Posts Categorized: Emerging Europe & Middle East

Poultry Antibiotics in Emerging Markets: Should We Rethink Growth?

Recent survey results indicate a move away from antibiotics in emerging market poultry production. Our read of the survey results is that investors should be cautious assuming that growth in emerging market poultry production will translate into similar growth in medicated feed additives.

Regional and Sector Strategy: Monthly Update

Our earnings momentum metric has been refined. In addition, we have also introduced a methodology for weighting ESG factors in sectors and regions. These modifications have resulted in an unusually large number of changes in recommendations.

Global Earnings Synthesis: On Track for Modest Gains in 2016

Building on the recent analysis in our Regional and Sector Strategy: Monthly Update, we continue to embrace an outlook for just a single-digit increase in profits in 2016, which is in contrast to consensus estimates that imply a 21% gain in earnings.

Regional and Sector Strategy: Monthly Update

We remain Overweight Information Technology (largest weighting in Overweight North America region) and Consumer Discretionary (largest weighting in Japan, our other Overweight). We continue to avoid regions with heavy exposure to commodities, most notably Latin America (Underweight), South Africa and Russia (both ranked Neutral).

Paris Agreement: Validates national and local actions

We view the Paris Agreement as accelerating the ‘race to the top’ in responding to climate change. Developed countries will need technologies and business models that de-carbonize their existing economies. Developing nations will focus on technologies that drive strong economic growth and improve living standards.

Global Earnings Synthesis

As a complement to our Regional and Sector Strategy: Monthly Update we introduce a new publication that will examine in detail the outlook for global earnings on a regular basis.

Regional and Sector Strategy: Monthly Update

We are becoming a little more cyclical once again. We are now upgrading the Industrials sector to Neutral from Underweight, largely reflecting improved valuation. We remain Neutral on the two sectors that are widely considered the most defensive: Consumer Staples and Health Care.

Regional and Sector Strategy: Monthly Update

We are Underweight Energy, Materials, and Industrials. Our only Overweight is in Financials. We upgrade China and Russia to Neutral from Underweight.

Dissecting the “Sharing Economy:” Business model opportunities and risks

Between Uber’s $50 billion valuation, Etsy’s IPO and the large venture capital infusions into Airbnb, the “sharing economy” is transitioning from a social movement to a large-scale commercial business model.

Regional and Sector Strategy: May Update

We are now underweight the most cyclically sensitive sectors: Industrials, Materials, Energy. While we upgrade the CEEMEA region to Neutral from Underweight — in large part because of an improved earnings outlook — this likely reflects a modest rebound in oil prices, which remain 40% below year-ago levels.

Regional and Sector Strategy: April Update

We continue to have a defensive tilt in our regional recommendations, and are Underweight the commodity-rich regions of Central and Eastern Europe, Middle East and Africa (CEEMEA) and Latin America …

Judges Announced for “Sustainable Games” Competition

Harvard Business School, Intel Education among Business and Entrepreneurial Leaders to Select Winner of $25,000 Prize Five global leaders from across business, the capital markets and academia have been selected as judges for “Sustainable Games:  The Business Model Challenge.”  The competition, which offers a $25,000 prize, is sponsored by Cornerstone Capital Inc., together with the Clinton… Read more »

Regional and Sector Strategy: March Update

Our regional strategy is unchanged. We continue to have a defensive tilt in our regional recommendations, and are Underweight the commodity-rich regions of CEEMEA and Latin America. Japan continues to be the top-ranked country. Over the past twelve months, share buybacks in Japan have been the largest of any country / region, the first time that country has been the global buyback leader since we launched the regional model in April 2014. We highlight changes in the Energy suggesting, perhaps, that stock prices in the sector have not fallen as fast as earnings estimates . . .

Regional and Sector Strategy: February Update

Our regional strategy is unchanged, even with a heightened focus on monetary policies and exchange rates in the past month driven, in part, by fears of deflation. We continue to have a defensive tilt in our regional recommendations, and are Underweight the commodity-rich regions of CEEMEA and Latin America. Our sector strategy is also unchanged and remains “less cyclical, more defensive.” We maintain our relatively defensive posture given pockets of economic weakness globally. We are Overweight Health Care in North America, the U.K. and Europe ex U.K. We are Underweight or Neutral Energy in the majority of regions….

