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The FSA Spy market buzz – 19 Jan 2018

Change at Blackrock and Credit Suisse; Philosophical donations; Singapore banks and funds; The only graph needed; 10-year yield; Peter Lynch’s wisdom; bookies in London; advertising and much more.
The FSA Spy market buzz - 19 Jan 2018

Oscar Wilde quipped that he could “resist anything but temptation”. Spy’s no-booze January came to a crushing end last night as he succumbed to the temptation of a Belgian beer from the Ardennes region, La Chouffe, an 8% smooth pale ale with coriander scent and milky foam which Spy found in small quantities in a hidden bar in Mid-Levels. Spy’s domestic commander-in-chief berated his weakness and lack of commitment. Spy felt like one of those fund marketers who resolves not to promote a fund with a performance chart or number…and promptly adds one in because it is still the most satisfying and easiest way to tell the story. Water is healthy, craft beer is better.

News has reached Spy that there has been a change at Blackrock. Tom Keenan who was head of private banking distribution in Asia ex-Japan has stepped down from the firm. There is no news on where Tom is going to and no word of his replacement. Blackrock’s CEO, Larry Fink, was in the news this week advocating that companies should do more and care more for the communities they operate in or the investment giant may shun them. The firm had a great run with its World Technology Fund – currently up 57% over the last year. However, with Davos around the corner, the company might prefer to be crowing about the 45% performance of its Swiss Small and Mid Cap Fund over the last 12 months.

Spy couldn’t help overhearing the news that a change is coming to Credit Suisse’s fund advisory team. Chris Wong, who has been a senior adviser, is apparently switching roles within the private bank to an investment councillor role rather soon. Private banks regularly move people around within the banks so the change should come as little surprise. No news yet who is being added to Rod Larque’s team.

If you walk into yet another meeting where every single person in the room has either an economics degree, or an MBA or a CFA or perhaps all three, extend a little thanks to Bill Miller. Bill, the former CIO of Legg Mason, now CEO of Miller Value Partners and one of the world’s most experienced value investors, has just coughed up $75m to John Hopkins University. The prestigious school is getting the donation for its philosophy department. Miller studied philosophy there himself and reckons it gave him an excellent investment perspective. Instead of dull white papers on the “time value of money”, perhaps we can, in the future, expect a few more papers on “What is time?” or “Does money exist?”. And, “Does it have any value?”

Singapore banks love mutual funds don’t they? After all, they have hordes of analysts thinking about funds, selecting funds, pontificating about funds, talking about funds. Spy thinks in Singapore, someone may have forgotten to send the memo to branch marketing. To get a flavour of what banks are promoting, Spy sent out a secret shopper this week to every bank located around Raffles Place – HSBC, Standard Chartered, CIMB, UOB, OCBC and Maybank. Guess what? Not a single one of those banks had a brochure in the branch about their available funds. It was barely possible to ascertain they even distributed funds. This is in fairly strong contrast to Hong Kong, where most banks will have a flyer on the funds of the month in the branch for Spy to peruse. Just sayin’.

Do we trust Google to give us an indication of which jurisdictions are the most prominent for asset management? Using Google Trends, Spy searched for “asset management”. The top three countries, in order, where that term is used are Luxembourg, Singapore and Hong Kong. Not much of a surprise there. But St Helena and Kazakhstan? Anyone fancy a trip to Jamestown or Astana?



The fund world is obsessed with graphs – especially ones that go bottom left to top right, thinks Spy. After all, marketers tend not put out any graphs which show performance top left to bottom right, do they? For Spy’s money, this is the one graph that should be shown to every analyst, fund sales person, investor or PM. Never a truth more richly illustrated– forget this one at your peril.



For people outside the financial industry, it must come as something of a surprise that there is such an obsession with the rather banal US 10-year treasury yield. Many laypeople must wonder why oceans of ink are wasted writing about the yield and where it stands. This morning the yield went above 2.633% – a rate above 2017’s high point. Spy would give them some simple advice – look at the global national debt number which you can do here.  With nearly $70trn in debt, an end to that 35-year bull market in bonds may get very ugly indeed. If you’re at a private bank or an asset manager that has been selling bond funds, better hope your managers are awfully agile. The times, they are a changing.



Spy’s quote of the week comes from Peter Lynch, Fidelity’s former superstar portfolio manager who was in charge of the mega-successful, mega-sized Magellan Fund. “Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.” Nailed it.

If you are in asset management or banking and have been fearing, due to Brexit, that your regular trips to exciting London are under threat and you are going to have to visit dull Frankfurt instead, there appears to be hope – if the bookies are to be believed. This week, Lord Adonis, a British politician campaigning for Britain to stay in the EU, claimed another referendum will be held on Britain’s exit terms from the Union. Ladbrokes, a prominent betting outfit, immediately offered the fairly short odds of only 6/1 of this happening. The odds of a “soft Brexit”, with the UK remaining close to the EU, have been moving steadily lower since December. Even Deutsche Bank, which had originally threatened to move thousands of jobs to the continent, now thinks it will be a few hundred.



Spy’s photographers have spotted Investec’s new outdoor marketing campaign in several places in Hong Kong and Singapore of late. The ad for their Asian Growth fund was spotted below One Raffles Quay, in the “Let’s influence UBS” spot:



Meanwhile in Hong Kong, the MTR is getting a dose:



For consumers roaming Yahoo’s portal in Singapore, Spy spotted a prominent campaign by Eastspring on their outlook for 2018. Spy thinks Eastspring should be lauded for targeting young consumers where knowledge of funds remains low:



Until next week…







Part of the Mark Allen Group.