Panel SA: Election boosts fortune abroad, but global scenario affects logic, says manager

The president of Julius Baer in Brazil, Fernando Vallada, sees a complex moment, especially in the foreign market, and with antagonistic signs. “Whenever there is a complex, polarized election, customers are interested in sending funds abroad as a form of protection. But there is a representative event, this fall in international markets, affecting this logic”, he says.

The vision for Brazil is optimistic, he says, with potential for wealth management. The company does not reveal numbers of assets under management in the country, but the goal is to double it in seven years.

Mr. took over as CEO in a complex year from a macroeconomic point of view. How has it been?I’ve been with Julius Baer for just over three years. Initially, I acted as the group’s representative in Brazil. A year ago, we set up an investment consultancy unit abroad and, in April, the decision was taken to unify the management of the two companies, family office and consultancy.

It is a troubled year, especially due to the foreign market, with a lot of volatility. There are things, in a way, antagonistic. For example, whenever there is a complex, polarized election, customers are more interested in sending funds abroad as a form of protection.

But there is a representative event, this fall in international markets, affecting this logic. In the exchange rate, there was also an appreciation of the dollar against the real. It’s kind of a contradiction and, at the same time, a significant increase in the domestic interest rate.

And what happens?What would be the natural, the expected, did not happen. The local currency is once again the protagonist of investments in Brazil. I think this is a counterintuitive event. The markets outside are calming down a bit, but there is great doubt as to whether a recession in the US or not, and what effect it would have on both the US and global economy. But it’s complex. It’s a challenging scenario.

Despite everything, are you optimistic about Brazil?You cannot be relevant in Latin America if you are not relevant in Brazil. In addition, the bank has been investing here since 2011. The Julius Baer group bought 30% of GPS in 2011, increasing the stake until it reached 100%. In 2018, it purchased Reliance.

Brazil has the capacity to generate wealth. Most of the companies are still family-owned, will go through an IPO, through a merger cycle or will be acquired. These families go through major liquidity events, and that’s where we come in helping to preserve prosperity.

And Brazil has been passing by, there are times when there is a peak or a reduction, but historically we have been generating wealth, we have been generating liquidity over time. That’s what matters in the country. It’s the dimension, the growth potential and the possibility and quantity of liquidity events that we should see.

What is the size of this Brazilian market for the company?We are one of Julius Baer’s nine priority markets in the world. Recently, in the last few months, when our CEO made the strategy statement for the coming years, between Switzerland, Germany, Spain, United Kingdom, there is also Brazil.

These are investments that have been made since 2011 and always with an eye on the market potential. We want to double our size in Brazil in seven years. By 2030, we expect to have double the volume of assets from Brazilian clients, whether locally or internationally.

It is a great ambition, which reflects the importance of Brazil within the scenario, the importance of growing the structure, of expanding the offer of services. Brazil is a key part of the growth strategy for the coming years.

The election period officially started last week. What changes?Do not change. like wealth management [gestão de patrimônio], we have to be prepared for any scenario. That’s our concern. We are agnostic about the party or government that will enter. Our role is to observe the economic scenario and try to extract from the political scenario what would be the possibilities and the paths to be followed from now on.

And it’s very preliminary at this point. So, we watch. As we have more subsidies, we prepare to be long in exchange or stock exchanges, or in inflation.

It is a little result of these observations that lead to a definition of investment strategy. And there are different investment profiles. There is the most aggressive client, the most conservative. The scenario serves as inspiration, but each mandate defines the way to allocate itself.

There are not so many possible scenarios. It has two candidates ahead and others farther away. What do you expect from each one?It’s too early to say. I think we don’t have a subsidy. I think it’s the market’s reaction to provocations, to ideas that are being brought. There is still no materiality to radically change any vision we have. It’s more in that sense.

There is still a series of discussions, of compositions that can probably lead to the path A, B or C. The campaign has just started and I think that later on we will have more clarity of scenarios, compositions, proposals, as things mature a little more.

X-ray

The executive joined Julius Baer in 2019 as a strategic consultant for Brazil and assumed the position of CEO of the Julius Baer Advisory Office at its inauguration in April last year. Prior to working at Julius Baer, ​​he held senior positions at companies such as Goldman Sachs, ABN AMRO Real and Citibank.