % - 2 1.6 % 0 .3 % - 2 1.4 % - 13 .7 % - 4 1.2 % 5 .1% 8 .3 % 0 .3% 19 .0 %
Arge ntina Bra zil Me xic o Brazil Arge ntina Arge ntina Peru Colombia Colombia Me xic o Bra zil Arge ntina Mexic o
- 4 .0 % - 56 .1% 5 6 .6 % 6 .8% - 3 8 .9 % - 3 7 .1% - 2 9 .8 % - 19 .8 % - 4 1.8 % - 9 .0 % 3 .1% 0 .1% 17 .0 %
2007 - 2016
Latin America equity returns
Source: MSCI, FactSet, J.P. Morgan Asset Management.
All returns are total return, unhedged and shown in USD. Past performance is not indicative of future returns.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
56
Equi
ties
|GTM – Latin America
57
|
54%
30%
9%4% 3%
0%
10%
20%
30%
40%
50%
60%
Brazil Mexico Chile Colombia Peru
$2.59
$0.75
$0.05 $0.02 $0.03$0.0
$0.4
$0.8
$1.2
$1.6
$2.0
$2.4
$2.8
Brazil Mexico Colombia Argentina Peru
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
'03 '05 '07 '09 '11 '13 '15 '17
Source: J.P. Morgan Asset Management; (Left and top right) Bloomberg Finance L.P.; (Bottom right) MSCI, FactSet.*Local equities only (excludes ADRs). Values may not sum to 100% due to rounding.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Latin America equity market liquidity
Equi
ties
Latin America historical daily trading volume*Six-month average, USD billions
Latin America current daily trading volume*Six-month average, USD billions
Country weightsWeights in MSCI Latin America index
MexicoBrazil
57
|GTM – Latin America
58
|
MSCI Latin America: Valuation measures Historical averages
Valuation measure DescriptionLatest 1 year
ago3-year avg.
5-year avg.
10-year avg.
15-year avg.
P/E Price-to-earnings 13.4 14.1 13.8 13.2 12.2 11.4
P/B Price-to-book 1.8 1.5 1.6 1.6 1.8 1.9
P/CF Price-to-cash flow 7.5 7.3 7.4 7.4 7.3 6.7
P/S Price-to-sales 1.3 1.2 1.2 1.3 1.4 1.4
Div. yield Dividend yield 3.1% 2.8% 3.1% 3.1% 3.1% 3.3%
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '167.0x
9.0x
11.0x
13.0x
15.0x
17.0x
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Source: MSCI, FactSet, J.P. Morgan Asset Management.Price to earnings is price divided by consensus analyst estimates of earnings per share for the next 12 months. Price to book is price divided by book value per share. Price to cash flow is price divided by consensus analyst estimates of cash flow per share for the next 12 months. Price to sales is calculated as price divided by consensus analyst estimates of sales per share for the next 12 months. Dividend yield is calculated as consensus analyst estimates of dividends for the next 12 months divided by price. Consensus analyst estimates are provided by FactSet.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Valuation measures
Equi
ties
MSCI Latin America price-to-book ratio MSCI Latin America price-to-earnings ratio
Average: 1.9x
Jun. 2017: 1.8x
Jun. 2017: 13.4x
Average: 11.4x
+1 std. dev.: 13.3x
-1 std. dev.: 9.5x
58
|GTM – Latin America
59
|
19%20% 19% 19%
15%
9%
0%
5%
10%
15%
20%
25%
MSCI LatinAmerica
Mexico Brazil Peru Colombia Chile
0%
5%
10%
15%
20%
25%
30%
35%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
-60%
-40%
-20%
0%
20%
40%
60%
80%
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Local forward
Source: MSCI, J.P. Morgan Asset Management; (Left and bottom right) FactSet; (Top right) Bloomberg Finance L.P.*Earnings are implied earnings derived from dividing the local and USD index levels by forward PEs.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Corporate profits
MSCI Latin America forward earnings* growthNext 12 months’, year-over-year growth, 3-month moving avg.
