Posted inFSA Spy

The FSA Spy market buzz – 02 December 2016

Promotion at EFG; Mestis Capital expands; Vontobel AM goes wholesale; Quaero Capital comes to Asia; Schroders reminds; Opec cuts; Hang Seng’s bargain and much more.

Sipping a big Barolo wine from Piedmont in a café on the Via Veneto, Spy could see through the Christmas-decorated window, busses filled with map-waving tourists without a care in the world. They were merely hoping to tick off a sighting of an item on their bucket list and move swiftly on. Yes, my readers, Spy found himself in Rome this week. The Eternal City, at this time of year, is quieter than the hellish summer months with its perennial scrum of visitors from every corner of the globe. While the tourists snapped the rain sodden ancient monuments, there was only one thing on the mind of the locals: prime minister Renzi’s referendum. The European Commission is probably going to send ‘round the heavies to the next EU leader who gets “referendumitis” and any urge for direct democracy. Make no mistake, if Renzi loses this weekend, which he is likely to, Europe and its banks will look even more fragile than it already does. Check your funds very carefully for Italian exposure, we could be in for a rocky ride next week.

News reaches Spy that Terence Tan, who held the post of head of product strategy at BSI in Singapore, has taken on a larger role within EFG post-merger between those two businesses. Terence is now head of investment and wealth solutions. He is overseeing the advisory team who support EFG’s bankers, including their investment councillors and product specialists. Terence has held previous roles at UOB, DBS Vickers and Coutts.

Singapore fintech is spreading its wings. Spy has discovered that Mestis Capital, the holding company for Bento, the bionic robo-adviser set up by Chandrimas Das and Tanmai Sharma has hired Gaurav Babar as a senior consultant in Dubai. Gaurav was formally heading up distribution for Eastspring in the region. In addition to Bento, Mestis has Canopy an account aggregation platform for wealth managers and Conduit Securities an agency-only execution provider specialising in both global equity and fixed income markets.

Is Vontobel Asset Management, the multi-boutique Swiss player, coming to the wholesale space in Hong Kong and Singapore? Spy believes so. Traditionally focussing on institutional markets in Asia, Spy has heard that Vontobel AM will beef up its marketing to private banks and wealth managers in 2017. Vontobel AM is an active manager with more than 300 staff including 100 investment specialist and had 86 billion Swiss francs under management as of June 2016. The business has almost tripled its AUM over the last 8 years. The business is led by Ulrich Behm in Hong Kong.  Watch this space.

Another Swiss manager that is being promoted in the region is Quaero Capital, a privately-owned boutique from Geneva. Spy understands that Peak Capital, the specialist fund marketer owned by Simon Powell, has the mandate to promote Quaero in Asia. Mike Smith, who is based in Singapore, is in charge of distribution at Quaero. The firm has 14 high conviction UCITS funds and offices in Geneva, Zurich, London and Paris. One of the strategies managed by Quaero that caught Spy’s eye is the Family Enterprise Fund, which invests in the private shares of family-owned European companies. Europe has a long tradition of well-managed, below-the-radar businesses that investors would love to get their hands on. Not dissimilar to the situation in Asia, muses Spy.

Schroders have given us all a timely reminder on the real nature of investment from their Value Perspective Blog this week. “Yet it is the nature of investment – and articles written on the subject of investment – that you rarely hear about the losers. You hear lots about the few businesses that have made their backers a fortune in the past and, because investors are a generally optimistic bunch, you hear even more about the businesses that could make their backers a fortune in the future. But those that lose their backers a fortune? Not so much.” Nailed it!

So OPEC has agreed to some cuts to production, which has everyone excited and sent the price of crude soaring. The markets seemed very happy to see the headline grabbing 1.2 million barrels being removed from production – on Wednesday WTI soared almost 9%. There are a few teensy, tiny problems with this euphoria in Spy’s humble opinion. 1) OPEC members are renowned for cheating their production figures and have been known to add production in previous periods of agreed “cuts”. 2) A soaring oil price makes that very annoying fracking business much more viable, which will, er, bring more production on line. This buoyant mood may be short lived. Nonetheless, Spy peeked at which funds registered for sale in Hong Kong may have benefitted. One stood out: Amundi’s Equity Global Resources is up 23% this year. It has Royal Dutch Shell, Total, Exxon and Apache Corp in its top 10.

Hang Seng bank in Hong Kong is doing little to entice Spy with its latest “Hot Offer”. Apparently one can buy an index fund through their platform with a “net 1% subscription fee” until 31st of December. Now, take the Vanguard S&P 500 tracker fund. It has a TER of just 0.25% in HK. That would mean buying the fund via Hang Seng would cost you four times the annual management fee on day one. Spy is not too sure what is so hot about that?

With all the talk of nationalism and protectionism rising across the globe, Spy spotted one infographic this week that caught his eye. It is courtesy of the World Economic Forum and highlights the top ten economies at enabling trade across borders. Singapore is 1st and Hong Kong is 3rd.  Both have much to lose if the world does turn inward and it is therefore no surprise we have heard so much from local policy makers promoting free trade of late.



Part of the Mark Allen Group.