Spy has been conducting an informal and deeply unscientific survey among fund sales and marketing representatives. The question goes something like this: “How easy are you finding it to persuade portfolio / fund managers in the US, Europe and the UK to travel to meet clients and do presentations in Asia at the moment?” The results make depressing reading. More than half of those chatted to since the beginning of the year were positively fuming. “Teams and Zoom has made them lazy” moaned one sales executive. “It is really hard. They constantly ask why they need to come.” Spy is absolutely staggered these PMs think investors want to give them money when they won’t pitch up to explain their thinking in person. Here’s a prediction: those that do, are likely to raise more assets.
Rather quietly in January, Matthews Asia has launched an ETF format of its Emerging Markets Discovery Fund. This is an active fund, which is already available in a traditional mutual fund format. The fund is trading on the Nasdaq in the United States under the ticker, MEMS. The Discovery fund is focused on small- to mid-cap equities and is very much an active strategy that invests everywhere except the “United States, Australia, Canada, Hong Kong, Israel, Japan, New Zealand, Singapore and most of the countries in Western Europe.” Spy continues to believe, in the long term, the ETF format will be the dominant fund vehicle.
The value destruction horror show that is abrdn since its creation via the merger of Standard Life Investments and Aberdeen Asset Management continues with more job losses and asset outflows this week. The aggressive cost cutting promised by the chief executive, Simon Bird, means that another 500 roles at the company are being made redundant. Spy is seldom convinced on mega-mergers at the best of times, but this sorry history must be a salutary lesson for asset management mergers everywhere. Spy has seen excellent boutiques integrated into larger firms very successfully over the years, but these mergers of “equals” have a rather poor track record unfortunately.
What happens to the S&P 500 when analysts are bearish or bullish on the year ahead? Well surprise, surprise, markets usually do the opposite to the consensus. Spy came across this nifty little chart which shows exactly that. It goes back to 1987 – nearly 40 years. It reflects the American Association of Individual Investors “Bulls” readings broken into deciles by decade, and shows the average return a year later for the S&P 500. If anyone is surprised that 2023 was a pretty good year, don’t be. Analysts were generally pretty bearish at the end of 2022.
Spy was talking to a fund selector in Singapore this week, who shall remain coy and anonymous. He said, “One of my favourite brand straplines in all of Asia is Standard Chartered’s ‘Here for good’. Apart from the obvious pun, it stands as a line in the sand. Why? Because for so many other businesses, foreign asset managers especially, at the first sign of trouble back home, they retreat from Asia.” He was lamenting that several well-regarded names have dipped their toes in the water, got a small following and have promptly pulled out of the region because of issues in their head office. “And the managers wonder why we hesitate to onboard them. Are they here for good, or here for the good times only?” Hard to argue with that sentiment, reckons Spy.
“Regrets, I’ve had a few, but then again, too few to mention”, so sang old Blue Eyes, Frank Sinatra himself in his classic, “My Way”. Spy has come across more than a few people who ‘escaped’ Hong Kong, during Covid, to other regional hubs including Singapore and Thailand and now have a more than a few regrets and most certainly enough to mention. The common lament has been that they are missing the Hong Kong lifestyle and now their job has been taken by somebody else and their lack of language skills will not make it easy for them to return.
Fun Fact. The Apple Mac was launched this week 40 years ago. On 24 January 1984, Steve Jobs unveiled the Macintosh, which started at $2,495 – that works out to the equivalent of about $7,400 today. Since then, Apple’s stock is up a truly staggering 208,000%. If we consider the value given by a laptop computer today, which costs about $1000, the change is even more dramatic.
The Singapore Sands Integrated Resort reported 4th quarter earnings this week. The high rollers are back and so are their losses – Sands’ gains, of course. “Net revenue for the Singapore integrated resort came in at $1.1bn, up 55.6% from the $682m recorded in the previous corresponding period, parent company Las Vegas Sands reported on Wednesday” according to Bloomberg. Staggering confidence or plain folly?
Until next week…