59
Equi
ties
MSCI Latin America profit margin and return on equityTrailing 12 months’ profit margin, blended 12-month forward ROE
Jun. 2017: 21%
Jun. 2017: 23%
USD forwardROEProfit margin
MSCI Latin America earnings growth by countryForward consensus estimates, next 12 months’, local currency
|GTM – Latin America
60
|
13.4x12.7x
17.4x
16.8x
12.9x12.4x
11.6x
5x
7x
9x
11x
13x
15x
17x
19x
21x
23x
LatinAmerica
EM Asia Mexico Chile Colombia Peru Brazil 50
75
100
125
150
175
200
225
250
275
'08 '09 '10 '11 '12 '13 '14 '15 '16
Source: MSCI, FactSet, J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Latin America valuations and earnings
Equi
ties
Latin America valuationsPrice to earnings ratio, NTMA
10-yr. averageLatest
10-yr. rangeColombia
Peru
Mexico
Chile
Brazil
EPS, local currency, NTMA, Dec. 2008 = 100
60
Latin America earnings
EM Asia
|GTM – Latin America
61
|
19%
50%31% 24% 22% 20% 17% 8% 8% 3%
-10%-20%0%
20%40%60%80%
100%
MSC
I Lat
inAm
eric
a
Ener
gy
Tele
com
Indu
stria
ls
Stap
les
Rea
l Est
ate
Dis
cret
iona
ry
Hea
lth C
are
Fina
ncia
ls
Mat
eria
ls
Info
Tec
h
Util
ities
MSCI Lati
n Ameri
caFinan
cials
Consum
er Stap
lesMate
rials
Energy
Industri
als
Teleco
m
Utilitie
s
Consum
er Disc
r.Rea
l Esta
te
IT
Health
Care
Index% weight
100.0% 29.9% 17.6% 15.1% 7.6% 6.7% 6.5% 6.3% 6.0% 1.7% 1.6% 1.0%
Wei
ght
Div. yield est.
Market consensus
P/E est.
Market consensus
21.6x 16.5x 14.9x 17.9x P/E
Div
.
13.4x 10.5x 21.5x 12.3x 10.9x 17.5x 17.8x 11.4x
2.7% 4.3% 1.5% 4.1% 2.4% 2.7%3.1% 3.9% 2.9% 2.3% 3.2% 2.3%
7%
20%16% 13% 12% 10% 8% 7% 7% 6% 6%
-10%-20%
-10%
0%
10%
20%
30%
MSC
I Lat
inAm
eric
a
Hea
lth C
are
Indu
stria
ls
Rea
l Est
ate
Tele
com
Fina
ncia
ls
Stap
les
Info
Tec
h
Mat
eria
ls
Util
ities
Dis
cret
iona
ry
Ener
gy
Source: MSCI, FactSet, J.P. Morgan Asset Management.Returns shown are total returns in local currency. Individual companies grouped into sectors using GICS (Global Industry Classification Standard). Average returns for sectors are weighted by market capitalization. Historical data can change as new information becomes available. Price to earnings is price divided by consensus analyst estimates of earnings per share for the next 12 months. Dividend yield is calculated as consensus analyst estimates of dividends for the next 12 months divided by price. All consensus analyst estimates are provided by FactSet.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Latin America by sector
Equi
ties
Latin America sector returns – YTD
61
150% 133%
Latin America sector earnings growthForward consensus estimates, next 12 months’, local currency
|GTM – Latin America |
62
21 1926
-11-15
-25
23 9 14 143
-40
23 8
-8
13
26
80
7 7
-10
-24
-10 -16
-31 -34
-15-7 -6
-11 -10
-48
-25-15
-21-12 -8
-8-14 -13
-4
-60%
-30%
0%
30%
'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17
35
-31
77
-151
-1
55
28 33 34 32
-40
58
7
-13
9-7
-4 -11
216
-26
-51
-17 -24 -23 -25-9 -17 -16 -23 -16
-57
-15 -15-27
-13 -18 -20 -19 -10 -7
-100%
-60%
-20%
20%
60%
100%
'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17
Annual returns and intra-year declines
Source: MSCI, FactSet, J.P. Morgan Asset Management.Returns are based on price index only and do not include dividends. Intra-year drops refers to the largest market drops from a peak to a trough during the year. For illustrative purposes only. Returns are calendar year returns from 1997 to 2016, except for 2017, which is year-to-date. 2015 return for MSCI The World was 0.2%.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
MSCI Latin America intra-year declines vs. calendar year returnsLocal currency, average intra-year drops of 22.0% (median -18.4%) and annual returns positive in 12 of 20 years
MSCI The World intra-year declines vs. calendar year returnsLocal currency, average intra-year drops of 16.9% (median -13.1%) and annual returns positive in 15 of 20 years
62
Equi
ties
|GTM – Latin America
63
|
-3 -2 -1 0 1 2 3 4 5
BloombergCommodity
Index
Agriculture
Crude oil
Industrial metals
Livestock
Natural gas
Silver
Gold
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-6%
-4%
-2%
0%
2%
4%
6%
8%
'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17
Source: Bloomberg Finance L.P., FactSet, J.P. Morgan Asset Management; (Left) J.P. Morgan Global Economic Research; (Right) CME.Commodity prices are represented by the appropriate Bloomberg Commodity subindex. Other commodity prices are represented by futures contracts. Z-scores are calculated using daily prices over the past 10 years. *Latin America and developed market (DM) aggregates are produced by J.P. Morgan Global Economic Research.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Commodities
