guide to the markets - latin america - j.p. morgan€¦ · latin america aggregate gdp growth...
TRANSCRIPT
Guide to the Markets®
Latin America | |
MARKET INSIGHTS
2Q 2020 As of March 31, 2020
|GTM – Latin AmericaGlobal Market Insights Strategy Team 2
*Responsible for Latin America
Vincent JuvynsLuxembourg
Tilmann Galler, CFAFrankfurt
Maria Paola ToschiMilan
Shogo MaekawaTokyo
Lucia Gutierrez MelladoMadrid
Tai HuiHong Kong
Marcella ChowHong Kong
Yoshinori ShigemiTokyo
Kerry Craig, CFAMelbourne
Dr. Jasslyn Yeo, CFASingapore
Karen WardLondon
Ambrose Crofton, CFALondon
Chaoping Zhu, CFAShanghai
Jai Malhi, CFALondon
Manuel Arroyo Ozores, CFAMadrid
Agnes LinTaipei
Michael Bell, CFALondon
Alex Dryden, CFANew York
Samantha AzzarelloNew York
Dr. David Kelly, CFANew York
Dr. Cecelia MundtNew York
Meera Pandit, CFANew York
John ManleyNew York
Tyler Voigt, CFANew York
Gabriela Santos*New York
David LebovitzNew York
Jordan JacksonNew York
Jennie Li*New York
Hugh Gimber, CFALondon Ian Hui
Hong Kong
Max McKechnieLondon
|GTM – Latin America
3
|Page reference 3
Latin America economy4. Latin America: Economic growth and inflation5. Latin America: Composition of economic growth6. Latin America: Inequality and fiscal balance7. 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, monetary and fiscal 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 economic growth25. Services momentum26. Global inflation 27. Global monetary policy28. U.S.: Economic growth and the composition of GDP29. U.S.: Social distancing vulnerability30. U.S.: Long-term drivers of economic growth31. U.S.: Inflation and unemployment32. U.S.: The Fed and interest rates33. Europe: Economic growth34. UK: Economic indicators35. Japan: Abenomics and markets36. China: Economic and policy snapshot37. Emerging economies
Fixed income38. Latin America fixed income: Returns39. Latin America fixed income: Valuations40. Emerging market debt41. Default protection prices42. Attractiveness of Latin American local rates43. Global fixed income: Interest rate risk44. Global fixed income: Yields and correlation to equities45. Global fixed income: Return composition46. Global negative-yielding debt47. U.S. corporate debt48. U.S. high yield bonds
Equities49. Latin America equity returns50. Latin America valuation measures51. Latin America corporate profits 52. Latin America valuations and earnings53. Emerging market equity indices54. Emerging market equities55. Global equity markets56. International equity earnings and valuations57. U.S. and international equities at inflection points58. U.S.: Corporate profits and valuations59. Annual returns and intra-year declines
Other asset classes 60. Commodities61. Oil markets62. Global currencies 63. Global alternatives64. Alternatives and manager selection
Investing principles65. Asset class returns66. Life expectancy and pension shortfall67. Local investing and global opportunities68. Correlations and beta69. Time, diversification and the volatility of returns70. Market timing, diversification and the average investor71. Asset class performance around bear markets72. Diversification benefits and forced rebalancing
|GTM – Latin America
4
|
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
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 or Venezuela.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Latin America: Economic growth and inflation
InflationYear-over-year % change
Latin
Am
eric
aec
onom
y
4
Real GDPYear-over-year % change
Average: 2.5%
Feb. 2020: 3.4%
Real GDP 3Q19
YoY % chg: 0.8%QoQ % chg: 1.9%
|GTM – Latin America
5
|
36%
25%
24%
20%
14%
12%
11%
0% 10% 20% 30% 40%
Mexico
Venezuela
Chile
Peru
Argentina
Brazil
Colombia
Latin America: Composition of economic growth
Latin
Am
eric
aec
onom
y
Exports% of nominal GDP, USD terms, goods, 2019
Source: IMF World Economic Outlook, J.P. Morgan Asset Management; (Left) Argentina Economy Ministry, BCE, BCRP, BCU, CBC, DANE, IBGE, INEGI; (Right) IMF Direction of Trade Statistics.Latin America aggregate GDP growth includes Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Uruguay. Uruguay is excluded from 2000 – 2005 due to data availability.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
5
China
EM ex-China
U.S.
Eurozone
Other
Real GDP growthContribution to growth, year-over-year % change
Private consumption
Investment
Net exports
Government spending
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
|GTM – Latin America
6
|
-5.9%
-3.8%
-2.8%-2.5%
-1.6% -1.6%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
Brazil Argentina Chile Colombia Mexico Peru
Latin America: Inequality and fiscal balance
Gini index and GDP per capitaGini index: 0 = perfect equality and 100 = perfect inequality
Fiscal deficitNominal deficit, % of GDP, 2019
Latin
Am
eric
aec
onom
y
Source: J.P. Morgan Asset Management; (Left) World Bank; (Right) Central Bank of Brazil, Central Bank of Chile, Central Bank of Colombia, Central Bank of Mexico, Central Reserve Bank of Peru, DANE (National Administration of Statistics), FactSet, INDEC (National Institute of Statistics and Census of Argentina), INEGI (National Institute of Statistics and Geography of Mexico), Ministry of Economy of Argentina.GDP per capita measured in constant 2010 U.S. dollars. *Data are from 2007 or the closest year available. **Latest Gini coefficients are from 2018 or latest available. GDP per capita is from 2018.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
6
Latest**2007*
Argentina
Brazil
Chile
China
Colombia
India
Mexico
Peru
30
35
40
45
50
55
60
65
$0 $3,000 $6,000 $9,000 $12,000 $15,000 $18,000
Gin
i ind
ex
GDP per capita, U.S. dollars
|GTM – Latin America
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|
Source: J.P. Morgan Asset Management; (Top left and right) World Bank “Doing Business in 2020” 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 March 31, 2020.
Latin America structural drags
Protectionist trade measures*
Ease of doing business rankingOverall ranking, 1 = most ease of doing business, 2019
Number of measures implemented from 2009 - 2020
Selected competitiveness indicators: 2019
Cost to export goodsUSD per container, 2019
7
Latin
Am
eric
aec
onom
y
59 60 67 76
124 126
188
020406080
100120140160180200
Chile Mexico Colombia Peru Brazil Argentina Venezuela
Indicator LATAM OECD High Income
Ease of doing business (rank, 1-189) 116 30
Days to register a new business 29 9
Days to deal w ith construction permits 191 152
Days to resolve a dispute 774 590
Recovery rate from insolvent f irm (cents) 31 70
Number of hours spent preparing taxes 317 159
Total tax rate (% profit) 47 40
$2,359 $2,245$1,910
$1,360$980
$685 $610 $602 $599 $487
$0
$400
$800
$1,200
$1,600
$2,000
$2,400
$2,8002,878
1,001 860 799 777 404 209 102 96 78 35
0
500
1,000
1,500
2,000
2,500
3,000
3,500
|GTM – Latin America
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|
40
50
60
70
80
90
100
110
120
-$20
$10
$40
$70
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
-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 '18
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
Real consumption and investmentYear-over-year % change
4Q19: -0.4%
4Q19: 2.1%
InvestmentConsumption
Source: IBGE (Brazilian Statistics and Geography Institute), J.P. Morgan Asset Management; (Bottom right) Central Bank of Brazil, MDIC (Ministry of Development, Industry and External Commerce), J.P. Morgan Global Economic Research.*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.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Brazil: Economic snapshot
Real GDPYear-over-year % change
8
Latin
Am
eric
aec
onom
y
Trade balance and exchange rateUSD billions, accumulated past 12 months, real effective FX*
Feb. 2020:87.5
Feb. 2020: $44.7bn
Average: 2.4%
REER
Trade balance
Real GDP 4Q19
YoY % chg: 1.7%QoQ % chg: 2.0%
|GTM – Latin America
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|
0%
2%
4%
6%
8%
10%
12%
14%
16%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '212%
5%
8%
11%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
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 March 31, 2020.
Brazil: Inflation and monetary policy
Inflation targeting and inflationIPCA, 12-month accumulated % change
Inflation breakdownIPCA, year-over-year % change
Consensus*
2020 target: 4.0%
Lower limit: 2.5%
Upper limit: 5.5%
ServicesGoods
Supervised**
9
Latin
Am
eric
aec
onom
y
BCB Selic target rate and consensus expectations, end of periodTarget policy rate and expectations
Consensus*Feb. 2020: 4.0%
-2%0%2%4%6%8%
10%12%14%16%18%20%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
|GTM – Latin America
10
|
6%
7%
8%
9%
10%
11%
12%
13%
14%
'12 '13 '14 '15 '16 '17 '18 '19 '2060
70
80
90
100
110
120
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
-12%
3%
18%
33%
48%
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
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 March 31, 2020.
Brazil: Consumer and business dynamics
Consumer and industrial confidenceSeasonally adjusted
Credit growthYear-over-year % change, non-earmarked credit*
Feb. 2020: 16.7%Feb. 2020: 13.1%
HouseholdsCorporates
Latin
Am
eric
aec
onom
y
ConsumerIndustrial
Unemployment rateNon-seasonally adjusted, 3-month average
Feb. 2020: 11.6%
10
|GTM – Latin America
11
|
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
15%
20%
25%
30%
35%
40%
45%
50%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
45%
50%
55%
60%
65%
70%
75%
80%
85%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
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.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Brazil: Fiscal policy
Social security and payroll expenditures% of total expenses, 12-month moving average
Public sector primary balance% of GDP, 12-month sum
% of GDPGross debt
11
Latin
Am
eric
aec
onom
y
Feb. 2020: 76.5%Feb. 2020:
-0.8%
Average: 63.6%
Feb. 2020: 22.1%
Feb. 2020: 44.5%
Social securityPayroll
|GTM – Latin America
12
|
70
80
90
100
110
120
130
140
-$20
-$15
-$10
-$5
$0
$5
$10
$15
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
-20%
-15%
-10%
-5%
0%
5%
10%
15%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
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) compare 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 March 31, 2020.
Mexico: Economic snapshot
Latin
Am
eric
aec
onom
y
12
Real GDPYear-over-year % change
Average: 2.1%
USD billions, accumulated past 12 months, real effective FX*Trade balance and exchange rate
Real consumption and investmentYear-over-year % change
4Q19: -5.2%
4Q19: 0.9%
ConsumptionInvestment
Mar. 2020: 82.2
Feb. 2020: $9.6bn
REER
Trade balance
Real GDP 4Q19
YoY % chg: -0.4%QoQ % chg: -0.5%
|GTM – Latin America
13
|
1%
2%
3%
4%
5%
6%
7%
8%
8
10
12
14
16
18
20
22
24
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
2%
3%
4%
5%
6%
7%
8%
9%
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '201%
2%
3%
4%
5%
6%
7%
8%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
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 March 31, 2020.
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 core goods inflationPeso per USD spot rate, monthly average, year-over-year % chg.
