It is generally considered a bad idea to mix White Russian cocktails, glasses of vintage port, varieties of single malt whiskies and large quantities of red wine together. This did not stop your humble Spy this week from such an extravagance, leaving him feeling worse than a junk bond manager in a credit crisis. Spy’s companions, who were funding this headache-inducing night on Hong Kong’s slippery tiles, were looking for the bright spot in the last ten days of market volatility. The general consensus was that, “so many people missed the equity rally in Q1, this could provide a small opportunity to jump back in and move some cash that is hovering on the side-lines.” Timing the market: now where has Spy heard that one before?
Janus Henderson announced this week they have appointed someone to head up global distribution after the exit of Phil Wagstaff last year. Suzanne Cain, who was the head of US and global head of institutional clients sales at BlackRock’s iShares unit, will join on 20 May and oversee global marketing and lead client service across the firm’s business worldwide. She joins the executive committee of the company and will be based in Denver. Spy is not surprised at all to see strong ETF experience in this role for an asset manager with a traditional active product suite. Janus Henderson’s Global Technology fund has had a good year, up more than 10% over the last twelve months. Global AUM at the Anglo-American-Australian firm is now about $357bn.
UBS Wealth Management has recently added a new member to its portfolio management team in Singapore. Charles Pope, who was previously an investment analyst at independent wealth manager Mindful Wealth in Singapore, has joined the Swiss giant. Spy has no news on who is replacing Charles at Mindful yet.
Is Hong Kong finally going to shake up its rather cosy banking world, wonders Spy? The HKMA did its best to appear to be in shake mode this week by issuing four new virtual banking licenses. The new license owners are Ant SME Services (Hong Kong), a unit of Alibaba Group affiliate Ant Financial; Infinium, a joint venture between internet giant Tencent Holdings, state-owned Industrial & Commercial Bank of China and Hong Kong Exchanges and Clearing; Insight Fintech HK, a joint venture backed by smartphone maker Xiaomi; and a unit of Chinese insurance giant Ping An Group. This brings the total of new virtual bank licenses issued in Hong Kong to eight. Considering Spy’s rather tedious experience with form-obsessed “Hong Kong Bank” he can but only welcome this development and hope that within a year these app-based banks get in on the wealth management game too.
This week, Spy came across this list of the current market caps of various leading companies per employee.
- Netflix: $23m
- Facebook: $14m
- Google: $7.9m
- Twitter: $7.6m
- Microsoft: $7.3m
- Apple: $7.1m
- Exxon Mobil: $4.6m
- Amazon: $1.5m
- JP Morgan: $1.4m
- Berkshire Hathaway: $1.3m
- Walmart: $130k
Spy has yet to find a similar exercise for asset or wealth managers but would be rather intrigued to know what the AUM per employee is in our leading AM and wealth firms. Spy would bet that Vangaurd might just top that list.
Hang Seng Bank publishes its list of most sold funds on regular basis. Looking for changes on the list can be as tedious as watching paint dry as it is typically the same income or Asia Pacific funds that feature week in, week out. This week however, Spy spotted a rather left-field entry on the list. Franklin Templeton’s Biotechnology Discovery Fund suddenly appeared. The fund has not had a great performance in the last 12 months, although over the last five years it is up a rather healthy 30%. If nothing else, it was a pleasure to see consumers embracing a more exotic thematic for a change. Flash in the pan or something longer lasting?
Looking at the share prices of most listed asset managers, they appear to be having a rather middling to weak sort of a year, to put it kindly. Spy did spot one stand-out though: Ameriprise, the parent company of Columbia Threadneedle. The firm seems to be keeping its investors happy at the moment. The shares are trading at nearly $143, towards the top of its five year range.
Unless one has been living the life of a hermit in a cave, it will be hard not to be aware that Uber is having its IPO today in New York. The company priced its shares at $45 last night and will begin trading later with an initial valuation of about $75bn. Lyft investors, who are already nursing losses since its hyped listing a few weeks ago will be watching with anticipation, no doubt. More than 60% of more than 7,000 IPOs from 1975 to 2011 had negative absolute returns after five years in the secondary market, according to a UBS analysis using data from University of Florida professor Jay Ritter. In other words, the insiders do well if they have a pre-IPO allocation, while you have few rewards if you are buying shares post-IPO. That is not going to stop Wall Street selling a pocket full of dreams, suspects Spy.
It seems The Donald is not backing down in his trade war with China. As of this morning, Trump is putting up more tariffs on $200bn of Chinese goods and throwing caution to the wind in his acrimonious and Twitter-driven negotiation with China. Market volatility, which had been in abeyance most of the year, is back with a vengeance and Spy would imagine it gets a whole lot bouncier from here. This week, Spy had dozens of commentaries arrive from various banks and asset managers trying to understand the implications of a trade deal failure. This comment from Lombard Odier rather sums up the mood: “We had been turning towards a cautious stance in our asset allocation mix by tempering our bullish views on risky asset to neutral levels, and are now actively building hedges given the scope for sustained volatility in coming weeks.” Spy suspects “building hedges” may soon switch to “run for cover” if a deal collapses entirely.
Spy’s photographers snapped a new tram running around Hong Kong this week promoting Fidelity’s Global Multi Asset Income Fund.
Until next week…