Commodity prices Commodity price z-scores
Oth
eras
set c
lass
es
63
Commodity prices and Latin America economic growthLatin America – DM GDP growth*, quarterly, % year-over-year change
Low level
$26.2
$650.8
$8.8
$47.7
$84.2
$1.6
$23.0
$72.9
Current
$46.0
$51.9
$16.6
$1242.3
$114.5
$32.1
$3.1
$82.6
High level
$145.3
$101.8
$48.6
$1891.9
$250.5
$13.6
$71.3
$238.0Commodity pricesLatin America – DM GDP
Example
|GTM – Latin America
64
|
Source: J.P. Morgan Asset Management; (Top left) EIA; (Bottom left) EIA, Baker Hughes; (Right) Commodity Research Bureau, FactSet.*Forecasts are from the June 2017 EIA Short-Term Energy Outlook and start in 2017. **U.S. crude oil inventories include the Strategic Petroleum Reserve (SPR). Active rig count includes both natural gas and oil rigs. Brent crude prices are monthly averages in USD using global spot ICE prices.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Oil markets
U.S. crude oil inventories and rig count**Million barrels, number of active rigs
Change in production and consumption of oilProduction, consumption and inventories, millions of barrels per day
Price of oilBrent crude, nominal prices, USD/barrel
Inventories (incl. SPR) Active rigs
64
Oth
eras
set c
lass
es
2014 2015 2016 2017* 2018* Growth since 2014Production
U.S. 14.1 15.1 14.8 15.6 16.7 18.1%OPEC 36.6 38.0 39.0 39.2 39.9 8.8%Global 93.8 96.7 97.2 98.3 100.2 6.8%
ConsumptionU.S. 19.1 19.5 19.6 20.0 20.3 6.0%China 11.5 12.0 12.4 12.8 13.1 14.2%Global 93.6 95.4 96.9 98.5 100.1 6.9%
Inventory Change 0.2 1.3 0.3 -0.2 0.1
Jun. 2017: $46.52
Jul. 2008: $135.73
Dec. 2008: $43.09
Jun. 2014: $111.93
Jan. 2016: $30.98
|GTM – Latin America
65
|
0
30
60
90
120
150
180
210
240$0.9
$1.0
$1.1
$1.2
$1.3
$1.4Jan '14 Jul '14 Jan '15 Jul '15 Jan '16 Jul '16 Jan '17
70
80
90
100
110
120
130
140
60
65
70
75
80
85
90
95
Jan '14 Jul '14 Jan '15 Jul '15 Jan '16 Jul '16 Jan '170.6 0.8 1.0 1.2 1.4 1.6 1.8
Argentina
Colombia
Turkey
Japan
Brazil
Russia
Mexico
UK
Euro Area
Chile
India
Peru
Korea
China
U.S.
Source: J.P. Morgan Asset Management; (Left and bottom right) J.P. Morgan Global Economic Research; (Top right) FactSet, Tullett Prebon; (Bottom right) Bloomberg Finance L.P.*Real effective exchange rates (REERs) compare the value of a currency to a weighted basket of several foreign currencies. They are deflated using a producer price index. EM currencies is the J.P. Morgan Emerging Market Currencies Index. Commodity prices is the Bloomberg Commodity Price Index.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Oth
eras
set c
lass
es
Expensive relative to averageCheap relative to average
Real effective exchange rates*FX adjusted for relative inflation changes vs. 10-year average
Graph Key
Current10-year range
2-year Treasury/Bund spread
USD/euro
Commodity prices
EM currencies vs. USD
Emerging marketsCommodity prices and FX
Developed marketsShort rates (bps) and FX
Global currencies 65
|GTM – Latin America |
66
6.3% 6.1% 5.9%5.1%
4.2% 4.0% 3.9% 3.6%3.1%
2.7% 2.6% 2.3% 2.1%
0%
2%
4%
6%
8%
Maritime MLPs Preferreds Infrastructureassets
GlobalREITs
U.S. REITs Privatereal estate
Convertibles LatinAmericaequity
EMequity
DMequity
U.S.10-year
U.S.equity
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
'95 '99 '03 '07 '11 '15
Global yield alternatives
Source: FactSet, MSCI, J.P. Morgan Asset Management; (Bottom) Alerian, BAML, Barclays, Clarkson, Drewry Maritime Consultants, Federal Reserve, FTSE, NCREIF, Standard & Poor’s. Yields are as of 6/30/17, except maritime which is as of 12/31/16. Maritime: Unlevered yields for maritime assets are calculated as the difference between charter rates (rental income) and operating expenses as a percentage of current asset value. Yields for each of the sub-vessel types above are calculated and the respective weightings are applied to calculate sub-sector specific yields, and then weighted to arrive at the current indicative yield for the World Maritime Fleet; MLPs: Alerian MLP; Preferreds: BAML Hybrid Preferred Securities; Private real estate: NCREIF ODCE; Global/U.S. REITs: FTSE NAREIT Global/USA REITs; Infrastructure Assets: MSCI Global Infrastructure Asset Index; Convertibles: Barclays U.S. Convertibles Composite; Latin America equity: MSCI EM Latin America; EM equity: MSCI Emerging Markets; DM equity: MSCI The World Index; U.S. equity: MSCI USA.Guide to the Markets – Latin America. Data are as of June 30, 2017.