Feb. 2020: 3.8%
Banxico target rateTarget policy rate and expectations
13
Feb. 2020: 3.7%
Lower limit: 2.0%
Upper limit: 4.0%
Mar. 2020: 23.5
FX
Core goods inflation
Consensus*
Mar. 2020: 6.5%
|GTM – Latin America
14
|
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
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 '18 '19 '20
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 March 31, 2020.
Mexico: Consumer and business dynamics
Consumer and industrial confidenceComposite consumer index, mfg. producer confidence, sa Households, year-over-year % change, net of bad debts
Private sector credit growth
Latin
Am
eric
aec
onom
y
14
Jan. 2020:4.9%
Consumer confidenceIndustrial confidence
Feb. 2020: 3.7%
Unemployment rateSeasonally adjusted
30
35
40
45
50
55
60
65
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2025
30
35
40
45
50
|GTM – Latin America
15
|
15%
17%
19%
21%
23%
25%
27%
29%
'93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '1935%
40%
45%
50%
55%
60%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
2019: 22.2%
Source: J.P. Morgan Asset Management; (Left) IMF; (Top right) Ministry of Finance and Public Credit; (Bottom right) Central Bank of Mexico, INEGI.*2019 is an IMF estimate.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Mexico: Fiscal dynamics
Latin
Am
eric
aec
onom
y
Government oil revenues% of total government revenues
Gross debt% of GDP
2019: 53.8%*
% of GDP, annualPublic sector revenues and expenditures
2019: 23.9%
15
RevenuesExpenditures
0%
10%
20%
30%
40%
50%
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18
|GTM – Latin America
16
|
-60%
-40%
-20%
0%
20%
40%
60%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
-60%
-40%
-20%
0%
20%
40%
60%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
-20%
-15%
-10%
-5%
0%
5%
10%
15%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
4Q19:-1.9%
Source: Economic Ministry, J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Argentina: Economic snapshot
Latin
Am
eric
aec
onom
y
Real GDPYear-over-year % change
Average: 1.4%
4Q19: -9.0%
International tradeYear-over-year % change, 4-quarter moving average
ExportsImports
4Q19: -18.2%
Real consumption and investmentYear-over-year % change
InvestmentConsumption
16
4Q19: 9.5%
Real GDP 4Q19
YoY % chg: -0.5%QoQ % chg: -3.9%
|GTM – Latin America
17
|
2.0%2.4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20
$40
$45
$50
$55
$60
$65
$70
$75
$80
Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20
20%
30%
40%
50%
60%
70%
80%
90%
Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20
Argentina: Inflation, monetary and fiscal policy
Latin
Am
eric
aec
onom
y
17
Source: Central Bank of Argentina, INDEC (National Institute of Statistics and Census of Argentina), J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Inflation% change month-over-month, national IPC
Mar. 2020:38.0%
Headline
Core
Feb. 20 (y/y change): 50%
Expectations next 12m: 40%
Monetary base% change month-over-month
International reservesBillions, U.S. dollars
Monetary policy rate% per annum
Capital controls
9.9%
-10%
-5%
0%
5%
10%
15%
Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20
|GTM – Latin America
18
|
-20%
-5%
10%
25%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
-10%-5%0%5%10%15%20%25%30%35%
-1%
1%
3%
5%
7%
9%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
Source: DANE (National Administration of Statistics), J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Colombia: Economic snapshot
Real GDPYear-over-year % change
Latin
Am
eric
aec
onom
y
Average: 3.9%
4Q19: 1.3%
4Q19: 4.7%
International tradeYear-over-year % change, 4-quarter moving average
4Q19: 3.2%
4Q19: 9.2%
ExportsImports
Real consumption and investmentYear-over-year % change
InvestmentConsumption
18
Real GDP 4Q19
YoY % chg: 3.4%QoQ % chg: 1.9%
|GTM – Latin America
19
|
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500$0
$20
$40
$60
$80
$100
$120
$140
$160
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
2%3%4%5%6%7%8%9%
10%11%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '200%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
Consensus*
Source: J.P. Morgan Asset Management; (Left and bottom right) Central Bank of Colombia, DANE (National Administration of Statistics); (Top right) Commodity Research Bureau, FactSet, Reuters.*Survey conducted by the Central Bank of Colombia.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Colombia: Inflation and monetary policy
Oil prices and the Colombian pesoCOP per USD (inverted); Brent US$ per barrel
Colombian peso
Oil ($/bbl)
Latin
Am
eric
aec
onom
y
Inflation targeting and inflationHeadline inflation, 12-month accumulated % change
Feb. 2020: 3.7%
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
Mar. 2020: 3.75%
|GTM – Latin America
20
|
-20%
-10%
0%
10%
20%
30%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
-20%
-10%
0%
10%
20%
30%
-10%
-5%
0%
5%
10%
15%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
-4%
-2%
0%
2%
4%
6%
8%
10%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
Source: Central Bank of Chile, J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Chile: Economic snapshot
Latin
Am
eric
aec
onom
y
Real GDP
Average: 3.8%
Real consumption and investmentYear-over-year % change
Consumption Investment
International tradeYear-over-year % change, 4-quarter moving average
4Q19: -2.3%
4Q19: -2.2%
ExportsImports
4Q19: -3.8%
4Q19: 2.7%
20
Real GDP 4Q19
YoY % chg: -2.4%QoQ % chg: -15.5%
Year-over-year % change
|GTM – Latin America
21
|
400450500550600650700750800850900$2,500
$4,000
$5,500
$7,000
$8,500
$10,000
'11 '12 '13 '14 '15 '16 '17 '18 '19 '20
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20-4%
-2%
0%
2%
4%
6%
8%
10%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
Consensus*
Source: J.P. Morgan Asset Management; (Left) INE (National Statistics Institute of Chile); (Top right) INE, Reuters; (Bottom right) Central Bank of Chile.*Survey conducted by the Central Bank of Chile.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Chile: Inflation and monetary policy
Latin
Am
eric
aec
onom
y
Target:3.0%
Lower limit: 2.0%
Feb. 2020: 3.9%
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
Mar. 2020: 0.5%
|GTM – Latin America
22
|
-20%
-10%
0%
10%
20%
30%
40%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
-20%
-10%
0%
10%
20%
30%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18-4%
-2%
0%
2%
4%
6%
8%
10%
12%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18
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 March 31, 2020.
Peru: Economic snapshot
Real GDPAvg. of 3 months, year-over-year % change
Latin
Am
eric
aec
onom
y
Average: 4.8%
4Q19: -1.5%
4Q19: 3.0%
International tradeYear-over-year % change, 4-quarter moving average
ExportsImports
Real consumption and investment
4Q19:0.8%
Year-over-year % change
InvestmentConsumption
22
4Q19:1.2%
Real GDP 4Q19
YoY % chg: 1.8%QoQ % chg: 2.2%
|GTM – Latin America
23
|
0%
5%
10%
15%
20%
25%
30%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
0%
1%
2%
3%
4%
5%
6%
7%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
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 March 31, 2020.
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
Feb. 2020: 1.9%
Mar. 2020: 1.3%
Reserve requirementsReserve requirements as a % of total deposits
23
Consensus*
Feb. 2020: 5.6%
|GTM – Latin America
24
|
3.8%3.6%
4.1%4.0%
1.6%
-1.9%
4.4%
3.2%
2.6% 2.7%
3.0%3.2%
2.8%
3.5%3.3%
2.5%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19*
Source: J.P. Morgan Asset Management; (Left) Markit; (Right) J.P. Morgan Global Economic Research.PMI is the Purchasing Managers’ Index. Global GDP growth is a GDP-weighted measure of real GDP at U.S. dollar market exchange rates. *2019 is an average of the four quarters and 4Q is a forecast. Guide to the Markets – Latin America. Data are as of March 31, 2020.
Global economic growth 24
Glob
al e
cono
my
Global PMI for manufacturing and servicesMonthly
Global real GDP growth% change, year-over-year
Services
Manufacturing
Average:2.9%
Feb. 2020: 47.1
Mar. 2020: 47.6
30
35
40
45
50
55
60
65
'04 '06 '08 '10 '12 '14 '16 '18 '20
|GTM – Latin America |
25
Services 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. Heatmap is based on quarterly averages, with the exception of the two most recent figures, which are single month readings. Data for the U.S. are back-tested and filled in from December 2007 to September 2008 due to lack of existing PMI figures. DM and EM represent developed markets and emerging markets, respectively. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Latin America. Data are as of March 31, 2020.
Global Purchasing Managers’ Index for services, quarterly
25
Glob
al e
cono
my
Feb Mar
Global 47.1 37.0
DM 49.7 34.8
EM 39.7 42.1
U.S. 49.4 39.8
Japan 46.8 33.8
UK 53.2 34.5
Euro Area 52.6 26.4
Germany 52.5 31.7
France 52.5 27.4
Italy 52.1 17.4
Spain 52.1 23.0
China 26.5 43.0
India 57.5 49.3
Brazil 50.4 34.5
Mexico 48.6 39.4
Russia 52.0 37.1
2019
Emer
ging
Dev
elop
ed
20202008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
|GTM – Latin America |
26
Global inflation
Source: Bank of Mexico, DGBAS, Eurostat, FactSet, Federal Reserve, Goskomstat of Russia, IBGE, India Ministry of Statistics & ProgrammeImplementation, Japan Ministry of Internal Affairs & Communications, Korean National Statistical Office, Melbourne Institute, National Bureau of Statistics China, Statistics Canada, Statistics Indonesia, UK Office for National Statistics (ONS), J.P. Morgan Asset Management.Heatmap is based on quarterly averages, with the exception of the two most recent figures, which are single month readings. Colors determined by percentiles of inflation values over the last 10 years. Deep blue = lowest value, light blue = median, deep red = highest value. DM and EM represent developed markets and emerging markets, respectively.Guide to the Markets – Latin America. Data are as of March 31, 2020.
Year-over-year headline inflation by country and region, quarterly
26
Glob
al e
cono
my
Jan Feb
Global 2.9% 2.5%
DM 1.8% 1.5%
EM 4.7% 4.0%
U.S. 2.5% 2.3%
Canada 2.4% 2.2%
Japan 0.7% 0.5%
UK 1.8% 1.7%
Euro Area 1.4% 1.2%
Germany 1.6% 1.7%
France 1.7% 1.6%
Italy 0.4% 0.2%
Spain 1.1% 0.9%
Greece 1.1% 0.4%
China 5.4% 5.2%
Indonesia 2.7% 3.0%
Korea 1.5% 1.1%
Taiwan 1.1% 0.4%
India 7.6% 6.6%
Brazil 4.2% 4.0%
Mexico 3.2% 3.7%
Russia 2.4% 2.3%
20192020
Dev
elop
edEm
ergi
ng
2008 2009 2010 2011 2012 2013 2014 2015 20172016 2018
|GTM – Latin America
27
-$1,000
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
'16 '17 '18 '19 '20
Source: J.P. Morgan Asset Management; (Left) Bank of England, Bank of Japan, European Central Bank, FactSet, Federal Reserve System, J.P. Morgan Global Economic Research; (Right) Bloomberg. *Includes the Bank of Japan (BoJ), Bank of England (BoE), European Central Bank (ECB) and Federal Reserve. **Bond purchase forecast assumes $200bn GBP in net purchases from BoE through August 2021; continued BoJQE of $50trn JPY ann. for 2020; $1.11trn EUR in net purchases from the ECB through 2020; and the Federal Reserve to purchase $2.5trn of Treasuries, $1.2trn of agency MBS and $50bn of agency CMBS through 2020. Fed assumptions are based on purchase activity in March 2020 and previous QE announcements. ***Central banks include: Australia, Brazil, Canada, Chile, China, Colombia, Denmark, euro area, Hong Kong SAR, Indonesia, India, Japan, Korea, Malaysia, Mexico, Norway, Peru, Philippines, Poland, Russia, Saudi Arabia, South Africa, Sweden, Switzerland, Thailand, Turkey, United Kingdom and the United States. Guide to the Markets – Latin America. Data are as of March 31, 2020.