China & Russia: Policies and Markets

Cornerstone Capital Group hosted a call on Jan. 12 with geopolitical expert, Lionel Vairon, CEO of CEC Consulting. Dr. Vairon spoke about implications for the global economy given closer ties between Russia and China – including likely developments in energy, politics and the financial sector. Click below to listen to the call.   Dr. Lionel… Read more »

Regional and Sector Strategy: January Update

This month we, upgrade Financials to Overweight from Neutral reflecting the combination of relatively attractive valuations and improving earnings momentum. In addition, Financials’ earnings estimate revisions are only modestly negative (i.e., downward revisions just outpace upward revisions), in sharp contrast to most other sectors where estimate revisions are strongly negative. Our regional strategy remains unchanged…..

Regional and Sector Strategy: November Update

This month we, upgrade Financials to Overweight from Neutral reflecting the combination of relatively attractive valuations and improving earnings momentum. In addition, Financials’ earnings estimate revisions are only modestly negative (i.e., downward revisions just outpace upward revisions), in sharp contrast to most other sectors where estimate revisions are strongly negative. Our regional strategy remains unchanged. We are Overweight or Neutral the majority of developed regions (Japan, U.K., Australia, North America) and Underweight most emerging markets (Latin America, CEEMEA)….

A Closer Looks at GMOs

Are laws requiring the labeling of food containing genetically modified organisms (GMO) justified? Do consumers have a right to know what is in their food, or will the labels simply confuse the public?

Market Summary: Overview

In a year of surprisingly muted market volatility, this month we saw risk assets tumble as investor concerns reached a decisive tipping point. Anxiety over a less accommodative Fed, the pace and sustainability of global economic growth, continued conflict in Ukraine, escalating violence in the Middle East, and even the Ebola crisis have investors fleeing… Read more »

Regional and Sector Strategy October Update

Still defensive — We maintain our relatively defensive posture given pockets of economic weakness globally. We are Overweight Health Care in the U.K., North America and Europe ex U.K. We are Underweight or Neutral Energy, Materials and Utilities in the majority of regions Regional strategy — We upgrade the U.K. to Overweight from Neutral, in large part because the earnings outlook has improved materially. We downgrade CEEMEA to Underweight from Neutral….

Ebola as a Challenge to Health and Investment

The latest Ebola outbreak has killed at least 1,200 people and probably infected 3,000 to 4,000 more across several West African countries, making it the biggest on record. From an initial start in Guinea, the focus of this deadly virus has shifted to Liberia and Sierra Leone (with limited numbers in Nigeria and Senegal), devastating… Read more »

Not Just a ‘Flash,’ But a Call to Arms

I was still at the Securities and Exchange Commission, overseeing the Division of Trading and Markets, when I first heard about a small band of traders and technology experts at the Royal Bank of Canada who were using technology to tilt the playing field back in favor of ordinary investors. I could hardly have imagined… Read more »

Flagship Research: Gauging Governance Globally – Macro & Micro Metrics

Much analysis has attempted to find an empirical link between Environmental, Social & Governance (ESG) factors and investment returns. By contrast, the focus of our research has been the significance of ESG factors for equity valuations….

Regional and Sector Strategy: Monthly Update

In this Executive Summary, we introduce the inaugural edition of a regular monthly update of our regional and sector strategy models, both of which explicitly take into account Environmental, Social & Governance (ESG) factors. More defensive — We extend our relatively defensive posture given more pockets of economic weakness globally. Regional strategy — We upgrade… Read more »

CCG Leases New Space at The Alliance Center

Cornerstone Capital Inc. has reached an agreement to become one of the earliest for-profit tenants at The Alliance Center in Denver and will participate in the building’s Grand Reopening festivities on Aug. 14th. The space will accommodate the firm’s new Investment Management practice. “We are pleased to have been able to find the perfect space to house… Read more »