The power of compoundingMSCI Latin America price return vs. total return, growth of 10,000, local currency returns, quarterly
Asset class yields
With dividends reinvested
Price return only
Jun. 2017: 163,173
Jun. 2017: 81,461
Oth
eras
set c
lass
es
66
|GTM – Latin America
67
|
70%
26%33%
72%
35%
22%
38%
70%
55%
35%
33%
30%
13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Bra
zil
Mex
ico
Chi
le
Arg
entin
a
U.S
.
UK
Ger
man
y
Italy
Fran
ce
Japa
n
89%
76%
58%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
75-79 80-84 85-89
Source: J.P. Morgan Asset Management; (Left) WHO Global Health Observatory data, life expectancy tables (2013); (Right) OECD Pensions at a Glance 2015.Life expectancy rates are based on Brazilian life expectancy tables. Mandatory and government pension replacement rate is the total public pension or forced savings in defined contribution plans; Voluntary savings is defined contribution savings by employers and employees; Gap is the savings shortfall assuming a desired pre-retirement income replacement rate of 80%. Pre-retirement income is calculated for the average earning worker who is assumed to have worked a full career, defined as entering the labor market at age 20 and working until the normal pension age within each country.Guide to the Markets – Latin America. Data are as of June 30, 2017.
Life expectancy and pension shortfall
Men
Women
Couple – at least onelives to specified age
Probability of reaching certain ages Persons aged 65-69, by gender, and combined couple
Mandatory and voluntary savings by country
Gap
Voluntary savings
Inve
stin
gpr
inci
ples
67
Mandatory & government pension replacement rate
Contribution to pre-retirement income replacement goal of 80%
|GTM – Latin America
68
|
30%
18%
15%
8%7% 6% 6% 6%
2% 2% 1%
18%
10%
5%6%
12%
3% 3%
12%
3%
16%
13%
0%
5%
10%
15%
20%
25%
30%
35%
Source: MSCI, J.P. Morgan Asset Management; (Left) BIS, IMF, Cerulli Associates. Latin American figures include Brazil, Chile, Colombia, Mexico and Peru. Share of global GDP is based on purchasing power parity (PPP) as calculated by the IMF for 2016 and is an estimate. Share of global market capitalization is based on float-adjusted MSCI data in U.S. dollar terms. Share of global bond market is based on BIS individual country total debt outstanding in U.S. dollar terms and is as of 4Q 2016. *Average investor allocation is an AUM weighted average of mutual fund international exposure in each country found in Cerulli Associate’s 2014 report “Latin American Distribution Dynamics 2014: Entry Points to Emergent Economies.” Percentages may not sum to 100% due to rounding.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Local investing and global opportunities
Inve
stin
gpr
inci
ples
Sector exposure% of MSCI The World Index and MSCI Latin America
Latin America Developed markets
Investment universe & Latin American investorsPercentage of total net assets
Latin America Global
68
5.8% 3.3%1.5%
97.5%94.2% 96.7% 98.5%
2.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
GDP Bond market Equity market Average LatinAmerican investor
allocation*
|GTM – Latin America
69
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD Cum. Ann.LATAM e quity
LCL LATAM
sov.
LATAM e quity
EM Asia e quity
US D LATAM
sov.
EM Asia e quity DM e quity
US D LATAM
sov.
US D EMD sov.
LATAM e quity
EM Asia e quity
Globa l high yie ld
Globa l high yie ld
5 0 .7 % - 10 .6 % 10 4 .2 % 19 .4 % 12 .3 % 2 1.2 % 2 7 .4 % 8 .1% 1.2 % 3 1.5 % 2 3 .3 % 10 3 .2 % 7 .3 %
EM Asia e quity Globa l IG
EM Asia e quity
LCL LATAM
sov.
US D EMD sov.