Global monetary policy
Developed market central bank bond purchases* USD billions, 12-month rolling flow
Number of rate changes by EM and DM central banks***
27
Forecast**Fed
BoJ
ECB
BoE
Total Cuts
Hikes
0
20
40
60
80
100
120
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Glob
al e
cono
my
|GTM – Latin America
28
|
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
'70 '75 '80 '85 '90 '95 '00 '05 '10 '15
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 third quarter of 2009.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
U.S.: Economic growth and the composition of GDP
Glob
al e
cono
my
Real GDPYear-over-year % change
Components of GDP4Q19 nominal GDP, USD trillions
28
Average: 2.8%
Expansion average:
2.3%
Real GDP 4Q19
YoY % chg: 2.3%QoQ % chg: 2.1%
68.1% Consumption
17.6% Gov't spending
13.3% Investment ex-housing
3.8% Housing
-2.7% Net exports-$1
$1
$3
$5
$7
$9
$11
$13
$15
$17
$19
$21
$23
|GTM – Latin America
29
Source: Bureau of Economic Analysis, Bureau of Labor Statistics, FactSet, S&P 500, J.P. Morgan Asset Management. Consumer spending (2019 annual): membership clubs, sports, amusement parks, campgrounds, movies, theaters, museums, libraries, casino gambling, purchased meals and beverages, packaged tours, air and water transportation, hotels and motels and select retail goods and services. Employment (January 2020): air and water transportation, transit and ground passenger transportation, support activities for air and water transportation, arts, entertainment, recreation, accommodation, food services and drinking places and retail ex-food and beverage stores. Earnings (2019 LTM): hotels, restaurants and leisure; airlines; select entertainment and travel booking companies; multiline and specialty retail; and textiles apparel and luxury goods.Guide to the Markets – Latin America. Data are as of March 31, 2020.
U.S.: Social distancing vulnerability 29
Glob
al e
cono
my
Earnings contribution by industryContribution to 2019 S&P 500 LTM earnings
Employment by industryJan. 2020, thousands
Consumer spending by industry2019, billions
Retail ex-food & beverage
12,575
Restaurants & bars12,235
Entertainment 2,493 Transportation1,420
Hotels & tourism 2,095 Total: 30,817 (20% of payroll jobs)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Employment
Retail ex-food & beverage
$2,711
Restaurants & bars $840
Entertainment $336 Transportation
$166
Hotels & tourism
$118
Total: $4,171 (19% of GDP)
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
Consumer spending
Retail ex-food & beverage
$5.36
Restaurants & bars$1.38
Entertainment$1.05
Airlines & cruises$1.83
Hotels & tourism$1.08
Total: $10.71 (7% of operating earnings)
$0
$2
$4
$6
$8
$10
$12
2019 Earnings contribution
|GTM – Latin America
30
0%
1%
2%
3%
4%
5%
6%
'55 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15
Source: J.P. Morgan Asset Management; (Top left) Census Bureau, DOD, DOJ; (Top left and right) BLS; (Right and bottom left) BEA.GDP drivers are calculated as the average annualized growth in the 10 years ending in 4Q18. Future working-age population is calculated as the total estimated number of Americans from the Census Bureau, per the September 2018 report, controlled for military enrollment, growth in institutionalized population and demographic trends. Growth in working-age population does not include illegal immigration; DOD Troop Readiness reports used to estimate percent of population enlisted. Numbers may not sum due to rounding. Guide to the Markets – Latin America. Data are as of March 31, 2020.
U.S.: Long-term drivers of economic growth
Drivers of GDP growthAverage year-over-year percent change
Growth in private non-residential capital stockNon-residential fixed assets, year-over-year % change
Growth in working-age populationPercent increase in civilian non-institutional population ages 16-64
Growth in workers + Growth in real output per worker
Growth in real GDP
Census forecastImmigrant Native born
Glob
al e
cono
my
30
2018: 2.2%
0.8% 0.6% 0.7%
0.2%0.05%
0.3% 0.5%0.6%
0.2%0.14%
1.1% 1.1%1.2%
0.4%
0.2%
0.0%
0.3%
0.6%
0.9%
1.2%
1.5%
1.8%
'80-'89 '90-'99 '00-'09 '10-'19 '20-'29
3.1% 2.5% 0.9% 1.4% 2.0% 1.5% 0.9%
1.2%
1.9%
2.4%
1.7%
1.3%
0.3%
1.4%
4.3%4.4%
3.3%3.1%
3.4%
1.8%
2.3%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
'50-'59 '60-'69 '70-'79 '80-'89 '90-'99 '00-'09 '10-'19
|GTM – Latin America
31
|
-3%
0%
3%
6%
9%
12%
15%
'70 '73 '76 '79 '82 '85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15 '180%
2%
4%
6%
8%
10%
12%
'70 '73 '76 '79 '82 '85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15 '18
Civilian unemployment rate and growth in wages Seasonally adjusted, year-over-year growth in wages and salaries
Source: BEA, BLS, J.P. Morgan Asset Management.CPI used is CPI-U and values shown are % change vs. one year ago. 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 March 31, 2020.
U.S.: Inflation and unemployment
Glob
al e
cono
my
31
CPI and core CPI % change vs. prior year, seasonally adjusted
50-yr. avg. Jan. 2020 Feb. 2020Headline CPI 3.9% 2.5% 2.3%Core CPI 3.9% 2.3% 2.4%Headline PCE 3.4% 1.8% 1.8%Core PCE 3.3% 1.7% 1.8%
Wage growth
UnemploymentOct. 2009:
10.0%
Feb: 20203.3%
Average: 4.0%
Average: 6.2%
Feb: 20203.5%
|GTM – Latin America |
32
0.08% 0.13% 0.13%0.13%
0%
1%
2%
3%
4%
5%
6%
7%
'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21
U.S.: The Fed and interest rates
Source: Bloomberg, FactSet, Federal Reserve, J.P. Morgan Asset Management. Market expectations are the federal funds rates priced into the fed futures market as of the following date of the March 15, 2020 emergency cut and are through December 2022. Guide to the Markets – Latin America. Data are as of March 31, 2020.
Federal funds rate expectationsFOMC and market expectations for the fed funds rate
Glob
al e
cono
my
32
Federal funds rateMarket expectations on 3/16/20
Fed policy actions Restarted unlimited asset purchase programs
Reduced reserve requirements for the banking sector
Expanded the asset purchase program to include CMBS
Restarted term asset-backed securities loan facility (TALF)
Launched a Primary (PMCCF) and Secondary Corporate Credit Facility (SMCCF)
Allowed municipal debt to be eligible as collateral in Money Market Fund Liquidity Facility (MMLF) and Commercial Paper Funding Facility (CPFF)
|GTM – Latin America
33
|
Source: ECB, FactSet, J.P. Morgan Asset Management; (Left and top right) Eurostat.Eurozone shown is the aggregate of the 19 countries that currently use the euro.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Europe: Economic growth
Eurozone GDP growthContribution to eurozone real GDP growth, % change year-over-year
Glob
al e
cono
my
33
Domestic demandReal GDP
Net exports
Eurozone unemployment and wage growthSeasonally adjusted, year-over-year compensation growth
Stronger loan demand
Weaker loan demand
Eurozone credit demandNet % of banks reporting positive loan demand
Wage growthUnemployment
-8%
-6%
-4%
-2%
0%
2%
4%
'07 '09 '11 '13 '15 '17 '19
Feb. 2020: 7.3%
4Q19: 1.7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19
-200%
-150%
-100%
-50%
0%
50%
100%
150%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
|GTM – Latin America
34
|
-4%
-2%
0%
2%
4%
6%
8%
'02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Source: FactSet, ONS, J.P. Morgan Asset Management; (Top left) GFK; (Bottom left) Bloomberg Finance L.P.; (Right) BEA, CSO (Central Statistics Office of Ireland), IMF, INE (National Statistical Institute of Portugal), INE (National Statistical Institute of Spain), INSEE (Statistics Bureau of France), ISTAT (Italian National Institute of Statistics), National Bank of Belgium, Statistics Austria, Statistics Finland, Statistics Germany, Statistics Netherlands. *Nominal wages include bonuses.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
UK: Economic indicators
Unemployment rate and consumer confidenceOverall index level
Trade with the UK% of GDP, 2018
Glob
al e
cono
my
34
Consumer confidence
Unemployment rate
Inflation and wage growth% change year-over-year
EU countries’ exports to the UK
Regions’ exports to the UK
UK exports to the EU
Headline CPI
Nominal wage growth*
0%
2%
4%
6%
8%
10%
12%
14%
16%
|GTM – Latin America
35
|
¥3.5
¥5.0
¥6.5
¥8.0
-¥400
¥0
¥400
¥800
¥1,200
¥1,600
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Source: J.P. Morgan Asset Management; (Top left) FactSet, Japan Ministry of Health, Labor and Welfare, Japan Ministry of Internal Affairs & Communications; (Bottom left and right) Nikkei; (Bottom left) Customs Japan.*Core CPI is defined as CPI excluding food and energy.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Japan: Abenomics and markets
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
Earnings and exportsNikkei 225 trailing EPS, nominal exports, trillion yen
Glob
al e
cono
my
35
Earnings
Exports
|GTM – Latin America
36
|
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
0.3%
-4.0% -1.3% -0.8%
0.2%
-0.1%
0.3%
-0.1% -0.8%0.3%
-0.5%
0.7%
4.3% 5.3% 4.8%5.9%
4.3%3.6% 3.6% 4.1% 4.5% 4.0% 4.4% 3.5%
5.1%
8.1%
7.1% 4.4%
3.4%4.3% 3.4% 2.9%
3.1%2.6% 2.8%
1.9%
9.7%
9.4%
10.6%
9.6%
7.9% 7.8%7.3% 6.9%
6.8%6.9% 6.7%
6.1%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: FactSet, J.P. Morgan Asset Management; (Left) CEIC; (Top right) People’s Bank of China; (Bottom right) China Agriculture Development Bank, China Development Bank, Ministry of Finance, People’s Bank of China, Wind. *The fiscal deficit is a J.P. Morgan Asset Management estimate of the augmented fiscal deficit. It measures the aggregate resources controlled by the government and used to support economic growth. It consists of the official budgetary deficit of the central and local governments, and additional funding raised and spent by local governments through Local Government Financing Vehicles (LGFVs) and various government-guided funds, whose activities are considered quasi-fiscal.Guide to the Markets – Latin America. Data are as of March 31, 2020.
