ICE Canyon Hosts 2011 Global Investment Conference

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Business and Policy Leaders Convene to Examine the Future of Globalization and Implications for Asset Allocation and Investment Strategy

NEW YORK--(BUSINESS WIRE)-- ICE Canyon LLC, a leading global investment management firm specializing in Emerging Markets and Global Credit strategies, held its 2011 Global Investment Conference on October 25 in New York City.

The conference, entitled “What is the Future of Globalization? Debt Crisis, Contagion, Climate Change, and Sustainable Growth,” brought together some of the world’s leading experts from government, academia, and the private sector specializing in the global economy, finance, and climate change. The speakers included renowned economists, former senior government and central bank officials, policy experts, one Nobel Prize winning economist, and ICE Canyon’s senior investment team.

This year’s conference program was set against the backdrop of unprecedented market volatility—framed by the rise of the emerging markets as the primary force for global economic growth, juxtaposed against significant structural and cyclical weaknesses in the advanced economies. As ICE Canyon Co-Founder and Managing Partner Nathan Sandler described, “Globalization is undergoing tectonic shifts that are reshaping the contours of the global economic growth, financial stability, capital flows, and the distribution of geopolitical power—this is Globalization 2.0.”

The conference presented an in-depth analysis of the challenges, risks, and opportunities of globalization. Panelists discussed the complex interplay between advanced economies and emerging markets, sovereign default risks and financial sector solvency, and the deepening tensions between economic development and climate change.

The conference program was divided into five panels, using a moderated question and answer format.

In Panel One, entitled “Global Scenarios for 2012,” four leading economists provided a comprehensive survey of the global economy with the outlook for the U.S., Europe, China, and emerging markets. Panelists included:

• Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley
• Raghuram Rajan, Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business
• Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University
• Michael Spence, recipient of the 2001 Nobel Memorial Prize in Economic Sciences, Senior Fellow at the Hoover Institution and Philip H. Knight Professor and Dean, Emeritus, at Stanford University’s Graduate School of Business

The participants focused on the dominant structural and cyclical forces that are driving Globalization 2.0, including strong growth and investment fundamentals in the emerging markets, playing off against deepening structural and cyclical risks in the advanced economies. These risks include rising public sector indebtedness, weak financial sector capitalization, sovereign default risks, high structural unemployment, and poor demographics. There was broad consensus that global economic growth momentum has shifted toward emerging markets, and that major policy initiatives are urgently needed in advanced economies to restore financial stability and reverse the longer-term decline in income and living standards.

The second panel focused on Latin America and was entitled “Brazil and Chile: The Perfect Models of Post-Emerging Markets Transition?” The panelists included:

• Paulo Leme, Managing Director and Director of Emerging Markets Research, Goldman Sachs
• Henrique Meirelles, Former Governor of the Central Bank of Brazil
• Andres Velasco, former Minister of Finance to the Government of Chile and Adjunct Professor of Public Policy at Harvard University

Drawing on the dramatic economic transformations of Brazil and Chile, the panel discussed whether the two countries were models for post-emerging markets transition and could complete the challenging transitions to high income economies. The panel also explored the underlying forces that have shaped their dramatic transformations in growth, income, and living standards. While significant progress has been made over the last 10 years, additional reforms are needed to unlock even stronger productivity gains and significant new investment is needed to address worsening infrastructure bottlenecks. Drawing from the lessons of past crises in Latin America, the participants had some pointed observations and advice for Europe’s policy makers on fiscal policy, the role of the central banks in securing financial stability, and crisis management.