The Cornerstone Capital Strategy Update: Less Cyclical, More Defensive

We have updated the inputs to the Cornerstone Capital Sector Strategy Model in which we rank the ten GICs in the MSCI All Country World Index (ACWI). Figure 1 summarizes the most recent rankings. Figure 1:  Cornerstone Capital Global Markets Equity Strategy Model Sector Overview Relative to the previous rankings (published in the June edition… Read more »

Cornerstone Summary of “Earnings Guidance A White Paper from KKS Advisors & the Generation Foundation”

The fact of the matter is that capital markets have moved away from a long-term mindset and more towards a focus on short-term results. This trend has been well observed by market participants and academics alike, yet the question as to what will serve as a catalyst to reverse the trend remains. To this end, it’s worth highlighting a recently released white paper by The Generation Foundation and KKS Advisors focusing on the impact of regular Earnings Guidance. Thorough examination of the topic leads to the following conclusions….

What is Shareholder Engagement… Why is it Important?

The article by Susan Baker and Jonas Kron provides a fascinating example of how Trillium Asset Management has used its influence as an investor to impact corporate policies on an important social issue. But is Trillium’s story an outlier or part of a trend? Do companies change their governance practices in response to input from shareholders? If so, why? And more importantly, does it benefit the bottom line?

Confirmation Bias in the Investment Process

The ancient Greek historian, Thucydides, wrote, “It is a habit of mankind . . . to use sovereign reason to thrust aside what they do not fancy.” The phenomenon to which he speaks manifests itself in all walks of life, from politics to religion and investing. Today, this concept is termed “confirmation bias” and refers to the tendency of people to favor information that confirms their beliefs or hypotheses….

The Cornerstone Capital Strategy Update

In the April edition of The Cornerstone Journal of Sustainable Finance & Banking we introduced the Cornerstone Capital Regional Strategy Model in which we ranked seven of the world’s regions/major economies. At the time, we excluded Australia and Canada but, following client feedback, we are now incorporating those two countries in our model – Australia as a stand-alone country, and Canada as part of the North America region….

The Cornerstone Capital Sector Strategy: Incorporating ESG Factors into Media Sector Valuations

Cornerstone Capital’s sector strategy model is overweight on the MSCI ACWI Consumer Discretionary Index, which contains a number of global media industries including Cable & Satellite (9% of the index’s market cap, the second largest weight after Auto Manufacturers), Movies and Entertainment (7% weight, fourth-largest in the index), and Casinos & Gaming (4% weight, tenth… Read more »

Principles of Responsible Gaming

A Chinese proverb says, “If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time.” Unfortunately, in not heeding this advice, some casual gamblers find themselves grappling with gambling addiction. Partly because of the well-documented adverse effects of compulsive gambling, a subset of ethics-based investors exclude gaming companies, along with other “sin stocks,” from their investment universe…

Fantasy Sports – Business Versus Social Implications

ABSTRACT FROM THE CORNERSTONE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE JUNE 2014 EDITION.  Fantasy sports is big business. A fanatic fan base and highly desirable demographic has turned it into a $3 billion industry in just the U.S. and Canada, growing over 12% annually.  The fantasy sports phenomenon caught fire with the advent… Read more »

Sports Analytics for the Masses

ABSTRACT FROM THE CORNERSTONE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE JUNE 2014 EDITION.  Professional tennis players now sparring on Centre Court at Wimbledon have likely scrutinized every part of their game – from stance, to serving strength to baseline maneuvers — with a team of coaches at the ready. But what of the… Read more »

Feeding Fans Sustainably

ABSTRACT FROM THE CORNERSTONE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE JUNE 2014 EDITION.  When we think about sustainability in the context of the fan experience we take a holistic view of our opportunity and responsibility – from the restaurants supporting the sports events to the ingredients provided by our supply chain.  In doing… Read more »

More Than a Game: Football Fans & Nationalism

ABSTRACT FROM THE CORNERSTONE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE JUNE 2014 EDITION.  It is conclusively clear from this discussion that football is an example of the interaction between the local and the global in regards to both to the globalization of the sport and to the impact that the game’s globalizing has… Read more »

Par for the Course?