China: Economic and policy snapshot
China real GDP contributionYear-over-year % change
InvestmentConsumptionNet exports
Monetary stimulus: Reserve requirement ratio
36
Glob
al e
cono
my
Small and medium banksLarge banks
Fiscal stimulus: Fiscal deficit*% GDP
F
-14%
10%
13%
16%
19%
22%
25%
'09 '11 '13 '15 '17 '19
|GTM – Latin America
37
|
Source: J.P. Morgan Asset Management; (Left) Consensus Economics; (Right) Bank of Korea Economic Statistics System, Central Statistical Office of Poland, DANE, Federal States Statistics Office of Russia, IBGE, Institute of International Finance (IIF), INDEC, INEGI, MOSPI, National Economic and Social Development Board of Thailand, South Africa Reserve Bank, Statistics Indonesia, TurkStat, J.P. Morgan Global Economic Research. “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.EM growth and portfolio flows aggregates exclude China. Portfolio flows include non-resident flows into equities and fixed income. Flows based on IIF October 2019 quarterly flows report. 2019 flow data are IIF estimates.Guide to the Markets – Latin America. Data are as of March 31, 2020.
Emerging economies
EM-DM growth differential and capital flowsYear-over-year GDP growth, four-quarter moving average for flows
EM vs. DM growthMonthly, consensus expectations for GDP growth in 12 months
Glob
al e
cono
my
37
DM growthEM growthGrowth differential
EM-DM growth
EM portfolio flows % GDP-0.3%
-0.2%
-0.1%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
0.9%
1.0%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19-1%
0%
1%
2%
3%
4%
5%
6%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19
|GTM – Latin America
38
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 March 31, 2020.
Fixe
d in
com
e
38
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Acum. Cum. Ann.
Arge ntina Ve ne zue la Ve ne zue la Arge ntina Arge ntina Arge ntina Ve ne zue la Arge ntina Bra zil Me xic o Pe ru Pe ru Pe ru
3 5 .4 % 18 .0 % 4 7 .0 % 19 .0 % 19 .1% 2 6 .6 % 5 3 .2 % 15 .7 % 0 .8 % 2 0 .8 % - 3 .4 % 113 .6 % 7 .9 %
V e ne zue la Pe ru USD EMD
US D EMD
Pe ru Ve ne zue la Bra zil Bra zil Pe ru Colombia Bra zil La tin Ame ric a
La tin Ame ric a
16 .1% 17 .1% 17 .4 % - 5 .3 % 13 .3 % 16 .9 % 2 0 .6 % 13 .2 % - 1.6 % 19 .4 % - 4 .1% 9 6 .3 % 7 .0 %
La tin Ame ric a
Colombia Pe ru Chile Me xic o USD EMD
Arge ntina Me xic o Chile Pe ru Chile Colombia Colombia
13 .3 % 14 .6 % 17 .0 % - 6 .6 % 10 .9 % 1.2 % 15 .4 % 11.9 % - 2 .7 % 18 .7 % - 5 .8 % 9 6 .2 % 7 .0 %
USD EMD
Me xic o La tin Ame ric a
Me xic o Colombia La tin Ame ric a
La tin Ame ric a
P e ru Colombia Bra zil Colombia USD EMD
US D EMD
12 .2 % 14 .3 % 16 .0 % - 7 .1% 10 .5 % - 2 .0 % 13 .5 % 11.5 % - 2 .8 % 16 .4 % - 8 .3 % 9 4 .9 % 6 .9 %
Pe ru Bra zil Bra zil La tin Ame ric a
Chile Chile Colombia La tin Ame ric a
USD EMD
USD EMD
USD EMD
Bra zil Bra zil
11.6 % 13 .8 % 12 .5 % - 7 .7 % 10 .5 % - 2 .8 % 13 .1% 11.4 % - 4 .3 % 15 .0 % - 13 .4 % 8 7 .7 % 6 .5 %
Colombia La tin Ame ric a
Colombia Colombia Bra zil Pe ru Chile Colombia La tin Ame ric a
Chile La tin Ame ric a
Me xic o Me xic o
11.4 % 12 .3 % 12 .3 % - 8 .8 % 8 .5 % - 3 .5 % 10 .5 % 11.1% - 5 .8 % 14 .7 % - 15 .3 % 8 6 .0 % 6 .4 %
Me xic o Chile Me xic o Pe ru La tin Ame ric a
Me xic o P e ru USD EMD
Me xic o La tin Ame ric a
Me xic o Arge ntina Arge ntina
10 .5 % 10 .7 % 11.7 % - 11.1% 8 .1% - 5 .5 % 10 .4 % 10 .3 % - 6 .3 % 14 .1% - 18 .3 % 8 2 .7 % 6 .2 %
Bra zil USD EMD
Chile Bra zil USD EMD
Colombia USD EMD
Chile Ve ne zue la Arge ntina V e ne zue la Chile Chile
9 .7 % 7 .3 % 8 .7 % - 11.2 % 7 .4 % - 7 .0 % 10 .2 % 9 .6 % - 2 0 .3 % - 2 3 .6 % - 2 1.3 % 7 2 .8 % 5 .6 %
Chile Arge ntina Arge ntina Ve ne zue la Ve ne zue la Bra zil Me xic o Ve ne zue la Arge ntina Ve ne zue la Arge ntina Ve ne zue la Ve ne zue la
5 .9 % - 12 .4 % 8 .2 % - 12 .3 % - 2 8 .7 % - 13 .4 % 6 .9 % - 3 4 .4 % - 2 2 .2 % - 5 5 .1% - 3 9 .4 % - 4 7 .1% - 6 .2 %
2010-2019
|GTM – Latin America |
39
820
240 241195
153 169
653
389 377
302265
0
100
200
300
400
500
600
700
800
900
1,000
Argentina Mexico Brazil Colombia Chile Peru
Latin America fixed income: Valuations
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.
All spreads represent EMBI Global Diversified country subindices, which are USD-denominated sovereign bond indices.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
EMD spreads by countryUSD-denominated sovereign debt, spread to worst
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10-yr. averageLatest
10-yr. range
39
4,000 3,803
|GTM – Latin America
40
|
100
200
300
400
500
600
700
800
900
'13 '14 '15 '16 '17 '18 '19100
200
300
400
500
600
700
'13 '14 '15 '16 '17 '18 '19
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 March 31, 2020.
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 341 627EM Asia 205 420EM Europe 287 481EM LATAM 389 641
40
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Average LatestEM 316 599EM Asia 236 433EM Europe 444 825EM LATAM 381 779
|GTM – Latin America |
41
0
100
200
300
400
500
600
700
800
900
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Default protection prices
Source: Bloomberg Finance L.P., J.P. Morgan Asset Management.
*Argentina is only shown from May 2016 onward due to its default in 2014.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Credit default swap spreads Yield, basis points, 5-yr. senior corporate credit, USD
41
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LatestArgentina* 28,930Brazil 275Mexico 240Colombia 230Russia 197Chile 130Peru 120
30,000
|GTM – Latin America
42
|
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19
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. Global spreads are calculated from the mid-yield to maturity for the generic 5-year government bond, as provided by Bloomberg, except for Brazil and South Africa, which are the spot yield-to-maturity provided by FactSet.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Attractiveness of Latin American local rates
Global – U.S. Treasuries 5-year spreadBasis points, local currency debt, as of Mar. 2020
Regional EMD yieldsLocal currency sovereign debt
Average LatestEM 6.7% 5.8%EM Asia 3.8% 3.1%EM Europe 5.5% 3.9%EM LATAM 7.5% 6.5%
42
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Current10-year average (LATAM)
10-year average (Other EM)
815
670
635
629
627
590
521
260
248
178
178
75
0 100 200 300 400 500 600 700 800 900 1,000
South Africa
Indonesia
Brazil
Mexico
Russia
India
Colombia
Malaysia
Chile
Peru
China
Korea
|GTM – Latin America |
43
-1.7%-4.4%
-8.1%
-19.1%
6.6%4.4%
1.7%
6.4%3.3%
-3.9%
5.3%
2.2%5.5%
10.5%
28.5%
24.0%
19.5%16.8%
14.8%12.1%
7.5%5.3%
-30%
-20%
-10%
0%
10%
20%
30%
2-yearTreasury
5-yearTreasury
10-yearTreasury
30-yearTreasury
USD LatinAmerica
sovereigns
USD LatinAmerica
aggregate
USD EMDsovereigns
Global highyield
USD EMDcorporates
U.S.aggregate
Floating rate
Source: Barclays, Bloomberg Finance L.P., FactSet, J.P. Morgan Asset Management.Returns shown are total returns. 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 March 31, 2020.
Global fixed income: Interest rate risk
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Impact of a 1% rise or fall in interest ratesTotal return, assumes a parallel shift in the yield curve and spreads are maintained
1% fall in interest rates1% rise in interest rates
43
|GTM – Latin America |
44
2y UST
5y UST
10y UST
30y UST
TIPS
Cash
Floating rate
U.S. HY
MBS
ABS
U.S. Aggregate
Munis
U.S. corps
Convertibles
Japan
Germany UK Euro Corp.
Euro HY
EMD (LCL)
EMD ($)
EM Corp.
1%
2%
3%
4%
5%
6%
7%
8%
-0.5 -0.3 0.0 0.3 0.5 0.8 1.0
Global fixed income: Yields and correlation to equities
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Source: Bloomberg, FactSet, ICE, J.P. Morgan Asset Management. Sectors are Bloomberg indices except for EMD and ABS - U.S. Aggregate; MBS: U.S. Aggregate Securitized - MBS; U.S. corps: U.S. Corporates; Munis: Muni Bond; Cash: 1-3m Treasury; U.S. HY: Corporate High Yield; TIPS: Treasury Inflation-Protected Securities (TIPS); Floating Rate: U.S. Floating Rate; Convertibles: U.S. Convertibles Composite; ABS: J.P. Morgan ABS; EMD ($): J.P. Morgan EMBIG Diversified; EMD (LCL): J.P. Morgan GBI EM Global Diversified; EM Corp: J.P. Morgan CEMBI Broad Diversified; Euro Corp.: Euro Aggregate Corporate; Euro HY: Pan-European High Yield. Convertibles yield is based on the U.S. portion of the Bloomberg Barclays Global Convertibles. Country yields are represented by the global aggregate for each country. Yield and return information based on bellwethers for Treasury securities. Correlations are based on 15-years of monthly returns for all sectors. International fixed income sector correlations are in hedged U.S. dollar returns except EMD local index. Yields for all indices are hedged using three-month LIBOR rates between the U.S. and international LIBOR and are a 12-month average. Guide to the Markets – Latin America. Data are as of March 31, 2020.
