Spy has been travelling the past 10 days. He found himself back in America grappling with ageing infrastructure, airports that seemed archaic, television that dredges the bottom of the barrel and people of extraordinary proportions. Jamie Dimon, the JP Morgan CEO, got a lot of press this week for his direct comments about American political dysfunction and its inability to build major infrastructure. Only the most partisan of critics could not agree with his sensible observations. The only thing Spy found remotely appealing during this visit was the Yankee bartenders’ enduring habit, of making every drink they pour a double. That is one thing the US should clearly not reform.
News has reached Spy that JP Morgan Asset Management has added to its institutional sales team in Hong Kong. Apparently, Daisy Xu, formerly of Nomura Asset Management, joined the Hong Kong powerhouse last month. Daisy previously held a business development role at BMO Asset Management in Hong Kong. Daisy might find herself with an easy day job if her clients are looking at tech: JP Morgan’s Pacific technology fund is up a stunning 41% over the last year.
What if a massive party was prepared and nobody came? Asia-Pacific equity markets are something like that, thinks Spy. Asia has been one of the best performing regions from a stock market point of view this year, but according to Fidelity International, participation in that rally has been minimal. Fund flows indicate that developed markets have had the lion’s share, leaving Asia dancing all by itself. July happens to mark 20 years since the Asian financial crisis, which wreaked havoc across the region. It is hard to believe that during that violent and volatile period Indonesia’s economy, in US dollar terms, shrank a whopping 85%. How times change. Today, that is unthinkable.
Hedge funds – remember those? Whilst the glamour and excitement surrounding hedge funds has slipped in recent years, the industry has not gone away. Some private banks continue to promote hedge funds and provide access to these alternative strategies. Credit Suisse has been surveying its Asia Pacific-based investors who invest in hedge funds to find out their preference within the hedgie universe and some of the data caught Spy’s eye. The most popular strategy within their survey is long/short equity, followed by emerging market equity. Is this telling us that the most sophisticated investors are getting increasingly worried about the downside, wonders Spy?
HSBC has been trying to understand consumers’ attitude toward technology and the bank recently surveyed 12,000 people across 11 key markets. In Singapore, Spy was alarmed to read that 13% of respondents believed that technology allowing the use of “brain signals to transfer money will be available in the next year”. Spy can think of few things a bank is more likely to get wrong than transferring money instructed by human thought alone. In Hong Kong where most banking transactions still seem to require you to physically rubber stamp, or chop, your hard copy instructions, Spy can rest assured that such sci-fi fantasies remain firmly in the realm of fiction.
Environmental. Social. Governance. ESG. It has a nice ring to it. It conjures up vibrant forests, clean lakes, cuddly panda bears and smiling children. In investing circles ESG, SRI and Impact investing have had a certain buzz about them of late. Well, Spy is seeing increasing evidence that ESG, as a philosophy, is delivering real returns that should make even the most hardened and uncaring investor take note. Take Nordea Asset Management, whose green credentials, drip from every inch of its Scandinavian heritage. Its results this week show AUM growing a healthy 10% since Q2 2016 reaching $332bn. Further, 88% of all its strategies outperformed their benchmark. Hermes, Nikko and Wellington are just a few of the groups, active in Asia, that spring to mind taking ESG very seriously. Saving the polar bear may just save our pensions, too.
What if your new marketing campaign made you look like a bit of a charlatan in the past? Spy came across the most extraordinary bit of marketing from OCBC this week. The Singapore-headquartered bank claims it made a very “bold move” in April this year by deciding to be “transparent and honest” in all its advertising communications. So, eh, OCBC is tacitly admitting that it has been opaque and dishonest in the past? I guess better late than never to discover one’s moral compass…but it can hardly come as a surprise to the banking fraternity that consumers are suspicious of banks in general with statements like this:
Whilst it is not exactly a return to the 1990s, one bit of news out of Singapore this week made the bon viveur in Spy happy. The Singapore Stock Exchange is bringing back lunch. After a six-year hiatus, the SGX has bowed to market participant pressure and will cease trading for an hour, from 12pm to 1pm. Traders who have watched the prices move up and down at snail’s pace all morning, can grab some noodles at Lau Pau Sat without staring in panic at their mobiles. Up until 2011, traders used to get a full hour and thirty minutes to wine and dine their clients, but SGX is clearly not envisaging any real lazy lunches in its new regime. The tie may be off but the top button is still firmly in place.
Where do you think US rates are going? The market seems to be revising its views and Neuberger Berman joined the chorus of voices that believe rate hikes are being pushed further out. Brad Tank, NB’s CIO of fixed income, reminds investors in his blog post this week that in a 1955 speech, William McChesney Martin, the longest-serving chairman of the Federal Reserve, memorably described his institution as “the chaperone who orders the punch bowl removed just when the party is really warming up.” In Brad’s opinion, we can all relax, the punch bowl is staying put for a while – albeit with a little watering down of the alcohol. It is no surprise to Spy that the dollar has taken a bit of a whack of late.
Until next week…