From the press release desk this week…

Enforcement and regulation

Hong Kong’s Securities and Futures Commission has reprimanded and fined Hang Seng Investment Management (HSIM) HK$3m ($380,000) for its failure to comply with regulatory requirements on cash management involving SFC-authorised funds. An independent review revealed that from 2010-2016, these HSIM funds maintained substantial cash deposits with connected persons, but the interest received on some of these cash deposits was at a rate lower than the prevailing commercial rate. The amount of interest involved was approximately HK$875,648. HSIM has agreed to make a voluntary payment of the equivalent amount to the affected funds…

The Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) of the Singapore Police Force have warned investors about trading on unregulated online platforms. The warning comes at a time when the MAS and CAD have received an increasing number of complaints from investors involving losses from unregulated online trading platforms over the past year. In 2017, the CAD received 143 reports from investors who lost a total of S$7.8m ($5.83m) from trading with these unlicensed platforms, up from 40 reports in 2016…

The MAS has issued new rules on short selling activities in Singapore, where investors will be required to report their short positions and short sell orders in securities listed on the local bourse. Under the new rules, which will be enforced on 1 October, investors will have to report their short selling activities to the MAS through a new online portal, the short position reporting system. In line with the new regulation, the MAS will also publish aggregated short positions of each security on Wednesday of each week, but the identities of short sellers will not be disclosed…

People and business moves

Investec Asset Management has appointed Diya Lowe as Singapore-based head of Southeast Asia for institutional sales. She will be responsible for business development and client servicing across institutional clients in Southeast Asia and will report to Kevin Wong, the newly appointed head of Singapore office. She replaced Keeran Maye, who performed the same role previously. Before Investec, Lowe was from Lazard Asset Management, where she worked in business development for five years in Singapore and led the firm’s establishment in the country. Diya’s appointment comes as the firm is looking at expanding its operations in Southeast Asia. “With the business expansion in mind, we will implement necessary plans to hire talented individuals across Asia that best fit our global business expansion,” the firm said…

State Street Global Advisors has appointed Michele Barlow as Hong Kong-based Asia-Pacific head of investment strategy and research for the firm’s investment solutions group (ISG). She replaced Thomas Poullaouec, who joined T Rowe Price in September last year as head of Asia-Pacific multi-asset solutions. She will be responsible for driving investment ideas and leading the team that creates customised research and multi-asset investment solutions for investors in the region. She will report to Ric Thomas, global head of strategy and research for ISG. Before SSGA, she led the credit research team at Bank of America Merrill Lynch, where she focused on analysing, designing and developing investment ideas for institutional investors and asset managers…

Global real estate investment manager Lasalle Investment Management has entered into an binding contract to acquire the real estate multi-manager business of Aviva Investors. Aviva’s real estate business has around $7bn in assets and 24 employees globally. After the acquisition, Lasalle IM will have a combined AUM of $10bn. In addition to the acquisition, Lasalle IM will also be acquiring Aviva’s rights and responsibilities as the fund manager of the Encore+ fund, which is an open-ended Continental European real estate fund and has been jointly owned and run by both parties for 11 years…

MSCI inclusion

FSA received a number of commentaries from the investment community about the inclusion of China A-shares in three MSCI indices. Below are some of the notable comments that they have shared:

“The correlation of A-shares with other indices will gradually increase over time. This is because global capital flows are highly correlated to the US and other major economies’ monetary cycles. That said, the changes are not going to happen overnight. It will take a long time before we eventually reach there…”

— Jack Lee, head of China A-share research at Schroders

“When A-shares are added to the index next month, an inclusion factor of just 5 percent will be applied, limiting their weighting in the index to less than 1 percent. However, over time, with a higher inclusion factor, total Chinese representation in the index could eventually rise to above 40 percent. This would be a high level of country concentration, and therefore single country risk, for an asset class that comprises over 20 different countries…”

— Ross Teverson, head of strategy for emerging markets at Jupiter Asset Management

“Our view is that this is more a symbolic indication of a trend which will only strengthen over the coming years. While the number of new stocks will provide some level of exposure and diversification, they are comprised mainly of large cap Chinese companies also listed in Hong Kong and New York, and within the MSCI Emerging Market indices the aggregate weight of Hong Kong listed companies dwarfs that of the A-shares being added…”

— Pablo Urreta, head of research at Sussex Partners

“Given the relative lack of international familiarity with the Chinese market, we see stronger demand among international investors for diversified and innovative China funds than for individual A shares at this point.”

— Danny Dolan, managing director at China Post Global

“The A-share market has the widest choice of mainland Chinese companies, including quality companies in unique sectors, such as traditional Chinese medicine. Such sectors aren’t common in offshore markets and some of the companies do have the potential to be market leaders, not only domestically but globally.”

— Nicholas Yeo, head of China equities at Aberdeen Standard Investments