Correlation of fixed income sectors vs. S&P 500 and yields
Correlation to S&P 500
Hed
ge A
djus
ted
Yiel
d
U.S. government
U.S. non-government
International
Stronger correlation to equities
Higher yieldingsectors
44
|GTM – Latin America |
45
Global fixed income: Return composition
Source: J.P. Morgan Economic Research, J.P. Morgan Asset Management.Based on J.P. Morgan CEMBI Broad Index (USD EMD corporates), J.P. Morgan EMBIG Broad Diversified Index (USD EMD), J.P. Morgan Domestic High Yield Index (U.S. high yield), J.P. Morgan GBI-EM Global Diversified Index (Local EMD), J.P. Morgan GBI-DM Diversified Index (Local DM sovereigns), J.P. Morgan CEMBI Broad Diversified Latin America Index (Latin America corporates), J.P. Morgan EMBIG Diversified Latin America Index (USD Latin America sovereigns), J.P. Morgan GBI-EM Global Diversified Latin Region Index (Local Latin America sovereigns), Bloomberg Barclays Global High Yield (Global high yield) and Bloomberg Barclays Global Credit – Corporate – Investment Grade (Global IG). Past performance is not indicative of future returns. Guide to the Markets – Latin America. Data are as of March 31, 2020.
Debt return compositionYear-to-date, total return, USD
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Income returnPrice returnCurrency return
Total return
1.6%
-6.7%
-8.0%
-13.4%
-15.0% -15.2% -15.3% -15.5%
-18.5%
-20%
-15%
-10%
-5%
0%
5%
Local DMsovereigns
Global IG USD EMDcorporates
USD EMDsovereigns
Global highyield
Local EMDsovereigns
USD LATAMsovereigns
USD LATAMcorporates
Local LATAMsovereigns
|GTM – Latin America
46
Breakdown of global government bonds by yield
0%
20%
40%
60%
80%
100%
-0.72 -0.34 -0.13 -0.01 0.17 0.26 0.35 0.49 0.74 1.300%
5%
10%
15%
20%
25%
30%
35%
'14 '15 '16 '17 '18 '19 '20
Source: J.P. Morgan Asset Management; (Left) Bloomberg, BofA/Merrill Lynch; (Top right) Bank for International Settlements International Banking Statistics, ECB, Eurostat, IMF Coordinated Portfolio Investment Survey (CPIS), IMF Currency Composition of Official Foreign Exchange Reserves (COFER), IMF International Financial Statistics (IFS), IMF-World Bank Quarterly External Debt Statistics; (Bottom right) Bloomberg, BofA/Merrill Lynch. Countries included in Europe are: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Slovenia, Spain, Sweden and Switzerland.Guide to the Markets – Latin America. Data are as of March 31, 2020.
Global negative-yielding debt
Negative-yielding debtShare of ICE BofAML Global Broad Market Index
Central and domestic bank ownership by region % of total government debt outstanding, 2Q19
46
Yield (%)
U.S. 10-year:0.70%
Below 0%
Below 1%
Above 1%
22.1% 19.5%10.5%
39.0%
17.3%
10.4%
0%
10%
20%
30%
40%
50%
60%
70%
Japan Eurozone United States
Domestic central bank
Domestic bank
Market value of negative-yielding debt (USD trillions)3/31/2020
Government Debt – Japan 4.92Government Debt – Europe 4.42Corporate Debt – Total 1.01
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|GTM – Latin America
47
|
4.04.55.05.56.06.57.07.58.08.5
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Duration of investment-grade corporate credit universeYears
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
'75 '79 '83 '87 '91 '95 '99 '03 '07 '11 '15 '19
Baa corporate debt*Percentage of Baa-rated investment-grade corporate debt outstanding
Source: FactSet, J.P. Morgan Asset Management; (Left) Bank for International Settlements (BIS); (Top and bottom right) Barclays, Bloomberg. Government, household and non-financial corporate debt refers to gross debt. General government debt is comprised of core debt instruments that include currency and deposits, loans and debt securities. All debt values are shown at market value. *Baa debt outstanding and duration of investment grade is based on the Bloomberg Barclays U.S. Aggregate Investment Grade Corporate Credit Index. Baa debt is the lowest credit rating issued by Moody’s for investment-grade debt. Guide to the Markets – Latin America. Data are as of March 31, 2020.
U.S. corporate debt
U.S. debt to GDP ratiosPercentage of nominal GDP
47
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Recession
% of 3Q19 GDPGovernment 103.5%Household 75.2%Non-financial corporate 75.3%
Recession
Average: 6.2 years
Recession
Greater sensitivityto interest rate
movements
Mar. 2020:8.0 years
Mar. 2020:46.7%
|GTM – Latin America |
48
0%
4%
8%
12%
16%
20%
'90 '94 '98 '02 '06 '10 '14 '18
U.S. high yield bonds
Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.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. Spread to worst indicated are the difference between the yield-to-worst of a bond and yield-to-worst of a U.S. Treasury security with a similar duration. High yield is represented by the J.P. Morgan Domestic High Yield Index.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
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Default rate and spread to worstPercent
48
30-yr. avg. Mar. 31, 2020Default rate 3.60% 2.30%Spread to worst 5.74% 9.49%
Recession
|GTM – Latin America
49
Latin America equity returns
Source: FactSet, MSCI, 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 March 31, 2020.
49
Equi
ties
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Acum. Ann. Vol.
Arge ntina Colombia Colombia Arge ntina Arge ntina Arge ntina Bra zil Arge ntina Pe ru Colombia EM Asia EM Asia Arge ntina
7 7 .4 % - 5 .0 % 3 5 .9 % 6 6 .2 % 19 .2 % - 0 .4 % 6 6 .7 % 7 3 .6 % 1.6 % 3 1.2 % - 18 .1% 6 .1% 4 1.9 %
Pe ru Me xic o Me xic o EM Asia Pe ru EM Asia Pe ru Chile Bra zil Bra zil EM Equity Pe ru Pe ru
5 3 .3 % - 12 .1% 2 9 .1% 2 .3 % 10 .5 % - 9 .5 % 5 5 .6 % 4 3 .6 % - 0 .1% 2 6 .7 % - 2 3 .6 % 5 .8 % 2 2 .2 %
Chile EM Asia EM Asia Me xic o EM Asia Me xic o La tin Ame ric a
EM Asia La tin Ame ric a
EM Asia Chile EM Equity Chile
4 4 .8 % - 17 .2 % 2 1.2 % 0 .2 % 5 .3 % - 14 .2 % 3 1.5 % 4 3 .3 % - 6 .2 % 19 .7 % - 3 3 .4 % 4 .0 % 2 0 .7 %
Colombia EM Equity Pe ru EM Equity EM Equity EM Equity Colombia Pe ru Colombia EM Equity Me xic o Colombia Bra zil
4 3 .4 % - 18 .2 % 2 0 .2 % - 2 .3 % - 1.8 % - 14 .6 % 2 6 .5 % 3 8 .4 % - 11.4 % 18 .9 % - 3 5 .4 % 1.5 % 17 .4 %
Me xic o La tin Ame ric a
EM Equity La tin Ame ric a
Me xic o Chile Chile EM Equity EM Equity La tin Ame ric a
Pe ru Me xic o EM Equity
2 7 .6 % - 19 .1% 18 .6 % - 13 .2 % - 9 .2 % - 16 .8 % 16 .8 % 3 7 .8 % - 14 .2 % 17 .9 % - 3 5 .8 % 1.2 % 16 .3 %
EM Asia Chile La tin Ame ric a
Bra zil La tin Ame ric a
La tin Ame ric a
EM Equity Bra zil EM Asia Me xic o Arge ntina La tin Ame ric a
Colombia
19 .4 % - 2 0 .0 % 8 .9 % - 15 .8 % - 12 .0 % - 3 0 .8 % 11.6 % 2 4 .5 % - 15 .2 % 11.8 % - 3 9 .3 % - 0 .4 % 16 .3 %
EM Equity Pe ru Chile Colombia Chile Pe ru EM Asia La tin Ame ric a
Me xic o Pe ru La tin Ame ric a
Arge ntina La tin Ame ric a
19 .2 % - 2 1.4 % 8 .3 % - 2 1.1% - 12 .2 % - 3 1.7 % 6 .5 % 2 4 .2 % - 15 .3 % 4 .8 % - 4 5 .6 % - 0 .4 % 12 .9 %
La tin Ame ric a
Bra zil Bra zil Chile Bra zil Bra zil Arge ntina Colombia Chile Chile Colombia Bra zil EM Asia
14 .9 % - 2 1.6 % 0 .3 % - 2 1.4 % - 13 .7 % - 4 1.2 % 5 .1% 16 .3 % - 18 .9 % - 16 .0 % - 4 9 .7 % - 0 .6 % 12 .8 %
Bra zil Arge ntina Arge ntina Pe ru Colombia Colombia Me xic o Me xic o Arge ntina Arge ntina Bra zil Chile Me xic o
6 .8 % - 3 8 .9 % - 3 7 .1% - 2 9 .8 % - 19 .8 % - 4 1.8 % - 9 .0 % 16 .3 % - 5 0 .7 % - 2 0 .7 % - 5 0 .2 % - 1.9 % 10 .8 %
2010 - 2019
|GTM – Latin America
50
|
7.0x
9.0x
11.0x
13.0x
15.0x
17.0x
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '191.0x
1.5x
2.0x
2.5x
3.0x
3.5x
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: FactSet, MSCI, 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 March 31, 2020.
Latin America valuation measures
Equi
ties
MSCI Latin America price-to-book ratio MSCI Latin America price-to-earnings ratio
Average: 2.0x
Mar. 2020: 1.7x
Mar. 202010.5x
Average: 12.1x
+1 std. dev.: 13.8x
-1 std. dev.: 10.4x
50
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 10.5 12.3 13.1 13.5 12.7 12.1
P/B Price-to-book 1.7 2.0 1.9 1.8 1.8 2.0
P/CF Price-to-cash flow 5.4 7.2 7.2 7.3 7.3 7.2
P/S Price-to-sales 1.0 1.4 1.3 1.3 1.4 1.4
Div. yield Dividend yield 4.6% 3.3% 3.4% 3.2% 3.2% 3.2%
|GTM – Latin America
51
|
-60%
-40%
-20%
0%
20%
40%
60%
80%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
-14%
3%
-4% -5%
-14%
-18%-20%
-15%
-10%
-5%
0%
5%
MSCI LatinAmerica
Colombia Mexico Peru Chile Brazil
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 index levels by forward P/Es.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Latin America corporate profits
MSCI Latin America forward earnings* growthNext 12 months, year-over-year growth, 3-month moving avg.