Globa l high yie ld
Globa l high yie ld
US D EMD sov. DM e quity
LCL LATAM
sov.
LCL LATAM
sov.
US D EMD sov.
US D EMD sov.
4 1.6 % - 11.2 % 7 4 .2 % 18 .7 % 7 .3 % 19 .6 % 7 .3 % 7 .4 % - 0 .3 % 17 .1% 11.5 % 9 4 .6 % 6 .9 %
LCL LATAM
sov.
USD EMD sov.
Globa l high yie ld
Asse t a lloc . Globa l IG
US D EMD sov.
EM Asia e quity DM e quity
US D LATAM
sov.
Asse t a lloc . DM e quity
US D LATAM
sov.
US D LATAM
sov.17 .4 % - 12 .0 % 5 9 .4 % 15 .6 % 4 .0 % 17 .4 % 2 .3 % 5 .5 % - 2 .0 % 15 .7 % 11.0 % 8 7 .0 % 6 .5 %
Asse t a lloc .
US D LATAM
sov.
Asse t a lloc .
LATAM e quity
Globa l high yie ld
LCL LATAM
sov.Globa l IG
EM Asia e quity
Globa l high yie ld
Globa l high yie ld
LATAM e quity
Asse t a lloc .
Asse t a lloc .
16 .5 % - 13 .5 % 4 3 .2 % 14 .9 % 3 .1% 17 .3 % 1.8 % 5 .3 % - 2 .7 % 14 .3 % 10 .3 % 6 5 .1% 5 .1%
DM e quityAsse t a lloc .
LCL LATAM
sov.
Globa l high yie ld
LCL LATAM
sov.DM e quity
Asse t a lloc . Globa l IG Globa l IG
US D LATAM
sov.
Asse t a lloc .
LCL LATAM
sov.
LCL LATAM
sov.9 .6 % - 2 0 .6 % 3 4 .3 % 14 .8 % 1.6 % 16 .5 % - 4 .1% 2 .5 % - 3 .8 % 13 .5 % 10 .0 % 6 0 .9 % 4 .9 %
USD EMD sov.
Globa l high yie ld DM e quity
US D LATAM
sov.
Asse t a lloc .
Asse t a lloc .
US D EMD sov.
Globa l high yie ld
EM Asia e quity
US D EMD sov.
USD LATAM
sov.Globa l IG Globa l IG
6 .2 % - 2 6 .9 % 3 0 .8 % 13 .3 % 1.0 % 16 .4 % - 5 .3 % 0 .0 % - 9 .5 % 10 .2 % 7 .0 % 5 5 .4 % 4 .5 %
Globa l IG DM e quityUSD EMD
sov. DM e quity DM e quityUS D
LATAM sov.
US D LATAM
sov.
Asse t a lloc .
Asse t a lloc . DM e quity
Globa l high yie ld DM e quity DM e quity
6 .1% - 4 0 .3 % 2 9 .8 % 12 .3 % - 5 .0 % 16 .0 % - 7 .7 % - 0 .2 % - 13 .0 % 8 .2 % 6 .5 % 5 4 .0 % 4 .4 %
US D LATAM
sov.
LATAM e quity
US D LATAM
sov.
USD EMD sov.
EM Asia e quity Globa l IG
LCL LATAM
sov.
LCL LATAM
sov.
LCL LATAM
sov.
EM Asia e quity
US D EMD sov.
