Mauricio Macri, Argentina's president-elect, has promised a "marvelous" new era was starting for his country, beleaguered by years of economic instability. Axel Indik/Bloomberg
Mauricio Macri, Argentina's president-elect, has promised a "marvelous" new era was starting for his country, beleaguered by years of economic instability. Axel Indik/Bloomberg

‘Kirchner era’ ends with opposition win in Argentina



BUENOS AIRES // President-elect Mauricio Macri’s promised to revitalise Argentina’s sagging economy with free-market reforms and improve strained relations with the United States resonated with voters, carrying him to an election victory that ended 12 years of rule by president Cristina Kirchner and her late husband.

With 98 per cent of the vote counted from Sunday’s election, Mr Macri had 51.5 per cent support compared to 48.5 per cent for ruling party candidate Daniel Scioli, Mrs Kirchner’s hand-chosen successor, who has conceded defeat.

“Today is a historic day,” Mr Macri crowed while his supporters celebrated. “It’s the changing of an era.”

The era he hopes to end is that of Mrs Kirchner and her late husband and predecessor Nestor Kirchner who rewrote Argentina’s social contract and dominated the nation’s political scene with a mix of patronage, charisma and withering attacks on opponents. Mrs Kirchner battled international creditors, had strained relations with Washington and allied her country with late Venezuelan president Hugo Chavez and his successor Nicolas Maduro.

During the election campaign, Mr Macri vowed he would listen more and talk less than Mrs Kirchner.

“I feel so happy because today we put an end to the mafia” of ruling party rule, said Felisa Sanchez, a Macri supporter waving an Argentine flag. “They claimed to be Robin Hood helping the poor with social welfare plans when the poor are really helped with jobs and education.”

But fulfilling his campaign promise to reform Argentina’s economy may prove difficult for Mr Macri.

When the business-friendly opposition candidate takes office December 10, he will inherit a country with around 30 per cent inflation, near-zero economic growth and entrenched government social spending that private economists warn is not sustainable. He also lacks majorities in either chamber of congress to pass his deep reforms.

Addressing thousands of supporters on Sunday, Mr Macri said his presidency would not be about “revenge” or “settling scores” but rather helping the country progress.

Mr Macri, 56, has pledged to lift unpopular controls on the purchase of US dollars and thus eliminate a booming black market for currency exchange. He has also vowed to jumpstart the economy by lifting many tariffs, lowering taxes and attracting foreign investment. Many of these moves could face resistance in a hostile congress and Mr Macri’s own background will feed into Argentina’s political polarisation after more than a decade of left-leaning government.

He hails from one of the country’s richest families and rose to prominence as president of the popular Boca Juniors soccer club. On the campaign trail, he sometimes talked about being kidnapped in the early 1990s, an experience he said helped him understand the needs of others and he credits with pushing him into politics.

Later, as mayor of Buenos Aires, he was known for a technocratic manner that stressed efficiency over style.

Mr Macri’s win signals a clear end to the era of Mrs Kirchner and her late husband. During their years in office, the power couple gained popularity by spending heavily on programmes for the poor, raising tariffs to protect local economies and passing several progressive laws, including the legalisation of gay marriage in 2010.

In recent weeks, Mr Macri increasingly talked about international relations, signalling some of his foreign policy priorities.

He said he would push to expel Venezuela from the South American trade bloc known as Mercosur because of the jailing of opposition leaders under Venezuela’s president Mr Maduro. That would be a huge change for a continent where many countries, including neighbours Chile, Brazil and Bolivia, have left-leaning democratic governments that have maintained close ties with Venezuela.

* Associated Press

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”