The newly created J.P. Morgan Chase & Co. is pushing forward with expectations of providing the "premium product on the Street" for Latin American markets, according to sources at the new company.
The firm has made a renewed commitment to invest experienced people, time and efforts into a recently realigned sector entitled emerging markets, external debt and local markets. The strategy of the new department is to build its already existing presence in emerging markets.
Prior to the merger, both institutions were positioned very strongly in the Latin American region, according to a J.P. Morgan spokesman. "The combination of the two will make it even stronger. That's where the combined organization will have a leading market position," said the spokesman.
Looking at some of the more dubious economic situations in Latin America - like Argentina, Peru and Venezuela - strengthening the company's position south of the border may raise some questions.
However, considering the rising economic success of countries like Mexico and Brazil, which the company is especially optimistic about, there is a drastic discrepancy. "There's a lot of distinction between the countries in Latin America that are doing well and that are not doing so well - more so than you have ever seen in the past," said a source from MBIA.
That said, J.P. Morgan Chase & Co. appears to be looking at Latin America as a whole. "That market (Latin America) happens to be a relatively healthy market as far as emerging markets go," said the spokesman.
"In the emerging markets fixed-income world, Latin America accounts for almost 75% of the EMBI+, the common benchmark. Latin America is very important to our clients and therefore very important to us," said Graham Stock, head of Latin American debt strategy for J.P. Morgan Chase & Co.
"We don't expect dramatic spread tightening for emerging markets over the year as a whole, or for Latin America in particular, although we see room for a continuation of the current rally through at least the first quarter," said Stock. "On unchanged spreads, a portfolio of fixed-income investments in Latin America would still return around 11% or 12% for the year, so even without dramatic improvement you're looking at attractive returns in the fixed-income investments in the region. Obviously we expect some countries to do better than others."
Miguel Gutierrez and Jorge Jasson are heading up the division. Additionally, Gutierrez and Jasson will be working closely with the co-heads of the emerging market research division, Joyce Chang and Jose Luis Daza. Moctar Fall will also lead the capital markets sector, where many Latin American countries are active players.