EM Asia e quity
EM Asia e quity
4 .9 % - 5 1.3 % 2 5 .8 % 12 .2 % - 17 .2 % 12 .5 % - 8 .2 % - 4 .2 % - 2 1.7 % 6 .5 % 6 .2 % 4 5 .0 % 3 .8 %
Globa l high yie ld
EM Asia e quity Globa l IG Globa l IG
LATAM e quity
LATAM e quity
LATAM e quity
LATAM e quity
LATAM e quity Globa l IG Globa l IG
LATAM e quity
LATAM e quity
3 .2 % - 5 2 .8 % 2 3 .7 % 7 .0 % - 19 .1% 8 .9 % - 13 .2 % - 12 .0 % - 3 0 .8 % 6 .0 % 5 .4 % 5 .4 % 0 .5 %
2007-2016
Asset class returns
Source: MSCI, Bloomberg/Barclays, J.P. Morgan Global Economic Research, FactSet, J.P. Morgan Asset Management.LATAM equity, EM Asia equity, DM equity, Global high yield, Global IG (investment grade), LCL LATAM sov. (sovereigns), USD LATAM sov. and USD EMD sov. are MSCI Latin America, MSCI EM Asia, MSCI The World, Bloomberg Barclays Global High Yield, Bloomberg Barclays Global Credit - Corporate, GBI-EM Global Diversified Latin Region subindex (US$), EMBIG Diversified Latin Region subindex and EMBIG Diversified index, respectively. The “Asset Allocation” portfolio assumes the following weights: 10% in LATAM equity, 5% in EM Asia equity, 5% in DM equity, 10% in global high yield, 5% in global investment grade, 40% in LCL LATAM sovereigns, 20% in USD LATAM sovereigns and 5% in USD EMD sovereigns. All asset class returns are unhedged and shown in USD. Past performance is not indicative of future returns.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Inve
stin
gpr
inci
ples
69
|GTM – Latin America |
70
0
5,000
10,000
15,000
20,000
25,000
Fully invested Missed 10 best days Missed 20 best days Missed 30 best days Missed 40 best days Missed 50 best days Missed 60 best days
0
20,000
40,000
60,000
80,000
Fully invested Missed 10 best days Missed 20 best days Missed 30 best days Missed 40 best days Missed 50 best days Missed 60 best days
Market timing
Source: FactSet, MSCI, J.P. Morgan Asset Management.Returns are in respective local currencies. This chart is for illustrative purposes only and does not represent the performance of any investment or group of investments. Past performance is not indicative of future returns. An individual cannot invest directly in an index.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Returns of MSCI The WorldPerformance of 10,000 between January 2, 1997 and December 30, 2016, annualized returns
22,107(4.05% return)
12,744(1.22% return)
8,879(-0.59% return) 6,534
(-2.11% return) 4,937(-3.47% return) 3,798
(-4.72% return)2,965
(-5.90% return)
Five of the 10 best days occurred within two weeks of the 10 worst days
Returns of MSCI Latin AmericaPerformance of 10,000 between January 2, 1997 and December 30, 2016, annualized returns
Inve
stin
gpr
inci
ples
61,269(9.49% return)
24,736(4.63% return) 14,386
(1.84% return) 8,885(-0.59% return) 5,863
(-2.63% return)3,990
(-4.49% return)2,777
(-6.20% return)
Six of the 10 best days occurred within two weeks of the 10 worst days
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|GTM – Latin America
71
|
$-
$100
$200
$300
$400
$500
$600
$700
'10 '11 '12 '13 '14 '15 '16 '17$0
$300
$600
$900
$1,200
$1,500
$1,800
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: J.P. Morgan Asset Management; (Left) Strategic Insight Simfund; (Right) IIF.
Guide to the Markets – Latin America. Data are as of June 30, 2017.
Fund flows
Cumulative flows into Latin American assetsNet portfolio flows, non-resident, monthly, USD billions
71
Cumulative flows into U.S. assetsMutual fund and ETF flows, quarterly, USD billions
Stocks: $1,114bn in cumulative flows since 2007
Bonds: $1,760bn in cumulative flows since 2007
Multi-asset: $601bn in cumulative flows since 2007In
vest
ing
prin
cipl
es
Stocks: $125bn in cumulative flows since 2010
Bonds: $582bn in cumulative flows since 2010
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J.P. Morgan Asset Management – Index definitionsAll indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses.Equities:The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip U.S. stocks.The MSCI ACWI (All Country World Index) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.The MSCI Europe Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe.The MSCI Pacific Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the Pacific region.The Russell 1000 Index® measures the performance of the 1,000 largest companies in the Russell 3000. The Russell 1000 Growth Index® measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Value Index® measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.The Russell 2000 Index® measures the performance of the 2,000 smallest companies in the Russell 3000 Index.The Russell 2000 Growth Index® measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Value Index® measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 3000 Index® measures the performance of the 3,000 largest U.S. companies based on total market capitalization. The Russell Midcap Index® measures the performance of the 800 smallest companies in the Russell 1000 Index.The Russell Midcap Growth Index ® measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth index. The Russell Midcap Value Index ® measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Value index.The S&P 500 Index is widely regarded as the best single gauge of the U.S. equities market. The index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. The S&P 500 Index focuses on the large-cap segment of the market; however, since it includes a significant portion of the total value of the market, it also represents the market.
