J.P. Morgan Survey Finds Improved Investor Relations And Corporate Governance Standards In Latam

Sept. 27, 2011 - PRLog -- NEW YORK, September 27, 2011 –According to a survey released today by J.P Morgan’s Depositary Receipts (DR) business, institutional investors in North America and Europe believe that investor relations (IR) and corporate governance standards in Latin America have improved, but stress the need for companies to further bolster their efforts as they continue to compete for global capital.  The study also revealed that investors in North America and Europe are optimistic about the investment opportunities that exist in Latin America over the next three years. The survey, conducted in June and July of 2011, gathered the opinions of 40 institutional investors which combined hold approximately $57.3 billion of actively managed equity in Latin American companies, or 13% of all actively managed investments from outside the region.  

The primary reason for the optimism found in the survey results is the region’s expected economic growth due to compelling demographic trends that should boost demand for goods and services. Investors are also encouraged by improving corporate governance standards, the prevalence of natural resources, low levels of consumer debt, and the continued development of capital markets and infrastructure across Latin America.

Titled “North America and European Investor Opinions of Latin American Companies”, the survey indicates that:

•   Investors believe that IR and corporate governance standards in the region have improved over time, but also feel that it is vital for companies to further bolster their efforts in these areas as they continue to compete for global capital.
•   Investors rank Mexican companies second only to Brazilian companies and equal to Chilean companies for their investor relations.  However, Mexican companies also ranked among the lowest, as best practices are concentrated among Mexico´s largest companies, according to investors.  
•   With respect to corporate governance practices, Mexican companies ranked third behind those in Brazil and Chile.  But best practices in this area are also limited to Mexico´s largest companies, in the eyes of investors.  
•   Investors view Brazil and Colombia as the most promising markets in Latin America over the next one to three years, while they are tentative about investing in Peru, Argentina and Venezuela, where there is a lack of clarity pertaining to the political situations in these countries.

•   Investors surveyed agree that the best way for Latin American companies to improve their IR efforts is by enhancing disclosure, and improving the quality of their investor presentations, providing all investor materials in English; increasing access to senior management; and proactively communicating with investors and sell-side analysts.
•   Over 50% of survey participants believe that Brazil has the best corporate governance standards in Latin America, primarily due to the creation of the Novo Mercado.
•   In order to improve corporate governance, investors recommend that Latin American companies protect the interests of minority shareholders by: implementing a single-class share structure; increasing financial transparency; and clarifying business issues such as executive compensation, Board independence, proxy proposals, and insider sales.
•   60% of the executives surveyed believe that a U.S. listing increases the investment appeal of a Latin American company, mainly citing the increased liquidity that it offers.  
•   Three-quarters of investors surveyed prefer NYSE- or NASDAQ-listed equities over OTC-traded equities because of the greater liquidity they offer and the stricter reporting and disclosure requirements with which exchange-listed, sponsored companies must comply.
Joe Dooley, DR Executive for the Americas at J.P. Morgan, said: “As more companies look abroad for capital, the competition for it becomes increasingly fierce. Latin American companies are no longer just competing with each other for capital, but with companies in other emerging markets, such as China and India, as well. We believe the findings of our survey will help our clients better understand the disposition of North American and European investors toward Latin America companies and ultimately help them enhance their investor relations efforts to better compete for global investors and their capital.”  

For market information on DRs and international equities please view J.P. Morgan’s award-winning web site: www.adr.com. For more information on J.P. Morgan’s DR services please visit: http://www.jpmorgan.com/visit/adr.

About the survey methodology:
In June and July of 2011, Ipreo conducted, on behalf of J.P. Morgan’s Depositary Receipts Group, a telephone-based survey of global institutional investors in the United States, Canada, and Europe (United Kingdom, France, Sweden, Switzerland and the Netherlands) in order to gain insight into how Latin American companies can improve their overall investor relations and corporate governance practices and to generally understand these investors’ disposition toward Latin American equities.  In total, Ipreo received feedback from 40 firms that invest in Latin America. As of June 30, 2011, these firms managed a combined ~$1.2 trillion in equity assets, approximately $57.3 billion of which represented holdings in Latin American companies, or 13.4% of all Latin American equities held by active investment managers outside of Latin America. Of these firms, 65% are traditional investment advisers/mutual fund managers, while 35% are hedge funds. For the purposes of this survey, participants are grouped into three categories: Tier 1 investors hold more than $35 billion in equity assets under management; Tier 2 investors manage between $5 billion and $35 billion in equity assets; and Tier 3 investors manage less than $5 billion in equity assets. Of the 40 participating firms, 9 are Tier 1 investors, 14 are Tier 2 investors, and 17 are classified as Tier 3 investors.

About JPMorgan Chase & Co.
JPMorgan Chase & Co.  is a leading global financial services firm with assets of $2.2 trillion and operations in more than 60 countries. The firm is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

This document is for information purpose only. It is intended neither to influence your investment decisions nor to amend or supplement any agreement governing your relations with J.P. Morgan. J.P. Morgan shall not be liable for any damages or costs of any type arising out of or in any way connected with your use of the mentioned information. J.P. Morgan does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information herein provided, either no representations as to the legal, regulatory, financial, tax or accounting implications of the matter in this document. © 2011 JPMorgan Chase & Co.  All rights reserved. Ombudsman J.P. Morgan: Tel: 0800 – 7700847/E-mail: ouvidoria.jp.morgan@jpmorgan.com.


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