51
Equi
ties
MSCI Latin America profit margin and return on equityTrailing 12 months’ profit margin, blended 12-month forward ROE
Mar. 2020: -5.7%
Mar. 2020: -20.0%
USD forward ROEProfit margin
MSCI Latin America earnings* growth by countryNext 12 months, year-over-year growth, local currency
0%
5%
10%
15%
20%
25%
30%
35%
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
|GTM – Latin America
52
|
10.5x
11.8x
11.2x 11.1x10.6x
9.3x
7.1x
5x
7x
9x
11x
13x
15x
17x
19x
21x
23x
LatinAmerica
EM Asia Mexico Chile Brazil Peru Colombia50
75
100
125
150
175
200
225
250
275
300
325
350
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: FactSet, MSCI, J.P. Morgan Asset Management.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Latin America valuations and earnings
Equi
ties
Latin America valuationsPrice to earnings ratio, NTMA
15-yr. averageLatest
15-yr. range Colombia
Peru
Mexico
Chile
Brazil
EPS, local currency, NTMA, Dec. 2008 = 100
52
Latin America earnings
EM Asia
|GTM – Latin America
53
|
Consumer22%
Technology30%
Financials22%
Commodities13%
Other14%
Latin America ex-Brazil3%
Brazil5% Asia ex-China,
Korea & Taiwan14%
China41%
Korea12%
Taiwan12%
Europe, Middle East & Africa
13%
Turkey0.5%
20%4%
20%31% 39%
14% 6%
22%
26%26%
57%64%34%
18%
25%
19% 10%9% 17%
26%73%
22% 5% 13% 7%11%17% 11% 18% 12% 13%
0%
20%
40%
60%
80%
100%
Brazil Russia India China Mexico* Korea Taiwan
MSCI EM country index by sector
Source: FactSet, MSCI, J.P. Morgan Asset Management.MSCI EM index region and sector components are market value percentages.*Mexico Communication Services sector accounts for 26% of the country’s market capitalization. **“Other” is comprised of Health Care, Industrials, Real Estate and Utilities sectors. Values may not sum to 100% due to rounding.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Emerging market equity indices
MSCI EM index by sectorMSCI EM index by region
53
Equi
ties
Other**
Commodities
FinancialsTechnologyConsumer
3%
1% 3%
2%
|GTM – Latin America
54
|
1.0x
1.5x
2.0x
2.5x
3.0x
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
60
80
100
120
140
160
180
200
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Source: J.P. Morgan Asset Management; (Top and bottom left) FactSet, MSCI; (Right) Brookings Institute.Middle class is defined as $3,600-$36,000 annual per capita income in purchasing power parity terms. Historical and forecast figures come from the Brookings Development, Aid and Governance Indicators.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Emerging market equities
Growth of the middle classPercent of total population
EM price to book ratioLast 12 months actual
EM earnings by regionEPS for next 12-month consensus, local currency, Jan. 2007 = 100
54
1995 2018F 2030F
Latin America
EM Asia
EMEA
Average: 1.7x
Mar. 2020: 1.5x1%
4%0%
30%
40%
14%
27%
34%
53%
71%
79%
41%
72%
61%
79%
0%
20%
40%
60%
80%
100%
India Indonesia China Brazil Mexico
Equi
ties
|GTM – Latin America |
55
9.0% 8.9%7.9% 7.8% 5.9%
4.3%
31.5%
25.9%
20.1% 19.7% 18.9% 17.9%
-16.6% -18.1%-19.6%
-22.6% -23.6%
-45.6%-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
U.S. EM Asia LatinAmerica
EM Europeex-UK
Japan U.S. Europeex-UK
Japan EM Asia EM LatinAmerica
Japan EM Asia U.S. Europeex-UK
EM LatinAmerica
Global equity markets
Source: FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.All return values are MSCI Gross Index (official) data, except the U.S., which is the S&P 500. *Multiple expansion is based on the forward P/E ratio and EPS growth outlook is based on NTMA earnings estimates. Chart is for illustrative purposes only. Past performance is not indicative of future results.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
55
Sources of global equity returns*Total return, USD
2020 YTD2005-2019 annualized 2019
Currency
Multiples
Dividends
Earnings
Total return
Equi
ties
|GTM – Latin America
56
|
16.33x 16.07x
14.57x
21.37x
15.04x
13.46x
12.08x
11.86x
1.78x
1.39x
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
5x
9x
13x
17x
21x
25x
29x
33x
U.S. DM Europe Japan EM20
40
60
80
100
120
140
160
180
200
220
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Source: FactSet, MSCI, Standard & Poor’s, Thomson Reuters, 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. MSCI Europe includes the eurozone as well as countries not in the currency bloc, such as Norway, Sweden, Switzerland and the UK (which collectively make up 46% of the overall index). Past performance is not a reliable indicator of current and future results.Guide to the Markets – Latin America. Data are as of March 31, 2020.
International equity earnings and valuations 56
Global earningsEPS, local currency, NTMA, Jan. 2006 = 100
49x
25-year range25-year average
Current
Japan
Europe
U.S.
EM
Pric
e-to
-ear
ning
s Price-to-book
Axis
Equi
ties
Global valuations Current and 25-year historical valuations*
|GTM – Latin America |
57
50
100
150
200
250
300
350
400
450
500
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
U.S. and international equities at inflection points
Source: FactSet, MSCI, Standard & Poor’s, 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 12 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 12 months, divided by most recent price, as provided by FactSet Market Aggregates.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
MSCI All Country World ex-U.S. and S&P 500 IndexDec. 1996 = 100, U.S. dollar, price return
57
+106% -49% +101% -57%
+401%
+143%-62%
+216%-52%+48%
Mar. 31, 2020P/E (fwd.) = 15.4x
Mar. 31, 2020P/E (fwd.) = 12.3x
P/E 20-yr. avg. Div. Yield 20-yr. avg.
S&P 500 15.4x 15.5x 2.4% 2.1%
ACWI ex-U.S. 12.3x 13.6x 4.0% 3.1%
As % of U.S. 80% 88% 164% 151%
Equi
ties
-24%
-30%
|GTM – Latin America
58
|
4Q19*: $39.17
-$1
$2
$5
$8
$11
$14
$17
$20
$23
$26
$29
$32
$35
$38
$41
$44
$47
'99 '02 '05 '08 '11 '14 '17 '20
8x
10x
12x
14x
16x
18x
20x
22x
24x
26x
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19
Source: FactSet, Standard & Poor’s, J.P. Morgan Asset Management; (Left) Compustat; (Right) FRB, Robert Shiller, Thomson Reuters. EPS levels are based on operating earnings per share. Earnings estimates are Standard & Poor’s consensus analyst expectations. *4Q19 earnings are calculated using actual earnings for 97.8% 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 1994, and FactSet for March 31, 2020. Average P/E and standard deviations are calculated using 25 years of IBES history.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
U.S.: Corporate profits and valuations
S&P 500 operating earnings per shareIndex quarterly operating earnings
S&P 500 Index: Forward P/E ratio
58
25-year average: 16.33x
Mar. 2020: 15.43x
+1 std. dev.: 19.48x
-1 std. dev.: 13.19x
S&P consensus analyst estimates
Recession
Equi
ties
|GTM – Latin America |
59
26
-10
15 17
1
2615
212
27
-7
26
4 7
-2
34
2031 27
20
-10
-13-23
26
93
144
-38
2313
0
13
30
11
-1
1019
-6
29
-20-17 -18 -17-7
-13 -8 -9
-34
-8 -8-20
-6 -6 -5 -9-3 -8 -11
-19-12 -17
-30 -34
-14-8 -7 -8 -10
-49
-28-16 -19
-10 -6 -7 -12 -11-3
-20-7
-34
-60%
-40%
-20%
0%
20%
40%
'80 '85 '90 '95 '00 '05 '10 '15 '20
Annual returns and intra-year declines
Source: FactSet, MSCI, 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 1980 to 2019 for the S&P 500 and 2000 to 2019 for the MSCI Latin America.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
MSCI Latin America intra-year declines vs. calendar year returnsLocal currency, average intra-year drops of 18.9% (median -16.6%) and annual returns positive in 13 of 20 years
S&P 500 intra-year declines vs. calendar year returnsLocal currency, average intra-year drops of 13.8% (median -10.3%) and annual returns positive in 30 of 40 years
59
Equi
ties
-151
-1
5528 33 34 32
-40
58
7
-13
9-7 -4 -11
21 191
16-32
-24 -23 -25-9
-17 -16 -23 -16
-57
-15 -15-27
-13 -18 -20 -19 -10 -7 -15 -10
-42
-100%
-60%
-20%
20%
60%
100%
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
YTD
YTD
|GTM – Latin America
60
|
-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 '19
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 March 31, 2020.
Commodities
Commodity prices Commodity price z-scores
Oth
eras
set c
lass
es
60
Commodity prices and Latin America economic growthLatin America – DM GDP growth*, quarterly, % year-over-year change
Low levelCurrent
High level
Commodity pricesLatin America – DM GDP
Example
$175.42
$41.63
$113.93
$6.15
$97.67
$211.51
$48.60
$1,892
$59.48
$18.92
$20.09
$1.60
$35.23
$84.23
$11.77
$1,050
$61.86
$19.40
$20.48
$1.60
$37.19
$93.10
$14.16
$1,597
-4 -3 -2 -1 0 1 2 3 4 5
BloombergCommodity Index
Livestock
Crude oil
Natural gas
Agriculture
Industrial metals
Silver
Gold
|GTM – Latin America
61
|
Source: J.P. Morgan Asset Management; (Top and bottom left) EIA; (Bottom left) Baker Hughes; (Right) Commodity Research Bureau, FactSet.*Forecasts are from the March 2020 EIA Short-Term Energy Outlook and start in 2020. **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 March 31, 2020.
Oil markets
U.S. crude oil inventories and rig count**Million barrels, number of active rigs
Change in production and consumption of liquid fuelsProduction, consumption and inventories, millions of barrels per day
Price of oilBrent crude, nominal prices, USD/barrel, monthly average
Inventories (incl. SPR) Active rigs
61
Oth
eras
set c
lass
es
Mar. 2020: $33.49
Jul. 2008: $135.73
Dec. 2008: $43.09
Jun. 2014: $111.93
Jan. 2016: $30.98
Production 2017 2018 2019 2020* 2021* Growth since '17U.S. 15.7 17.9 19.5 20.9 20.8 32.8%OPEC 37.4 37.3 35.2 34.2 34.5 -7.8%Russia 11.2 11.4 11.5 11.6 11.5 2.8%
Global 98.1 100.8 100.6 102.1 102.4 4.4%Consumption
U.S. 20.0 20.5 20.5 20.5 20.7 3.8%China 13.6 14.0 14.5 14.6 15.4 13.4%
Global 98.7 100.0 100.8 101.1 102.9 4.2%Inventory Change -0.6 0.8 -0.2 1.0 -0.4
|GTM – Latin America
62
|
60
70
80
90
100
110
120
130
140
'73 '78 '83 '88 '93 '98 '03 '08 '13 '18
Source: J.P. Morgan Asset Management; (Left) Federal Reserve; (Right) J.P. Morgan Global Economic Research.Currencies in the real broad dollar index are: Australian dollar, Argentine peso, Brazilian real, British pound, Canadian dollar, Chinese renminbi, Chilean peso, Colombian peso, euro, Hong Kong dollar, Indonesian rupiah, Indian rupee, Israeli shekel, Japanese yen, Korean won, Malaysian ringgit, Mexican peso, Philippine peso, Russian ruble, Saudi Arabian riyal, Swedish krona, Swiss franc, Singaporean dollar, Taiwanese dollar, Thai baht and Vietnamese dong. *Currencies are the real effective exchange rates (REERs), which compare 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 March 31, 2020.