Panel Three was entitled, “Europe: Sovereign Defaults, Financial Crisis, and the Future of the EMU – Lessons from the Emerging Markets.” The panelists included:

• Anders Aslund, Senior Fellow at the Peterson Institute for International Economics
• Kemal Dervis, Director of the Brookings Institution’s Global Economy and Development Program
• Otmar Issing, Former Member of the Executive Board of the European Central Bank
• Axel Weber, Former President of the Bundesbank Germany and visiting Professor of Economics at the University of Chicago’s Booth School of Business

The Europe panel was especially timely, following pivotal EU summits on October 23 and October 26, and preceding the November 3 meeting of the G-20 in Cannes. The panel’s focus was also more broadly applicable. The deepening crisis in Europe exemplifies many of the new challenges and risks of globalization—e.g., unsustainable fiscal deficits and the excessive build- up of public sector indebtedness, which is leading to escalating sovereign default risks and widening contagion. The panelists delivered a spirited debate on the European crisis, the policy responses, the future of the euro and European integration, and the impact on the global economy. The participants were deeply divided over the prospects for fiscal adjustment and structural reforms, the role of the ECB in ensuring financial stability, and the longer-term prospects for economic growth.

The conference program concluded with a final panel entitled, “Climate Change: The X-Factor for Global Investing in the 21st Century?” Two of the leading authorities on climate change and poverty served as panelists:

• Lord Nicholas Stern, IG Patel Professor of Economics and Government, Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics
• Paul Collier, Director of Oxford University’s Centre of the Study of African Economies

Nicholas Stern described climate change as the biggest market failure in human history. But, he added that if successfully managed, the transition to a low carbon economy could drive an energy “revolution” similar in magnitude to the industrial revolution. The panelists were in strong agreement that climate change and poverty are “two of the most pressing global challenges of our time,” and closely interconnected. The tipping point for carbon emissions and irreversible climate change may be within 10-15 years, or sooner. Yet the urgency over climate change is being upstaged by economic and financial crises, pseudo scientific challenges, and policy inertia. There was a strong consensus from the participants that the cost of doing nothing would significantly outweigh the estimated cost of a globally-coordinated plan for carbon mitigation.

Finally, senior members of ICE Canyon’s investment team provided a synthesis of conference panels, and presented tactical ideas for global investors in a panel entitled “Expected Returns: Alpha, Beta, Value and Best Ideas for 2012.”

ICE Canyon outlined three key ideas for investors to consider when devising their global asset allocation and investment strategy:

• Emerging markets are a structural growth and improving credit story. As a result, emerging markets credit and equities should be used to optimize risk-adjusted total returns. The investable emerging markets have expanded in breadth and depth, enabling a wide continuum of new investment strategies to exploit growth and improving credit fundamentals.
• Emerging markets could be a relative safe haven for global asset allocation. Risk indicators in the emerging markets are at the lowest risk point in four decades, while risk indicators in the advanced economies are at the highest risk point in four decades. Furthermore, valuations in the emerging markets are more compelling—reinforced by strong secular growth and investment fundamentals.
• EM Credit is the “sweet spot” for global asset allocation for at least the next three to five years, or until the process of financial sector recapitalization has played out. In ICE Canyon’s view, over the next three years, EM Credit could generate equity-like returns from income and capital appreciation. Furthermore, while EM Credit may not generate the highest absolute returns over the next three years, it could generate the highest risk-adjusted total returns across the widest range of potential global outcomes.
• EM Credit is a structural alpha story. The sources of structural alpha include: strong sovereign and corporate credit fundamentals, cheaper valuations, global market dislocations and inefficiencies, private market liquidity premiums, and event-driven catalysts (e.g., M&A, restructuring, recapitalization).

At the conclusion of the conference program, Sandler observed: “Our objective was to engage and apply the valuable expertise of our speakers to develop an even deeper understanding for global investment opportunities, as well as the risk and reward symmetries (or asymmetries) of today’s uncertain markets. I can’t imagine a better roster of speakers to help us achieve this objective.”

ABOUT ICE Canyon

Founded in 2006, ICE Canyon is a leading global investment management firm specializing in Emerging Markets and Global Credit investment strategies. ICE Canyon is a joint venture with Canyon Capital Advisors and is an SEC registered investment advisor. ICE Canyon has approximately $2.2 billion in assets under management as of October 31, 2011 and is headquartered in Los Angeles with offices in New York City and Abu Dhabi, UAE.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50066378&lang=en

ICE Canyon LLCFor media:Christy Eyster, 310-272-1712[email protected]orFor investors:Angela Kay, 310-272-1706[email protected]

Source: ICE Canyon LLC

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