Your humble Spy returns to Hong Kong from a few weeks of travelling in Europe feeling refreshed, indulged and a mere six pounds heavier having drunk more gluhwein and schnapps than a sailor on shore leave. Conversations in Europe, when people weren’t boasting about their crypto gains, were dominated by talk of Mifid, GDPR and Brexit – a dull acronym soup of regulation and politics. Spy was relieved to note that Asia, although feeling the slight chill of American and Euro regulations, is far less inclined to implement such tedious do-gooding and rather let the market forge on. Asia’s dynamism is all too apparent and gives Spy a distinct optimism for the future.
It is the New Year and the Asian asset management merry-go-round spins with its usual frenetic pace. Spy has come across several people moves before his annual New Year’s resolutions have even been broken.
Franklin Templeton in Singapore has hired Terence Bong to be head of wholesale distribution in Southeast Asia. Terence was previously at Nikko Asset Management in a similar role and has previously held a private banking-focused role at Schroders. Along with the rest of the market, FTI has numerous funds that have performed well in the last year. The stand out has been the Templeton BRIC fund, up nearly 50% over the last year.
Columbia Threadneedle has added another person to its marketing team in Singapore. Susan Koh has joined the American firm from AIA. She has previously held roles at Prudential and UOB according to her LinkedIn profile. Spy understands Susan will be working with Grace Chow, head of APAC marketing. CTI has had a stellar year in China with its Greater China Equities Fund, up a whopping 58% over the last year.
JP Morgan Asset Management in Hong Kong has added to its marketing team. Kate Chan, who was previously at Standard Life Investments, has joined the business. Spy understands that Kate will be working with Gloria Chung, head of marketing in the region, on an APAC remit. JPM AM has had tremendous success in the tech space with both its European Dynamic Technology and US Technology funds up 50% over the last year.
2017 was meant to be the year that active managers were going to show some of their passive competitors a thing or two. Someone forgot to send Vanguard the memo, thinks Spy. Vanguard’s AUM has just gone through the $5trn mark and it surely has Blackrock in its sights for “World’s Largest Manager” crown in 2018. The ETF juggernaut shows no signs of slowing down as it sucks in more and more of the industry’s cash in the US and Europe.
Looking at the fund performance tables, where it is hard to find a fund that had a negative year in 2017, it does not surprise Spy to see that many asset managers are seeing their own share prices start the year at one-year, or even all-time highs. A quick scan of Spy’s asset manager watch list indicates Jupiter, Blackrock, T Rowe Price, Lazard, GAM, Janus Henderson and Man Group are all riding high with soaring shares prices. There are many others snapping at their heels, too. To buy the fund or buy the fund company shares, that is the question?
It seems to Spy that in the last three weeks, whilst most people were happily indulging in the annual food and drink binge that is the Christmas holiday break, gold, oil and other precious metals decided to wake from their slumber and rally rather hard. Gold is above $1,300 and Brent oil is nudging $70. Spy smells the whiff of inflation in the air – those holders of billions of dollars of bond funds must be feeling a tad nervous. Just sayin’.
It seems Value Partners will not be changing hands any time soon, notes Spy. The Hong Kong asset manager announced to the Hong Kong Stock Exchange that talks had ended with its suitor, rumoured to be Chinese conglomerate HNA, without a deal. The shares fell mildly this morning in response. HNA is also in the process of acquiring a 25% stake in Old Mutual’s asset management business.
Spy took the chance over the holiday break to read a book published in the 60s that gave a pertinent reminder that certainties and empires often collapse faster than expected. The book is Edmond Taylor’s The Fall of the Dynasties: The Collapse of the Old Order. For those who like their history witty and well researched, this fits the bill. It is intriguing to think that about 100 years ago there were only 60 countries and we now have nearly 200. If anyone is foolish enough to think things will always go on as before, Spy recommends this classic work.
Have you heard of ripple? If not, you may soon do so. Whilst bitcoin has had most of the limelight, ripple is a cryptocurrency and a technology that facilitates cheaper real world currency exchange at lower costs. It seems to be bubbling like the proverbial unattended stew. Ripple’s tech seems to have attracted the attention of many of the world’s leading banks. Ripple’s total value has soared 36,000% (yes, you read that right) over the last year, making its CEO, Chris Larsen, as wealthy as Mark Zuckerberg. Michael Novogratz, the hedge fund manager who is expected to launch a fund solely investing in the crypto value chain, tweeted this week, “At one point in the 1989 Japanese real estate bubble, the Imperial Palace in Japan was said to be worth more than the entire state of California, things that don’t make sense don’t last….be careful out there” Well said!
T’is the time for predictions, so Spy will go out on a limb for 2018. Your Spy is also a contrarian in the sense that he will only give nine predictions rather than the conventional ten:
- 2018 is the year Asian fund buyers finally reduce their bond fund holdings. Only high yield will be spared. Expect equity funds to get greater billing.
- Commodities make a roaring come back and have a vintage year.
- Expect more innovative pricing from active managers – where innovative means “lower”.
- Socially responsible investing becomes “a thing” in Asia. Private, and even some retail banks join the global trend.
- The British pound surprises to the upside as Brexit fears fade and Europe returns to squabbling internally.
- Indonesia opens up its fund market a tiny bit more than hitherto.
- Angela Merkel fails to form a government and Germany calls fresh elections.
- Singapore property roars back into favour as the Kiasu animal spirits are unleashed; Hong Kong property grinds steadily higher despite headlines screaming overvalued.
- Expect niche tech themes to be promoted: artificial intelligence, crypto, electric transport, etc.
The new year kicks off with some advertising from Allianz Global Investors. It seems Spy’s prediction from above is already proving true…artificial Intelligence gets top billing. Spy is reminded of the Monty Python song which included the immortal line, “Let’s hope there’s intelligent life in space, because there is bugger all down here on earth”.
Until next week…
