Spy hopes that under the rather trying circumstances in Asia at the moment, all his readers had a happy Chinese New Year. Spy opted to stay in Hong Kong rather than escape to Asia’s snowier resorts. The rapidly spreading coronavirus has brought to the Fragrant Harbour a touch of hysteria and Spy has spotted a fair amount of quackery as people attempt to avoid contamination. Admittedly, it is hard to gauge the epidemic’s real virulence and potential scale when so many experts can’t agree. For what it is worth, Spy’s great aunt was an old-school chemist and she lectured the wider family with monotonous regularity every winter, “If you want to avoid flu, wash your hands often and have a stiff whisky before bed.” Although that last bit of advice may just have been wishful thinking on her part, it has seldom failed your humble Spy, who has trusted the advice for decades (even when there was no flu epidemic).
Spy usually reports on people moves across the asset and wealth management industry. This post-CNY, rather-slow-news-week, he diverts his attention closer to home. Tom Porter, Fund Selector Asia and Last Word Asia co-founder and managing director for more than a decade, has decided to step down from the business. Tom told Spy over several large cognacs and a Montecristo no. 2 cigar that he had spent far too much time away from his young children and was in danger of being considered a distant relative instead of their father. Tom is not entirely leaving Fund Selector Asia, as he has been persuaded to chair conferences in the region from time-to-time and continue to inform and entertain the FSA delegates. Long standing head of Last Word Hong Kong, Gareth Wilde was appointed MD of Asia in the middle of last year and fully took up the reigns on January 1st. Last Word has also recruited David Cavanagh, formerly of the FT Group, to be its new commercial director and based in Hong Kong…Spy tried very hard to winkle out of Tom what he is planning to do next. Tom claims to be “taking a sabbatical and writing a humorous novel with a touch of romance, a perfume empire heiress and a nasty incident with some bagpipes”. Spy is politely withholding judgement on this dubious-sounding endeavour – in public.
Spy has the slightest feeling of schadenfreude over the Tesla short-sellers who are now bleeding profusely as Tesla stock soars on the back of results that exceed expectations in its most recent quarterly reports. It is not so much that Spy disapproves of shorting, but rather that he harbours a healthy disdain for the venomous crowd that has appeared who seem to think Elon Musk is some sort of fraud and are, literally, desperate for him to fail. Musk is certainly eccentric and perhaps a little crass at times, but he is no fraud. Similar to the late, great, Steve Jobs before him, Musk is upending entire industries and companies that had grown complacent, flabby, lobby-dependent and downright stuck in the 20th century. Spy suspects that many in the active asset management industry often felt the same about Vanguard’s Jack Bogle. Look how that worked out.
Whether it is the coronavirus, stretched earnings or some other, as yet misunderstood malign factor, volatility has returned to our markets. Once again, active managers will have a chance to show they can beat the index funds where, surely, lots of healthy investment babies are being tossed out with the panicky Wuhan bathwater. Spy will be watching, with interest, for the end of January figures as funds report their scorecards…(With the speed with which the ETF industry launches new funds, Spy is expecting an Anti-coronavirus ETF to debut soon.)
Fed committee watching must now be the dullest sport in town. If anyone had any excitement over this week’s announcement, they should calm down and have nice glass of cold water. We have had 86 FOMC meetings since the great central banker-led expansion began in June 2009. At 74 of those, including Wednesday’s gathering, the market priced in no rate change and got no rate change. At 9 of those meetings, the market had priced in a 25 bps hike and got a 25 bps hike. At 3 of those meetings, the market had priced in a 25 bps cut and the Fed cut by 25 bps. There was not a single surprise in more than a decade. Stop the anticipation, this is definitely not a Netflix drama.
Unsurprisingly, there is practically no outdoor advertising for asset management in Hong Kong or Singapore at the moment. The industry is in hibernation, it would seem – or hiding behind a large facemask, perhaps?
And speaking of coronavirus, one of Spy’s videographers captured the reaction in Hong Kong when the stock of sold-out face masks was briefly replenished at a small shop:
Until next week…