Fixed income:The Barclays 1-3 Month U.S. Treasury Bill Index includes all publicly issued zero-coupon US Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value. In addition, the securities must be denominated in U.S. dollars and must be fixed rate and non convertible.The Barclays Global High Yield Index is a multi-currency flagship measure of the global high yield debt market. The index represents the union of the US High Yield, the Pan-European High Yield, and Emerging Markets (EM) Hard Currency High Yield Indices. The high yield and emerging markets sub-components are mutually exclusive. Until January 1, 2011, the index also included CMBS high yield securities. The Barclays Municipal Index: consists of a broad selection of investment- grade general obligation and revenue bonds of maturities ranging from one year to 30 years. It is an unmanaged index representative of the tax-exempt bond market.The Barclays US Dollar Floating Rate Note (FRN) Index provides a measure of the U.S. dollar denominated floating rate note market.The Barclays US Corporate Investment Grade Index is an unmanaged index consisting of publicly issued US Corporate and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB or higher) by at least two ratings agencies, have at least one year to final maturity and have at least $250 million par amount outstanding. To qualify, bonds must be SEC-registered.The Barclays US High Yield Index covers the universe of fixed rate, non-investment grade debt. Eurobonds and debt issues from countries designated as emerging markets (sovereign rating of Baa1/BBB+/BBB+ and below using the middle of Moody’s, S&P, and Fitch) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included.The Barclays US Mortgage Backed Securities Index is an unmanaged index that measures the performance of investment grade fixed-rate mortgage backed pass-through securities of GNMA, FNMA and FHLMC.The Barclays US TIPS Index consists of Inflation-Protection securities issued by the U.S. Treasury.The J.P. Morgan Emerging Market Bond Global Index (EMBI) includes U.S. dollar denominated Brady bonds, Eurobonds, traded loans and local market debt instruments issued by sovereign and quasi-sovereign entities.The J.P. Morgan Domestic High Yield Index is designed to mirror the investable universe of the U.S. dollar domestic high yield corporate debt market. The J.P. Morgan Corporate Emerging Markets Bond Index Broad Diversified (CEMBI Broad Diversified)is an expansion of the J.P. Morgan Corporate Emerging Markets Bond Index (CEMBI). The CEMBI is a market capitalization weighted index consisting of U.S. dollar denominated emerging market corporate bonds. The J.P. Morgan Emerging Markets Bond Index Global Diversified (EMBI Global Diversified) tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds. The index limits the exposure of some of the larger countries.The J.P. Morgan GBI EM Global Diversified tracks the performance of local currency debt issued by emerging market governments, whose debt is accessible by most of the international investor base.The U.S. Treasury Index is a component of the U.S. Government index.
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J.P. Morgan Asset Management – DefinitionsOther asset classes:The Alerian MLP Index is a composite of the 50 most prominent energy Master Limited Partnerships (MLPs) that provides investors with an unbiased, comprehensive benchmark for the asset class.The Bloomberg Commodity Index and related sub-indices are composed of futures contracts on physical commodities and represents twenty two separate commodities traded on U.S. exchanges, with the exception of aluminum, nickel, and zincThe Cambridge Associates U.S. Global Buyout and Growth Index® is based on data compiled from 1,768 global (U.S. & ex – U.S.) buyout and growth equity funds, including fully liquidated partnerships, formed between 1986 and 2013.The CS/Tremont Hedge Fund Index is compiled by Credit Suisse Tremont Index, LLC. It is an asset-weighted hedge fund index and includes only funds, as opposed to separate accounts. The Index uses the Credit Suisse/Tremont database, which tracks over 4500 funds, and consists only of funds with a minimum of US$50 million under management, a 12-month track record, and audited financial statements. It is calculated and rebalanced on a monthly basis, and shown net of all performance fees and expenses. It is the exclusive property of Credit Suisse Tremont Index, LLC.The HFRI Monthly Indices (HFRI) are equally weighted performance indexes, utilized by numerous hedge fund managers as a benchmark for their own hedge funds. The HFRI are broken down into 4 main strategies, each with multiple sub strategies. All single-manager HFRI Index constituents are included in the HFRI Fund Weighted Composite, which accounts for over 2200 funds listed on the internal HFR Database.The NAREIT EQUITY REIT Index is designed to provide the most comprehensive assessment of overall industry performance, and includes all tax-qualified real estate investment trusts (REITs) that are listed on the NYSE, the American Stock Exchange or the NASDAQ National Market List.The NFI-ODCE, short for NCREIF Fund Index - Open End Diversified Core Equity, is an index of investment returns reporting on both a historical and current basis the results of 33 open-end commingled funds pursuing a core investment strategy, some of which have performance histories dating back to the 1970s. The NFI-ODCE Index is capitalization-weighted and is reported gross of fees. Measurement is time-weighted.Definitions:Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments involve greater risks than traditional investments and should not be deemed a complete investment program. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain. The value of the investment may fall as well as rise and investors may get back less than they invested.Bonds are subject to interest rate risks. Bond prices generally fall when interest rates rise.Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic or market conditions than other types of investments and could result in losses that significantly exceed the original investment. The use of derivatives may not be successful, resulting in investment losses, and the cost of such strategies may reduce investment returns. Distressed Restructuring Strategies employ an investment process focused on corporate fixed income instruments, primarily on corporate credit instruments of companies trading at significant discounts to their value at issuance or obliged (par value) at maturity as a result of either formal bankruptcy proceeding or financial market perception of near term proceedings.