Global currencies
Oth
eras
set c
lass
es
62
U.S. dollar in historical perspectiveIndex level, real broad dollar index, Jan. 2006 = 100
6.5 years: +52%
7 years: +32%
5.5 years: +31%
6 years: -22%
10 years: -34%
9.5 years: -25%
Currency valuationsCurrencies* adjusted for relative inflation changes vs. 10-year average
Graph Key
Current10-year range
Dollar strengthening
Dollar weakening
0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60
Argentina
Colombia
Turkey
Brazil
Russia
Mexico
Chile
India
UK
Korea
China
Japan
Euro Area
Peru
U.S.
|GTM – Latin America |
63
2009 - 2019 Global Bonds
Global Equities
U.S. Core RE
Europe Core RE
APAC Core RE
Global Core Infra
Direct Lending
Venture Capital
Private Equity
Equity Long/Short
Relative Value Macro
Global Bonds 1.0Global Equities 0.3 1.0U.S. Core RE -0.3 -0.5 1.0Europe Core RE (Continental Europe) -0.4 -0.3 0.6 1.0
APAC Core RE -0.3 -0.4 0.8 0.7 1.0Global Core Infra -0.2 -0.4 0.4 0.1 0.2 1.0Direct Lending 0.1 0.5 -0.1 -0.3 -0.3 0.1 1.0Venture Capital -0.2 0.2 0.2 0.4 0.1 0.1 0.2 1.0Private Equity 0.2 0.8 -0.3 -0.1 -0.2 -0.1 0.6 0.5 1.0Equity Long/Short 0.2 1.0 -0.4 -0.3 -0.4 -0.3 0.6 0.3 0.9 1.0Relative Value 0.3 0.9 -0.6 -0.5 -0.6 -0.3 0.7 0.1 0.7 0.9 1.0Macro 0.3 0.5 -0.2 0.0 -0.2 -0.3 0.2 0.1 0.3 0.5 0.4 1.0
Asset class yields
Alternatives correlations
Global alternatives
Source: Bloomberg Barclays, MSCI, NCREIF, J.P. Morgan Asset Management; (Top) Alerian, BAML, Clarkson, Drewry Maritime Consultants, FactSet, Federal Reserve, FTSE, Standard & Poor’s; (Bottom) Burgiss, Cliffwater, HFRI. Yields are as of 3/31/20, except direct lending, global infrastructure, APAC, U.S., Europe real estate (9/30/19), and global transport (12/31/19). All correlation coefficients are calculated based on quarterly total return data for the period 06/30/09 – 09/30/19. Returns are denominated in USD. Global transport: Levered yields for transport assets; Preferreds: BAML Hybrid Preferred Securities; Global infrastructure: MSCI Global Infrastructure Asset Index-Low risk; Global REITs: FTSE NAREIT Global; U.S. real estate: NCREIF-ODCE Index; Latin America equity: MSCI EM Latin America; DM equity: MSCI World Index; USD Latin America sovereigns: J.P. Morgan EMBIG Diversified Latin America; U.S. high yield: Bloomberg U.S. Aggregate Corporate High Yield; Global equities: MSCI AC World Index; Global bonds: Bloomberg Barclays Global Aggregate Index; Europe core real estate: IPD Global Property Fund Index-Continental Europe; U.S. core real estate: NCREIF Property Index - Open End Diversified Core Equity component; APAC core real estate: IPD Global Property Fund Index-Asia-Pacific; Global core infrastructure: MSCI Global Quarterly Infrastructure Asset Index (equal-weighted blend); Direct lending: Cliffwater Direct Lending Index; Private equity: Cambridge Associates Global Private Equity Index; Venture capital: Cambridge Associates U.S. Venture Capital Index; Hedge fund indices include equity long/short, relative value and global macro and are all from HFRI. Guide to the Markets – Latin America. Data are as of March 31, 2020.
63
Oth
eras
set c
lass
es
Fixed incomeEquities Alternatives
Glob
alre
al
esta
te
Priv
ate
mar
kets
Oth
er
real
asse
ts
Fina
ncia
l as
sets
Hed
ge
fund
s
9.9% 9.9% 9.4%7.2% 6.3% 5.7% 5.1% 4.6% 4.5% 4.4% 4.2%
3.0%0.7%
0%
4%
8%
12%
Globaltransport
DirectLending
U.S.high yield
USD LATAMsovereigns
Preferreds GlobalREITs
Globalinfrastructure
APAC realestate
LATAMequity
Europe realestate
U.S. realestate
DMequity
U.S.10-year
|GTM – Latin America |
64
Alternatives and manager selection
Oth
eras
set c
lass
es
Sources: Cambridge Associates, HFRI, Lipper, NCREIF, J.P. Morgan Asset Management. Global equities (large cap) and global bonds dispersion are based on the world large stock and world bond categories, respectively. *Manager dispersion is based on: 2Q 2009 – 2Q 2019 annual returns for global equities, global bonds and U.S. core real estate. Hedge funds are based on 4Q 2009 to 4Q 2019 annual returns. U.S. non-core real estate, U.S. private equity and U.S. venture capital are represented by the 10-year horizon internal rate of return (IRR) ending 2Q 2019.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
Private and public manager dispersionBased on returns over a 10-year window*
64
-5%
0%
5%
10%
15%
20%
25%
Globalequities
Globalbonds
U.S. corereal estate
U.S. non-corereal estate
Globalprivate equity
U.S. venturecapital
Hedgefunds
11.8%
8.9%
4.1%
2.5%
8.9%
10.6%
2.5%
15.4%
3.3%
21.2%
-2.2%
20.0%
-0.8%
13.2%
Median
Top quartile
Bottom quartile
|GTM – Latin America
65
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Acum. Cum. Ann.LATAM equity
LATAM equity
LATAM equity Cash
LATAM equity
EM Asia equity
USD LATAM
sov.
EM Asia equity DM equity
USD LATAM
sov.
USD EMD sov.
LATAM equity
EM Asia equity Cash DM equity Cash
EM Asia equity
EM Asia equity
50.4% 43.5% 50.7% 1.8% 104.2% 19.4% 12.3% 21.2% 27.4% 8.1% 1.2% 31.5% 43.3% 1.8% 28.4% 0.5% 258.3% 8.9%
EM Asia equity
EM Asia equity
EM Asia equity
LCL LATAM
sov.
EM Asia equity
LCL LATAM
sov.
USD EMD sov.
Global high yield
Global high yield
USD EMD sov. Cash
LCL LATAM
sov.
LATAM equity
LCL LATAM
sov.
EM Asia equity Global IG
LATAM equity
LATAM equity
27.5% 33.2% 41.6% -10.6% 74.2% 18.7% 7.3% 19.6% 7.3% 7.4% 0.0% 17.1% 24.2% -2.9% 19.7% -6.7% 212.1% 7.9%
LCL LATAM
sov.DM equity
LCL LATAM
sov.Global IG
Global high yield
Asset alloc. Global IG
USD EMD sov.
EM Asia equity DM equity DM equity
Asset alloc. DM equity Global IG
LATAM equity
USD EMD sov. DM equity DM equity
23.9% 20.7% 17.4% -11.2% 59.4% 15.0% 4.0% 17.4% 2.3% 5.5% -0.3% 15.0% 23.1% -3.5% 17.9% -13.4% 196.6% 7.5%
Asset alloc.
Asset alloc.
Asset alloc.
USD EMD sov.
Asset alloc.
LATAM equity
Global high yield
LCL LATAM
sov.Global IG
EM Asia equity
USD LATAM
sov.
Global high yield
Asset alloc.
Global high yield
USD EMD sov.
Global high yield
LCL LATAM
sov.
LCL LATAM
sov.19.0% 18.4% 16.5% -12.0% 41.9% 14.9% 3.1% 17.3% 1.8% 5.3% -2.0% 14.3% 14.8% -4.1% 15.0% -15.0% 190.2% 7.4%
USD LATAM
sov.
LCL LATAM
sov.DM equity
USD LATAM
sov.
LCL LATAM
sov.
Global high yield
LCL LATAM
sov.DM equity Cash Global IG
Global high yield
USD LATAM
sov.
LCL LATAM
sov.
USD EMD sov.
USD LATAM
sov.
USD LATAM
sov.
USD EMD sov.
USD EMD sov.
10.8% 17.4% 9.6% -13.5% 34.3% 14.8% 1.6% 16.5% 0.0% 2.5% -2.7% 13.5% 13.2% -4.3% 14.1% -15.3% 186.2% 7.3%
USD EMD sov.
Global high yield
USD EMD sov.
Asset alloc. DM equity
USD LATAM
sov.
Asset alloc.
USD LATAM
sov.
Asset alloc. Cash Global IG
USD EMD sov.
USD LATAM
sov.
Asset alloc.
Asset alloc.
EM Asia equity
Global high yield
Global high yield
10.2% 13.7% 6.2% -19.8% 30.8% 13.3% 0.4% 16.0% -3.7% 0.0% -3.8% 10.2% 11.4% -4.5% 14.1% -18.1% 185.4% 7.2%
DM equityUSD
LATAM sov.
Global IGGlobal
high yieldUSD EMD
sov. DM equity CashAsset alloc.
USD EMD sov.
Global high yield
EM Asia equity DM equity
Global high yield
USD LATAM
sov.
LCL LATAM
sov.
LCL LATAM
sov.
Asset alloc.
Asset alloc.
10.0% 12.7% 6.1% -26.9% 29.8% 12.3% 0.1% 15.6% -5.3% 0.0% -9.5% 8.2% 10.4% -5.8% 12.7% -18.5% 180.6% 7.1%
Global high yield
USD EMD sov.
USD LATAM
sov.DM equity
USD LATAM
sov.
USD EMD sov. DM equity Global IG
USD LATAM
sov.
Asset alloc.
Asset alloc.
EM Asia equity
USD EMD sov.
LATAM equity
Global high yield
Asset alloc.
USD LATAM
sov.
USD LATAM
sov.3.6% 9.9% 4.9% -40.3% 25.8% 12.2% -5.0% 12.5% -7.7% -0.6% -12.9% 6.5% 10.3% -6.2% 12.6% -18.7% 179.9% 7.1%
Cash Global IG CashLATAM equity Global IG Global IG
EM Asia equity
LATAM equity
LCL LATAM
sov.
LCL LATAM
sov.
