Posted inFSA Spy

The FSA Spy market buzz – 30 September 2016

Changes at FPI; a swap at BNPP IP; exit at First State; Motilal Oswal coming to Asia; thoughts on UBS; Ratner and Lehman moments and much more.

“Is that another beer you are drinking?”, demanded Spy’s exasperated domestic-commander-in-chief. “No, an orange juice”, claimed your humble Spy as he cradled a Young Master Classic Ale (only drinkable from a tulip glass). In honesty, Spy has decided that to remain trendy, he needs to join the “post-truth world” and provide blatantly wrong answers to direct questions. The US election has, apparently, delivered to us the age of “post-truth politics”. The Great Financial Crisis delivered us the age of “post-truth financial disclosure”. Parts of the fund management industry have long delivered us “post-truth performance figures”. Real estate agents in Hong Kong have long delivered us “post-truth sizing” of square footage in apartments. And don’t even get Spy started on Hong Kong fast food restaurants that claim “hand-made noodles”. Yes, sophistcated readers, we are in a post-truth world and you may as well get used to it. Read the small print carefully. Caveat emptor. And don’t believe any official words.

Spy hears of numerous changes at Aviva’s high-end wealth management unit, Friends Provident International. Charles Barrows, the regional head in Hong Kong, has taken on a new role within the Aviva stable and moved to Indonesia. Patrick Wei has moved across from Aviva to take on the role and oversee FPI’s North Asia development. Meanwhile, further south, long standing Singapore sales director at FPI, Toby Simpson, is stepping down and moving to Melbourne. He will leave FPI at the end of November. There is no word yet on Toby’s replacement.

For anyone in doubt that Singapore and Hong Kong are simply two sides to the same coin, Spy has heard that Ginny Shi, BNP Paribas Investment Partners local marketing support, is moving to Hong Kong to take on a role in the the firm’s local office. If Spy had a coin for every time he had heard someone in the industry say, “I am moving to HK from SG” or vice versa, he could actually afford his craft beer habit.

At First State Investments in Singapore, Spy has heard that Catherine Ow, director of marketing and communications, is stepping down from the firm. There is no news yet of where she is going but Spy’s (sometimes reliable) sources say she is staying within the industry and will no doubt surface again soon.

The Indian economy is one of the best performing globally and Indian equity funds have tended to perform well. Spy hears that a new one is coming to the global market from India itself and has apparently been one of the top performers in a competitive sector, going long on a very concentrated portfolio. Motilal Oswal, an Indian financial house with a long domestic track record is finally going international. Karun Marwah, head of international business, said the firm will bring its Motilal Oswal India Fund to Hong Kong and Singapore next week. With good India equity performance from Standard Life Investments, JP Morgan AM and Matthews Asia, it looks like investors can still have an Indian Summer.

Spy is hearing mutterings that UBS is doing its very best to up-end its market leading wealth management model in Asia by adopting an asset management-style pricing approach, seemingly way ahead of market trends and regulatory requirements. One trusted source was heard claiming, “this change is giving Credit Suisse a real chance at stealing the march on their Swiss country rival”. Supposedly revenues are down about 40% in the UBS funds division this year. Ouch.

In retailing there is something called a “Ratner Moment”, named after hapless Gerald Ratner, who jokingly denigrated his own products, leading to his eponymous firm’s collapse. Closer to our financial home, Spy is hearing more and more about “Lehman moments” from the big banks. This is becoming shorthand for denying there is anything wrong before being proven otherwise by Mr Market. You may recall that Lehman said five days before its collapse that it had “the capital strength and certainly the liquidity to ride out this period”. Then it didn’t. Wells Fargo denied opening customer accounts without their permission. Then decided it did. DBS thought it had sold Swiber bonds only to accredited investors, but turns it they weren’t all. Spy could go on, but the one to watch now appears to be mighty Deutsche Bank. They have denied seeking a state bailout. They have denied seeking the German government’s help with their $14bn US fine. Spy is wondering when some poor spokesman is forced to admit that actually, “some state help might be appropriate”. Check your funds’ holdings carefully to see which ones are investing in banks. There may be some nasty surprises ahead. Legendary British investor Neil Woodford said in 2014 that he was avoiding banks because of their “potential fines”. That call still seems very appropriate.

In Asia, Spy has been long aware that a decent address is obligatory. In Hong Kong, that means within crawling distance of Central station and in Singapore, within staggering distance of Raffles Place, despite being forced to pay eye-bleeding prices to greedy landlords. It thus came as no surprise to hear that in Hong Kong, M&G, which has moved office recently, has remained downtown and not decamped to the outer reaches of the world (anywhere beyond Admiralty). You can now find the boys and girls of M&G Hong Kong at the Man Yee building, firmly near Central.

Schroders has come back out to play in Hong Kong, encouraging clients to have another look at China’s “new economy”:



The Spy says, until next week…

Part of the Mark Allen Group.