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Global Credit Research - 16 Jul 2012
Sao Paulo, July 16, 2012 -- Moody's outlook for the Brazilian asset management industry is stable,
reflecting expectations that the country's economic progress will
continue to support the growth of the capital markets and investment sector
over the next 12--18 months, Moody's Investors Service
says in a new industry outlook, "Brazilian Asset Managers:
Outlook Stable." In addition, the pension fund segment
is expected to become increasingly important for Brazilian asset managers,
given the country's aging population and the growing awareness of
retirement planning.
"While the current global economic slowdown will constrain the growth
of the Brazilian economy and, consequently, of the local asset
management sector, local companies are well positioned to face current
challenges," says analyst and author of the report Diego Kashiwakura.
Not only do local asset managers have limited exposure to foreign assets,
he says, but Brazil's improved macro-economy and strong
domestic demand help shield them from global pressures.
Nevertheless, Brazilian asset managers do face challenges,
including pressure on fees, which have been on a decreasing trend
for money market, fixed-income, multimarket and equity
funds due to declining interest rates and increasing competition.
Fixed-income and money market fund fees, in particular,
are expected to remain under pressure from declining interest rates,
as well as the availability of substitute products such as Tesouro Direto
and savings accounts.
Interest rates in Brazil stand at a record low of 8.00%
in July 2012, compared with 12.50% a year ago.
"If rates continue to go down and remain low for a sustained period,
expected returns on a number of asset types will go down,"
Kashiwakura says. "In this case we would expect to see investors
reallocate their portfolios away from government bonds toward more risky
instruments, such as corporate bonds, commercial paper and
equities." Indeed, the impact of lower rates is already
being seen, with pension funds increasing their allocations to corporate
bonds and equities in order to meet their actuarial targets.
Pension funds in Brazil have grown at a compound average annual rate of
49% for the past 10 years, helped by the tax benefits afforded
by the leading products. "The pension fund segment is poised
for continuing strong growth," Kashiwakura says, "due
to Brazil's aging population, higher disposable incomes and
an increasing awareness of long-term savings."
Moody's research subscribers can access this report at:
http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_143828
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Diego Kashiwakura
Asst Vice President - Analyst
Financial Institutions Group
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
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Daniel Serrao
Associate Managing Director
Financial Institutions Group
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Releasing Office:
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
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Moody's: Brazilian Asset Managers: Outlook Stable
No Related Data.
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