Posted inFSA Spy

The FSA Spy market buzz – 19 May 2017

Change at Columbia Threadneedle; Movement at SSGA; GAM hires; Vanguard rocks UK; M&G sanity check; Wisdom from AB; Singapore’s mojo; Betting on Trump and much more.

Spy found himself drinking in a cocktail bar on Hollywood Road this week. Spy’s companions were good naturedly trying to come up with new cocktails that would suit the current times. Since gin is the happening drink of choice by hipsters, wannabe hipsters and just about every other drinker on the street, naturally “Mother’s Ruin” was also our base tipple of the evening too. Names suggested included “Blind Oblivion” and “All’s Well That Ends Well” but Spy’s favourite was “Dumb Luck” (Monkey 47 Gin, lemon juice, a dash of bitters and a quarter measure of Galliano served in a martini glass, since you ask). Yes, dear readers, with our central banks continuing to buy the market at every turn, ours may be the first generation of investors who simply don’t know what a falling market looks like. You may be lucky to have that, but you will be dumb to believe it will always be thus.

News reaches Spy that there have been some changes at Columbia Threadneedle. Michael Langlois, who was managing director, head of Asian wholesale distribution, based in Singapore, has stepped down from the firm. Spy understands that Michael has retired but was unable to confirm that as of press time. Further, Christy Yee, who was handling wholesale sales in Hong Kong, has also left the firm. Spy understands that Christy is staying within the industry, but he has no news yet of where she is going.

News has reached Spy that Lisa Wang, SSGA’s respected head of marketing, is moving on to new pastures. She is stepping down from the American firm and will be staying within the industry. Spy is unable to ascertain where she is moving to, but it is understood she’ll be staying here in Hong Kong.

GAM, the Swiss asset manager has appointed Rossen Djounov to replace Henry Choon as head of Asia-Pacific including Australia and Japan. Rossen will be moving from London to Hong Kong to take up the role. GAM has been ramping up distribution efforts across the world in the last few years and is understood to be increasing wholesale efforts in Asia.

Be afraid, be very afraid. That is the message that Vanguard seems to be sending with its new launch in the UK this week, thinks Spy. The American passives giant has launched a new direct-to-consumer platform for its own ETFs that has prices so low that it makes the eyes bleed. Vanguard’s new online service will charge an annual account fee of only 15 basis points, capped at £375, plus an additional fee per fund, which would currently average 14 basis points. Hargreaves Landsdown, the FTSE 100 listed stockbroker and fund platform, got hammered on the news. People have been stressing about robo, but what if there is simply no margin to go around?

Before one gets completely carried away with the razor blade about the Vanguard story, Spy did read a healthy sanity check about this on the M&G equities forum, written by Matt Cable. Matt highlights what so many others have been saying to Spy: the active / passive debate is so often about the giant, highly liquid indices such as the S&P 500. However, the smaller, illiquid indices such as UK small caps may have real problems when we have a big sell off. All is not what it seems with passive, despite the tsunami of hype.

The asset management industry is doing its best to remind the world that this level of calm in the markets is not usual. Spy spotted a great comment from AB’s Christine Johnson: “The recent run of market tranquillity makes it easy to forget that we’ve seen more volatility spikes in the past two years than there have been in the previous 20. It’s true that most of these surges were short-lived. But investors shouldn’t expect that they will always be.” The problem is, is anybody listening?

Is Singapore getting its mojo back, wonders Spy? If the property market is anything to go by, the answer could be yes. News broke this week that a residential plot in the Lion City may fetch a record price for a government land sale, with a Chinese consortium putting in the highest bid at S$1 billion ($718 million), according to a Bloomberg report. Christine Li, director of research for Singapore at Cushman & Wakefield, is reported to have commented, “It’s the first time for a pure residential site to cross the S$1 billion mark.”

Singapore property has languished for the last few years, in stark contrast to Australia. Spy came across this chart from Minack Advisors. Bubble, what bubble?



Poor, poor Donald James Trump, thinks Spy. The guy just can’t get a break. He comes to Washington and can barely find a friend (so much for the old adage, `a rich man’s jokes are always funny’). His chance of building a cosy relationship with Russia seems over before you can say the word “glasnost”. And now, even the bookies seem to think he won’t make it through the year. PaddyPower, the Irish betting company, will give you odds of just 13/8 that his presidency will end before 31 December (In contrast, Obama would have been about 100/1 at this stage). The bookies aren’t always right but they don’t seem to have much confidence that Donald will be around for the rest of his term. What will this mean for equity markets? In the topsy-turvy world we live in, a professor at the University of Pennsylvania Wharton School of Business, Jeremy Siegel, is predicting a Trump exit could add 1,000 points to the Dow. So, we had a massive Trump rally when he got elected and now we will get another rally when he gets dumped? Heads I win, tails you lose. Everyone must have prizes.

Outdoor asset management advertising in Hong Kong seems to have really picked up in the last few weeks. Spy’s photographers have seen another tram covered in M&G livery. This appears to be a follow-on campaign from their first tram last year:



CSOP Asset management is still channelling super heroes:



Allianz Global Investors simply can’t get enough of American income, it seems. And judging from the number of distribution partners listed, neither can the industry!



Until next week…



Part of the Mark Allen Group.