The modern game of golf has come a long way from its humble beginnings in 15th-century Scotland, and its fans are some of the most ardent of any sport. Ironically, it is golf’s deep-rooted traditions that have left it struggling to adapt to structural shifts, and the industry is now facing declining interest in many… Read more »

Regional Strategy Update

  In the April edition of The Cornerstone Journal of Sustainable Finance & Banking we introduced the Cornerstone Capital Regional Strategy Model in which we ranked seven of the world’s regions/major economies. At the time, we excluded Australia and Canada but, following client feedback, we are now incorporating those two countries in our model –… Read more »

Introducing Cornerstone Capital Global Sector Strategy

In this note, we introduce the Cornerstone Capital Global Sector Strategy Model.  The model ranks the 10 GICS in the MSCI All Country World Index.  As discussed in detail below, the model employs a quantitative multi-factor methodology to generate sector recommendations based on proprietary measures of valuation and earnings.  The Cornerstone Capital model also takes… Read more »

The Cornerstone Capital Regional Strategy Update

ABSTRACT FROM THE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE MAY 2014 EDITION In the April edition of The Cornerstone Journal of Sustainable Finance & Banking we introduced the Cornerstone Capital Regional Strategy Model. This month there is no change in our regional weightings. We provide a quick update by region. Michael Geraghty is the… Read more »

Where Angels Fear to Tread: Entrepreneurs Rush In, But Investors Don’t

ABSTRACT FROM THE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE MAY 2014 EDITION Co-Authored by Robert D. Lamb and Sadika Hameed, Program on Crisis, Conflict and Cooperation at the Center for Strategic and International Studies A teenage girl sews some clothes and sells them to a vendor at the local market, grows her business, and eventually… Read more »

Introducing Cornerstone Capital Global Sector Strategy

ABSTRACT FROM THE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE MAY 2014 EDITION We introduce the Cornerstone Capital Global Sector Strategy Model which ranks the 10 GICS in the MSCI All Country World Index. The model employs a quantitative multi-factor methodology to generate sector recommendations based on proprietary measures of valuation and earnings and incorporates… Read more »

Introducing Cornerstone Capital Global Markets Regional Equity Strategy Model

In this note, we introduce the Cornerstone Capital Global Markets Regional Equity Strategy Model.  As discussed in detail below, the model employs a quantitative multi-factor methodology to generate regional recommendations based on proprietary measures of valuation and earnings.  The Cornerstone Capital model also takes into account corporate governance metrics by region.  We will be updating… Read more »

Increasing Access to Clean Water in Kenya: The Case for a Social Impact Bond

EXCERPT FROM THE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE APRIL 2014 EDITION. With limited public funding available for socially and environmentally responsible programs, a variety of initiatives have been developed to attract private capital into sustainable development. Although still in their infancy, social impact bonds (SIBs) offer a promising outlook for sustained public-private partnerships…. Read more »

Cornerstone Roundtable Discussion on the Global Pharmaceuticals Industry

The “Biopharma” Industry The lines between the “pharmaceuticals” and “biotechnology” sectors are becoming increasingly blurred. With 35-40% of the earnings of global large cap pharmaceuticals companies coming from biologics, it is probably more accurate to refer to these companies as operating in the “biopharma” industry. Corporate governance has played a key role in the emergence… Read more »

Maersk: Sustainability as a Driver for Growth

EXCERPT FROM THE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE APRIL 2014 EDITION. It is our experience that sustainability adds value if it is tied closely into business and is allowed to help the company take a longer term perspective on material matters. At its core, it adds value through better risk management whether it… Read more »

Social Stock Exchanges: Democratizing Impact Investing

EXCERPT FROM THE JSFB. SUBSCRIBERS CAN READ THE FULL ARTICLE IN THE APRIL 2014 EDITION. While impact investing is still far from being an accessible opportunity for the general population, investor demand for greater liquidity and platforms such as Kiva and Kickstarter make it clear that the potential for involving retail investors in the sector is immense…. Read more »