LCL LATAM
sov.Global IG Global IG DM equity Global IG DM equity Global IG Global IG
3.0% 8.3% 4.8% -51.3% 23.7% 7.0% -17.2% 8.9% -8.2% -4.2% -21.7% 6.0% 9.3% -8.2% 11.8% -20.9% 93.0% 4.5%
Global IG CashGlobal
high yieldEM Asia equity Cash Cash
LATAM equity Cash
LATAM equity
LATAM equity
LATAM e quity Cash Cash
EM Asia equity Cash
LATAM equity Cash Cash
-2.7% 4.8% 3.2% -52.8% 0.1% 0.1% -19.1% 0.1% -13.2% -12.0% -30.8% 0.3% 0.8% -15.2% 2.2% -45.6% 21.7% 1.3%
2005-2019
Source: Bloomberg/Barclays, FactSet, J.P. Morgan Global Economic Research, MSCI, 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., USD EMD sov. and cash are MSCI Latin America, MSCI EM Asia, MSCI The World, Bloomberg Barclays Global High Yield, Bloomberg Barclays GlobalCredit – Corporate – Investment Grade, GBI-EM Global Diversified Latin Region subindex (US$), EMBIG Diversified Latin Region subindex, EMBIG Diversified index and Bloomberg Barclays 1-3m Treasury, 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, 15% in USD LATAM sovereigns, 5% in USD EMD sovereigns and 5% cash. 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 March 31, 2020.
Asset class returns
Inve
stin
gpr
inci
ples
65
|GTM – Latin America
66
|
Source: J.P. Morgan Asset Management; (Left) WHO Global Health Observatory data, life expectancy tables (2016); (Right) OECD Pensions at a Glance 2019.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 March 31, 2020.
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
66
Mandatory & government pension replacement rate
Contribution to pre-retirement income replacement goal of 80%
90%
79%
58%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
75-79 80-84 85+
59%
26%31%
71%
39%
22%
39%
80%
60%
32%
17%
31%
29%
14% 24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
|GTM – Latin America
67
|
30%
17%15%
8% 8%6% 6% 5%
2%1% 1%
13%
9%
4%
9%
3%
10%
4%
10%
15%
3%
19%
0%
5%
10%
15%
20%
25%
30%
35%
Source: MSCI, J.P. Morgan Asset Management; (Left) BIS, Cerulli Associates, IMF. 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 2019 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 3Q19. *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 March 31, 2020.
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
67
5.5% 3.0% 1.0%
97.5%94.5% 97.0% 99.0%
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 |
68
0.730.91
1.11 1.17
1.41
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
Japan equity U.S. equity Europe equity EM Asia equity LATAM equity
Correlations and beta
Source: Bloomberg/Barclays, FactSet, MSCI, Standard & Poor’s, J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.LCL LATAM sov. (sovereigns), USD LATAM sov., USD EMD sov., LATAM equity, EM Asia equity, U.S. equity, Europe equity, Japan equity, Global high yield, Global IG (investment grade) and U.S. dollar are: GBI-EM Global Diversified Latin Region subindex, EMBIG Diversified Latin Region subindex, EMBIG Diversified index, MSCI Latin America, MSCI EM Asia, S&P 500, MSCI Europe, MSCI Japan, Bloomberg Barclays Global High Yield, Bloomberg Barclays Global Credit – Corporate – Investment Grade and J.P. Morgan Emerging Market Currency index, respectively. Correlations are based on monthly total return data in local currency terms for the period between 12/31/04 – 12/31/19. Beta calculations are based on monthly price returns in U.S. dollars for the period between 12/31/1999 – 12/31/2019.Guide to the Markets – Latin America. Data are as of March 31, 2020.
Beta of regional equities to global equities (MSCI ACWI)U.S. dollars, monthly price returns
Correlation between Latin America local sovereign bonds vs. other asset classesLocal currency, monthly total returns
Inve
stin
gpr
inci
ples
>1.00 = Swings more than MSCI ACWI
68
0.69 0.68
0.50 0.46 0.450.36 0.31 0.26
0.15
-0.49-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
USD EMD sov. USD LATAMsov.
Global IG Global high yield LATAM equity EM Asia equity Europe equity U.S. equity Japan equity U.S. dollar
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69
-39%
-8%
-15%-3% -2%
1%
-1% 1% 2%6%
1%5%
47%43%
33%28%
23% 21% 19%16% 16% 17%
12% 14%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
1-yr. 5-yr.rolling
10-yr.rolling
20-yr.rolling
Time, diversification and the volatility of returns
Source: Barclays, Bloomberg, FactSet, Federal Reserve, Robert Shiller, Strategas/Ibbotson, J.P. Morgan Asset Management.Returns shown are based on calendar year returns from 1950 to 2019. Stocks represent the S&P 500 Shiller Composite and Bonds represent Strategas/Ibbotson for periods from 1950 to 2010 and Bloomberg Barclays Aggregate thereafter. Growth of $100,000 is based on annual average total returns from 1950 to 2019.
Guide to the Markets – Latin America. Data are as of March 31, 2020.
69
Inve
stin
gpr
inci
ples
Range of U.S. stock, bond and blended total returnsAnnual total returns, 1950 - 2019
50/50 portfolio 8.9% $555,161Bonds 5.9% $313,758Stocks 11.3% $844,684
Annual avg. total return
Growth of $100,000 over 20 years
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70
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
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, diversification and the average investor
Source: J.P. Morgan Asset Management; (Top) Barclays, Bloomberg, FactSet, Standard & Poor’s; (Bottom) Dalbar Inc.Indices used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index, Bonds: Bloomberg Barclays U.S. Aggregate Index, Homes: median sale price of existing single-family homes, Gold: USD/troy oz., Inflation: CPI. 60/40: A balanced portfolio with 60% invested in S&P 500 Index and 40% invested in high-quality U.S. fixed income, represented by the Bloomberg Barclays U.S. Aggregate Index. The portfolio is rebalanced annually. Average asset allocation investor return is based on an analysis by Dalbar Inc., which utilizes the net of aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior. Returns are annualized (and total return where applicable) and represent the 20-year period ending 12/31/19, except the average investor which is through 12/31/2018 and is based on Dalbar’s most recent analysis. Guide to the Markets – Latin America. Data are as of March 31, 2020.
20-year annualized returns by U.S. asset class (1999-2019)
Inve
stin
gpr
inci
ples
70
Returns of S&P 500Performance of $10,000 between January 1, 2000 and December 31, 2019, annualized total returns
$32,421(6.06% return)
$16,180(2.44% return)
$10,167(0.08% return) $6,749
(-1.95% return) $4,607(-3.80% return) $3,246
(-5.47% return)$2,331
(-7.02% return)
Six of the 10 best days occurred within two weeks of the 10 worst days
11.6%
8.6%
6.1% 5.6% 5.4% 5.0%4.2% 3.8% 3.4%
2.2% 1.9%
0%
2%
4%
6%
8%
10%
12%
14%
REITs Gold S&P 500 60/40 40/60 Bonds Oil EAFE Homes Inflation AverageInvestor
|GTM – Latin America
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Source: Barclays, Bloomberg, CME, FactSet, J.P. Morgan Global Index Research, MSCI, Standard & Poor’s, J.P. Morgan Asset Management. Indices: S&P 500: S&P 500 Index; DM Equity: MSCI EAFE; EM Equity: MSCI EM; U.S. HY: Bloomberg US High Yield; U.S. IG: Bloomberg US Corporate Investment Grade Index; U.S. Treasuries: Bloomberg US Treasury Index; U.S. Dollar: US Dollar Index (DXY); Gold: Gold (NYM $/oz) continuous contract; Cash: US Treasury 3M Bellwether. All data are total returns and are in USD. *Assumes 2% dividend yield throughout. **Previous four bear markets are the GFC (’08-’09), tech-bubble (’00-’01), 1990 and the flash crash (’87). Drawdowns are measured from market peak to market trough. EM equity returns do not include the 1987 bear market due to data availability. Past performance is not indicative of future returns. Guide to the Markets – Latin America. Data are as of March 31, 2020.
Asset class performance around bear markets
Average returns needed to recover to market peak*S&P 500
Average returns around bear marketsPrevious four bear markets**
71
Inve
stin
gpr
inci
ples
Average annual total return required to recover to peak
Cumulative total return required to recover to peak
5%
5%
5%
6%
7%
8%
9%
11%
16%
33%
59%
56%
53%
50%
47%
44%
41%
38%
36%
33%
0% 5% 10% 15% 20% 25% 30% 35% 40%
10 years
9 years
8 years
7 years
6 years
5 years
4 years
3 years
2 years
1 year
Peak level (2/19/2020) 3,386Current level (3/31/2020) 2,585Decline from peak -24%
-60%
-40%
-20%
0%
20%
40%
60%
80%
12-mo. prior Drawdown 12-mo. recovery
S&P 500 DM EquityEM Equity U.S. TSYsU.S. IG corps U.S. HYU.S. Dollar GoldCash
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30%
35%
40%
45%
50%
55%
60%
65%
70%
Source: Barclay’s, Bloomberg, FactSet, MSCI, Standard & Poor’s, J. P. Morgan Asset Management. Guide to the Markets – Latin America. Data are as of March 31, 2020.
Diversification benefits and forced rebalancing
Stock, bond and 40/60 portfolio returns since 12/31/19S&P 500 and Barclays US Aggregate total return indices
40/60 portfolio without rebalancing since 12/31/19S&P 500 and Barclays US Aggregate total return indices
72
Inve
stin
gpr
inci
ples
Mar. 31, 2020: 34.2%
Mar. 31, 2020: 65.8%
Equities
Fixed Income
-19.6%
3.1%
-6.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
Equity only Bond only U.S. 40 stocks/60 bonds
|GTM – Latin America |
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J.P. Morgan Asset Management – Index definitions
All 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 Bloomberg 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 Bloomberg 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 Bloomberg 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 Bloomberg Barclays US Dollar Floating Rate Note (FRN) Index provides a measure of the U.S. dollar denominated floating rate note market.The Bloomberg 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 Bloomberg 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 Bloomberg Barclays US Mortgage Backed Securities Indexis an unmanaged index that measures the performance of investment grade fixed-rate mortgage backed pass-through securities of GNMA, FNMA and FHLMC.The Bloomberg 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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J.P. Morgan Asset Management – Risks & disclosures 75
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.For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programs are marketing communications and are not in scope for any MiFID II / MiFIR requirements specifically related to investment research. Furthermore, the J.P. Morgan Asset Management Market Insights and Portfolio Insights programs, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any prohibition on dealing ahead of the dissemination of investment research.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 are not reliable indicators 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.To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our privacy policies at https://am.jpmorgan.com/global/privacy.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 European jurisdictions by JPMorgan Asset Management (Europe) S.à r.l.; in Hong Kong by JPMorgan Asset Management (Asia Pacific) 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), this advertisement or publication has not been reviewed by the Monetary Authority of Singapore; 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 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 LatAm countries, by local J.P. Morgan entities, as the case may be; in Canada for institutional clients’ use only by JPMorgan Asset Management (Canada) Inc., and in the United States by J.P. Morgan Institutional Investments, Inc. or JPMorgan Distribution Services, Inc., both are members of FINRA; J.P. Morgan Investment Management, Inc. or J.P. Morgan Alternative Asset Management, Inc. In APAC, distribution is for Hong Kong, Taiwan, Japan and Singapore. For all other markets in APAC, to intended recipients only. In Latin America, distribution intended to recipients only.
Copyright 2020 JPMorgan Chase & Co. All rights reserved.
Prepared by: Gabriela D. Santos and Jennie Li.
Unless otherwise stated, all data are as of March 31, 2020 or most recently available.
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