What a difference a week makes, muses Spy over a glass of Knob Creek small batch nine-year-old whiskey. Before Trump’s surprise election last week, fund managers, economists and the commentariat were telling us that a disaster of biblical proportions would befall mankind should the Orange One gain the White House. Like Trump himself, the rhetoric has calmed down and commentators are finding things to like about the president-elect’s policies. Instead of talk of building walls, people are talking about building new bridges (and roads and buildings) and have suddenly discovered the silver lining that comes with fiscal expansion. Once again, Spy is reminded that being part of the consensus is a dangerous game. All those knee-jerk stock sellers on election night must be having a bad case of remorse as the S&P has rallied 2.5% since the elections and is just shy of its all-time high. Hardly apocalyptic, is it?
Spy’s network of sources brings news of an imminent change in the Singapore fund sales landscape, if this particular rumour heard this week turns out to be true.* Apparently Amelie Remond, who has been with Aberdeen for more than 8 years focusing on private banks, has been lured to Axa Investment Management. It is not known when her exact start date is. As of press time, Axa IM had not responded to our enquiries. Watch this space.
*Update: Spy has learned that the rumour turned out to be untrue.
News has reached Spy that Nick James has stepped down from his sales role in Hong Kong at Leonteq, the Swiss structured product specialist. Nick was brought on to help develop the intermediary channel last year. Spy has no news yet on his replacement or where Nick is moving to.
Standard Chartered in Singapore has finally put its 4th quarter funds conviction list online, Spy spotted. What is noticeable is how few equity funds have been retained on their focus conviction list and it is a lot shorter than the 3rd quarter. All equity funds previously listed for Greater China, North America, Japan and Europe have dropped off their list. The list has shrunk to merely 12 from 18. Spy identified two new funds that have been added to the multi-asset income theme: JP Morgan AM’s Global Income (SGD Hedged) and Blackrock’s Global Multi Asset Income (SGD Hedged). The core list has also shrunk as Standard Chartered has cut back on global and government bonds: Templeton’s Global Total Return (SGD) and Templeton’s Global Bond (SGD) have both been dropped. Spy’s comment: SC may come to regret dropping North America from the focus list with the US equity reaction to Trump.
One top tier bank that believes a Trump presidency will not be bad for Asia in 2017 is Goldman Sachs, notes Spy. In a report this week it stated, “The best improvement in the opportunity in global equities is in Asia ex-Japan, where we forecast returns of 12.5 percent (versus 3.8 percent for 2016).” Note the ‘ex-Japan’. Unfortunately for the Land of the Rising Sun, GS is predicting, “At the other end of the equity spectrum, in Japan…declines of -3.7 percent on the Topix (versus 5.2 percent for 2016).” Ouch!
Julius Baer seems to be having a merry old time with assets rising to a record CHF 327 billion, according to their interim report published yesterday. Net new money growth was 4%. The eye-opening figure was the growth in RMs to 1,376. Also of note is the completion this year of its majority acquisition of Kairos, an Italy-headquartered asset and wealth management business. Spy does wonder whether JB can decide whether it wants to be in the asset management game or the wealth management game or both? In 2005 it acquired GAM and then publicly listed the firm in 2009. In 2013, just four years later, it bought a 20% stake in Kairos, expanding that to 80% in April 2016. JB has already stated that it will float Kairos when it gets a chance at some later date.
Spy often talks about Western firms buying stakes in Asian asset or wealth management platforms. Spy was therefore pleased to see in FSA’s sister publication, International Adviser, the report that Convoy, the large, listed Hong Kong IFA business, has bought a stake in the UK’s Nutmeg platform. Convoy has paid £24m for 17.16% of the digital wealth business. Schroders is also a shareholder in Nutmeg. Globalisation appears alive and well and that the fall in the pound has made UK assets awfully attractive.
One of the big beneficiaries of the Trump win has been the banking and financial sector. Perceptions that Trump will be more regulatory-friendly and that higher rates may benefit the banks has led to decent rallies in the shares of Citibank, JP Morgan et al. So which funds are benefiting? According to data from FE only 9 financial specific funds are registered for sale in HK and a few of those are ETFs. The standout is Blackrock’s GF World Financials, it is up 15.2% in the last 6 months. The fund has BoA, Citi and JP Morgan as its top 3 holdings. Spy would bet a fine bottle of Bordeaux that Blackrock has sold barely a penny of it in HK this year, though.
Spy is keeping an eye on Indian equity funds that have been widely sold by Hong Kong and Singapore’s private banks, especially to NRIs. With Indian Prime Minister, Narendra Modi’s gamble to remove large currency notes from circulation at short notice in order to combat fraud and tax evasion, there is some speculation that consumers may rush to spend the money rather than declare it. Bloomberg reported, “There was a surge in demand for luxury watches after Modi’s sudden announcement as wealthy Indians rushed to make costly purchases with unaccounted cash. One luxury watch outlet in north-west Mumbai saw 45 units of Rolex watches sold on a single day, according to a representative of a watchmaker, who was present when the sales took place. Demand matched what the shop would usually sell in a month.” Funds such as Standard Life Investments Indian Equity Midcap, up an impressive 14.5% over the last 6 months and Jupiter’s India Select up 8.8% over 6 months, may just have an even better run ahead of them.
Speculation is afoot about where Karen Tan is going to end up after leaving Deutsche Bank. For the record, Spy suspects it will be UBS. Ravi Raju has joined UBS and it is not unheard of for top staff to follow a popular boss…
More details have been revealed to Spy about the merger between Henderson Global Investors and Janus Capital. The merged firm will be listed on the NYSE and renamed Janus Henderson Global Investors. Apparently the shareholder split between the two firms will be 57% and 43% respectively. A rebrand is likely.
In Hong Kong, Old Mutual Global Investors is making sure everybody knows they exist. Following on from an OMGI tram spotted recently, Spy’s photographers have captured a giant billboard in Central:
Blackrock is back on MTR advertising, too. It is all about income – is it ever not…?
Until next week….