Investments in emerging markets can be more volatile. The normal risks of investing in foreign countries are heightened when investing in emerging markets. In addition, the small size of securities markets and the low trading volume may lead to a lack of liquidity, which leads to increased volatility. Also, emerging markets may not provide adequate legal protection for private or foreign investment or private property.The price of equity securities may rise, or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. These price movements may result from factors affecting individual companies, sectors or industries, or the securities market as a whole, such as changes in economic or political conditions. Equity securities are subject to “stock market risk” meaning that stock prices in general may decline over short or extended periods of time.Equity market neutral strategies employ sophisticated quantitative techniques of analyzing price data to ascertain information about future price movement and relationships between securities, select securities for purchase and sale. Equity Market Neutral Strategies typically maintain characteristic net equity market exposure no greater than 10% long or short.Global macro strategies trade a broad range of strategies in which the investment process is predicated on movements in underlying economic variables and the impact these have on equity, fixed income, hard currency and commodity markets.International investing involves a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies outside the U.S. can raise or lower returns. Some overseas markets may not be as politically and economically stable as the United States and other nations.There is no guarantee that the use of long and short positions will succeed in limiting an investor's exposure to domestic stock market movements, capitalization, sector swings or other risk factors. Using long and short selling strategies may have higher portfolio turnover rates. Short selling involves certain risks, including additional costs associated with covering short positions and a possibility of unlimited loss on certain short sale positions.Merger arbitrage strategies which employ an investment process primarily focused on opportunities in equity and equity related instruments of companies which are currently engaged in a corporate transaction.Mid-capitalization investing typically carries more risk than investing in well-established "blue-chip" companies. Historically, mid-cap companies' stock has experienced a greater degree of market volatility than the average stock.Price to forward earnings is a measure of the price-to-earnings ratio (P/E) using forecasted earnings. Price to book value compares a stock's market value to its book value. Price to cash flow is a measure of the market's expectations of a firm's future financial health. Price to dividends is the ratio of the price of a share on a stock exchange to the dividends per share paid in the previous year, used as a measure of a company's potential as an investment.Real estate investments may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector. Real estate investments may be subject to risks including, but not limited to, declines in the value of real estate, risks related to general and economic conditions, changes in the value of the underlying property owned by the trust and defaults by borrower.Relative Value Strategies maintain positions in which the investment thesis is predicated on realization of a valuation discrepancy in the relationship between multiple securities. Small-capitalization investing typically carries more risk than investing in well-established "blue-chip" companies since smaller companies generally have a higher risk of failure. Historically, smaller companies' stock has experienced a greater degree of market volatility than the average stock.
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|GTM – Latin America |
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J.P. Morgan Asset Management – Risks & disclosures
The Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment decision-making, the program explores the implications of current economic data and changing market conditions. This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields is not a reliable indicator of current and future results.J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. This communication is issued by the following entities: in the United Kingdom by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority; in other EEA jurisdictions by JPMorgan Asset Management (Europe) S.à r.l.; in Hong Kong by JF Asset Management Limited, or JPMorgan Funds (Asia) Limited, or JPMorgan Asset Management Real Assets (Asia) Limited; in Singapore by JPMorgan Asset Management (Singapore) Limited (Co. Reg. No. 197601586K), or JPMorgan Asset Management Real Assets (Singapore) Pte Ltd (Co. Reg. No. 201120355E); in Taiwan by JPMorgan Asset Management (Taiwan) Limited; in Japan by JPMorgan Asset Management (Japan) Limited which is a member of the Investment Trusts Association, Japan, the Japan Investment Advisers Association, Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency (registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Korea by JPMorgan Asset Management (Korea) Company Limited; in Australia to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Cth) by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919); in Brazil by Banco J.P. Morgan S.A.; in Canada for institutional clients’ use only by JPMorgan Asset Management (Canada) Inc., and in the United States by JPMorgan Distribution Services Inc. and J.P. Morgan Institutional Investments, Inc., both members of FINRA/SIPC.; and J.P. Morgan Investment Management Inc.
In APAC, distribution is for Hong Kong, Taiwan, Japan and Singapore. For all other countries in APAC, to intended recipients only.In Latin America, distribution intended to recipients only.
Copyright 2017 JPMorgan Chase & Co. All rights reserved
Prepared by: Gabriela D. Santos and Abigail B. Dwyer
Unless otherwise stated, all data are as of June 30, 2017 or most recently available.
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