Over dim sum and cold bottles of Tsingtao, Spy caught up on all the gossip in the private banking market with an old contact this week. The French expression, “the more things change, the more things stay the same” springs to mind. Deutsche Bank’s well-publicised woes (despite a modest €278 million quarterly profit announced yesterday) are providing a feeding frenzy: head-hunters in Asia are poaching bankers left, right and centre for DB’s bulge bracket competitors, according to Spy’s well placed dining companion. UBS started the battle cry earlier this month announcing that Ravi Raju, DB’s former APAC wealth head had joined the Swiss bank, but that is thought only to be the beginning. Spy’s advice: get ready to update your address book – there are going to be a lot of business card changes in the next few months, and not just at the top brass.
Just when asset managers thought the numerous changes in fund selection and fund advisory at UBS were slowing down, a little rumour, from a rather reliable source, has reached your humble Spy. Apparently, Sean Cochran, UBS’s head of portfolio specialists in Hong Kong, is due to move to the UBS Switzerland office shortly, following Patrick Grossholz, head of investment management for Asia-Pacific, who relocated there at the end of August (as Spy reported). An internal replacement has been found but he has not been formally put in place yet. Spy will be following up with interest on specifics. For some the sound of cowbells and evenings of fondue are just too much to resist…
News has reached Spy that Catherine Ow, former marketing director at First State Investments in Singapore is resurfacing in the industry next week. Catherine is joining Wellington Management, the privately-owned, $1trn AUM asset manager headquartered in Boston. Wellington, traditionally an institutional-only manager in Asia, has recently made forays into the wholesale markets and has been building up its capability. Marketa Dvorak is the account manager for their global relationship group supported by Sashi Nambiar in business development. Both are based in Singapore.
Which banks in Singapore have had a good year, wealth management wise? Spy’s sources say DBS and Credit Suisse’s fund selection teams have recommended funds that have performed particularly well, and, in turn, made their wealth management clients happy. Flows have been healthy and the year has turned out better than the first and second quarters suggested. Other words coming out of competitor banks are “sluggish”, “tough”, “can’t wait for the new year” and “umm”. Indeed.
In a poll taken at Fund Selector Asia’s Hong Kong Investment Forum this week, nearly 26% of fund selectors and fund advisory analysts expected to be promoted within the next year. Although the poll itself was light-hearted and should not be taken too seriously, the data does hint at a well-known issue in Asia’s wealth management industry. Spy has been hearing numbers from industry contacts that the average length of time a fund selector stays in their role in Hong Kong and Singapore is a mere two years and three months, and can be as little as eighteen months in some banks. Fund selectors often find they move from asset manager-facing roles to client-facing roles within a short period of time, leaving asset manager salespeople the perpetual job of building new relationships.
Taiwan’s CTCB Private Bank in Singapore is growing steadily. Information reaches Spy that the number of bankers at the boutique has grown to sixty in Singapore. Whilst modest by the standards of UBS, Credit Suisse and Citibank, it pleasing to see smaller players making headway.
After a period of being relatively low profile, BNY Mellon Investment Management seems to be on the move in the Asian wholesale space. Under the relatively new guidance of Singapore CEO, Nicolas Kopitsis, formerly of BNY’s Swiss office and a Goldman Sachs AM alumnus, intermediary distribution has been growing. Spy hears that BNY is actively pushing their British boutique Newton and its Global Real Return Fund. GRRF is taking on heavyweight multi-asset competitors such as GARS by Standard Life Investments, AIMS by Aviva Investors and Nordea’s, currently soft-closed, Stable Return Fund. Get out the popcorn.
Could the news for hedge funds and higher priced alternatives get much worse in Asia? Appetite for alts has been tepid at best, with one major fund selector a global private bank telling Spy that “demand is back to 2012 levels, and falling”. It has not helped that the industry continues to behave as badly as a big bank left to its own aggressive sales targets (yes, we are talking about you Wells Fargo). A while ago Steven Cohen’s SAC closed, mired in insider trading charges. In June, another high profile hedge fund, Visium, was accused of insider trading on pharmaceutical news and a conflict of interest with its colourful CEO Jake Gottlieb and closed abruptly, tarnishing the industry’s reputation further. However, in this heavyweight fund selector’s view, those dubious activities where not the most egregious. No, it was the “high fees for delivering absolutely no alpha”. One fund was charging “3 and 30 for a net return of 4% and had the temerity to be proud of it”. Yes, dear readers, the Wolves of Wall Street (or leafy Connecticut and Rhode Island) are being forced back into their lairs while Asian buyers stick to long-only funds with distinct fee sensitivity. Spy’s suggestion, if you are going to promote alts, stick to PE, real assets and infrastructure – the appetite for those are undiminished.
Some brokers and banks have been sending out notices of increased margin requirements in the run up to the US election. Perhaps, having been bitten by the Brexit volatility, they appear to be taking no chances this time should The Donald upset the bookies. In one example, although Spy has seen others, Saxo Bank in Singapore wrote, “In advance of the US election, Saxo Group is raising margins for a selected group of products as of Thursday, 3 November, 2016… While the level of volatility is hard to predict, there is no doubt that the outcome of the US election, and especially if it is a surprise outcome, could lead to rapid price movements in certain stocks and indices, but also to a lesser degree in certain FX pairs… Analysts may be dismissing Trump’s chances, but the UK’s game-changing vote to leave the European Union in June has crystallised the anti-establishment mood and one should not underestimate the parallels in the protest vote between Trump and Brexit.”
Is it the battle of the trams in Hong Kong? Perhaps the adage, you wait and wait for a bus to come along and then two arrive at once, could apply to asset management trams, too. No sooner had Spy’s photographers spotted a shiny new tram with M&G branding all over it, then another came along decorated in the blue colours of bond giant competitor PIMCO. M&G’s reminds Hong Kongers that it was founded in 1931 – about the same time as some of these aged Tram Trollies….
Until next week…
