Morgan Stanley Triples Mexico Staff as IPOs Beat Brazil’sJonathan J. Levin
Wall Street firms that chopped more than 300,000 jobs in the past two years are hiring in Mexico, where share sales are increasing sixfold and economic growth is topping Brazil’s.
Morgan Stanley has tripled employees in Mexico since 2010 to an undisclosed number, according to Jaime Martinez-Negrete, head of the New York-based firm’s business in the country, while cutting 7,200 positions globally. JPMorgan Chase & Co. added two floors to the four it had in a 25-story office tower with a view of Mexico City’s central park. Goldman Sachs Group Inc. obtained a brokerage license last year and is boosting staff in the country.
Mexico is luring bankers and traders after the country overtook Brazil as Latin America’s biggest market for equity offerings, with $11.8 billion worth of deals since the start of 2012. President Enrique Pena Nieto’s plan to balance the budget and increase private investment in the oil industry is drawing money to an economy expanding at almost twice the pace in the U.S., even though drug-related violence deters some investors.
Morgan Stanley has “grown enormously in Mexico in all areas,” Martinez-Negrete said in a Jan. 7 interview. “You have to put in place a whole infrastructure. We have traders, we have research analysts, operations people, finance people, legal, H.R. Our investment banking team has grown, too, though not by triple.”
Mary Claire Delaney, a Morgan Stanley spokeswoman, declined to provide the firm’s headcount in Mexico.
Mexico’s benchmark IPC stock index has surged 16 percent in dollar terms in the past year, compared with a 12 percent gain in the Standard & Poor’s 500 index and a 1.1 percent advance in the MSCI Emerging Markets Index. Mexican companies sold a record $9 billion of stock in 2012, topping Brazil for the first time since 2003, data compiled by Bloomberg show.
The peso strengthened 8.4 percent last year against the dollar, the biggest gain among 16 major currencies tracked by Bloomberg. Yields on Mexican government peso-denominated bonds due in 2024 fell by 1.6 percentage points from the end of 2011 to a record 5.06 percent on Feb. 6.
Mexico’s four-year-old expansion, slowing inflation and debt ratios half those in the U.S. are winning over investors searching for stable returns as Europe’s economy heads for a contraction. Pacific Investment Management Co. Co-Chief Investment Officer Bill Gross, who helps run the world’s biggest bond fund, called the peso a “great currency” and lauded the country for its low debt levels in a Feb. 5 Twitter post.
Latin America’s second-biggest economy, which is about half the size of Brazil’s, outgrew its larger regional peer in each of the past two years, posting annual expansions of about 4 percent as construction and auto production jumped.
Pena Nieto is helping to bolster the growth outlook by pledging to work with the opposition on laws to strengthen the economy. A day after his Dec. 1 inauguration, he signed a pact with the three biggest parties to increase the efficiency of tax collection and public spending while luring more investment into the state-controlled energy industry.
Pena Nieto also inherits a drug war that led to 58,398 deaths under the previous administration, according to newspaper Milenio, which tracks monthly killings. Crime costs Mexican businesses 115 billion pesos ($9 billion) annually, according to a government report in December.
Geoffrey Pazzanese, a money manager who helps oversee $800 million at Federated Investors Inc. in New York, said that while he still prefers Mexico to many other emerging markets, Pena Nieto’s plans are already reflected in many asset prices. He said the drug war “definitively weighs on our view.”
“You’ve got to expect that you’re not really going to see” a broad rise in Mexican stocks “beyond the level that we’re kind of at now,” he said in a telephone interview from New York.
Brokerage personnel in the country climbed 8.6 percent in the first nine months of 2012 to 6,304 workers, according to the most recent National Banking and Securities Commission bulletin.
Demand for Mexican stock and bond offerings “is very strong,” Citigroup Inc.’s local investment banking chief, Alfredo Capote, said in an interview in Mexico City. “There’s going to be a lot more focus on Mexico simply because of the macroeconomic dynamic.”
Citigroup, which is cutting more than 11,000 jobs globally, hired Capote away from New York-based Goldman Sachs in December.
Last year’s pickup in stock volumes prompted officials at the country’s stock exchange to install a new trading engine in September that is about 300 times faster than its predecessor, with the capacity to handle about 100,000 transactions per second. Trades on the exchange rose 76 percent to 19.7 million operations in 2012.
Goldman Sachs, which got authorization for a Mexican brokerage in November, plans to add staff this year, partly by relocating executives based elsewhere who work with clients in the nation, said Michael DuVally, a spokesman for the New York-based firm. He declined to give specifics.
London-based HSBC Holdings Plc, which cut at least 21,000 jobs worldwide last year, added three executives in Mexico to underwrite stocks, marking the first time it’s had such bankers based locally, according to a person with direct knowledge of the matter, who asked not to be named because staffing decisions are private.
Lyssette Bravo, a Mexico City-based spokeswoman with HSBC, declined to comment on staffing.
Credit Suisse Group AG has expanded its Mexico business by about 50 percent since the end of 2010 to include a private bank and an asset management group, said a person with direct knowledge of the matter, who also requested anonymity. Drew Benson, a New York-based spokesman with Credit Suisse, declined to comment on the growth.
JPMorgan, the largest U.S. bank, lists 11 openings on its website in Mexico City, including a “head of cross-asset investment solutions” for its private bank, which caters to wealthy clients. John Murray, a Mexico City-based spokesman with JPMorgan, said in a phone interview that the bank has a “growth and hiring” plan in the country that extends through 2015.
As the expansion picks up in Mexico, some international banks are cutting back in Brazil.
London-based Barclays Plc is closing its research unit and reducing staff in Brazil, two people with knowledge of the matter said last month. Deutsche Bank AG, based in Frankfurt, has cut employees in the local investment bank and research groups. St. Petersburg, Florida-based Raymond James Financial Inc. said in November it was shutting its equity research unit in the country.
Brazilian banks are expanding in Mexico. Banco Itau BBA SA, the wholesale arm of Brazil’s biggest bank, is considering opening a corporate and investment bank in Mexico this year, Chief Executive Officer Candido Bracher told reporters Dec. 7. Grupo BTG Pactual, Brazil’s biggest equity underwriter, has applied for a brokerage license in Mexico.
The hiring boom is being felt beyond Mexican borders.
Gregory Cresci, an executive recruiter at Odyssey Search Partners, said he landed a job for a New York-based salesman who caters to Mexican clients in the foreign-exchange and interest-rate markets a month after he was let go by a bank. The new position included a guaranteed bonus, a rarity today on Wall Street, he said.
“In a time of overall retrenchment in different areas of major banks, Mexico-focused businesses, whether in banking or in sales and trading, seem to be going the other way,” Cresci said in a telephone interview from New York.