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The FSA Spy market buzz − 03 November 2017

M&G appoints; Eastspring hires, so does Fullgoal; BNP Paribas AM loses; Crypto polls; Debt galore; Compliance obstruction; Vontobel warrants; Schroders advertises and much more.

Spy could be mistaken for thinking the Asian wealth and asset management community is holding its collective breath. With markets having delivered and client accounts looking fat, most practitioners seem hopeful that nothing will change between now and the end of the year. October has disappeared with its tail between its legs and any lingering concerns about Black Mondays and the 10th month curse have been put to bed. Few are looking for any more returns. All eyes are now looking toward bonus season. The holiday brochures are being pulled out and the restaurant bookings for lazy lunches are piling up. The only real business question on everyone’s mind is, what on earth do we sell in the first quarter of 2018?  Ah, now there is the rub.

Has M&G found a new head of its overall business in Asia? Spy heard talk that Alex Jeffrey, who is currently CEO of M&G Real Estate in the UK, has taken the role. Your Spy, never one to act on rumours :), asked for and received confirmation from the firm. They added that Alex, who remains a member of the M&G’s executive committee, will relocate to Singapore in the second quarter of 2018. M&G is currently undergoing some well-publicised corporate restructuring in the UK. The asset manager best known for its fixed income expertise is being integrated more tightly with parent company, Prudential Plc.

News reaches Spy that Gloria Char has recently joined Eastspring Investments as an assistant director in the regional marketing team in Hong Kong. She will likely report to Christian Fleischer, based in Singapore. Gloria joined from the Hong Kong arm of Chinese asset manager, Fullgoal Asset Management (in which Canada’s BMO has a stake).  In this world, notes Spy, one seldom has a leaver without a new starter and at Fullgoal it is no different. Elva Guo has now replaced Gloria at Fullgoal, reporting directly to Michael Chow, who is managing director and head of international business.

BNP Paribas Asset Management has also had a change in their Singapore marketing team as Bonnie Wan, has stepped down from the firm. There is no news of Bonnie’s replacement yet. Asian marketing is still headed by Janis You who is based in Hong Kong.

Spy also understands that Charmain Wan, is stepping down from Lazard Asset Management in Hong Kong. Charmain was handling business development in North Asia for the American firm. There is no news on Charmain’s replacement and Spy is unaware of where she is moving to.

At Fund Selector Asia’s investment forums in Hong Kong and Singapore this week, more than 80 fund selectors, analysts and discretionary investors were polled on their attitude toward cryptocurrencies. In a week when giant global futures broker CME announced it was going to launch its first cryptocurrency contracts and Bitcoin hit $6,500, it seems the Asian fund community is as sceptical, perhaps even, as befuddled, as ever. More than 60% of respondents in both markets thought cryptos are a fraud or a complete mystery.

With so much enthusiasm for markets, Spy was heartened this week to hear a few sceptical voices sounding a note of caution. BNY Mellon Investment Management, during a presentation this week, reminded FSA’s audience that in 2007 an IMF stability report stated, “Favourable global economic prospects, particularly strong momentum in the euro area and in emerging markets led by China and India, continue to serve as a strong foundation for global financial stability.” They point out we are currently getting similarly confident bleatings from the BoE, ECB and Fed as they all point to rate rises and easing of QE. Are central banks now a contra-indicator, wonders Spy?

Spy’s quote of the week was overhead at the dinner table. The head of a prominent Canadian wealth manager in the region was caught muttering with a certain disdain, “These days the only criteria needed for being able to become a compliance officer is the ability to spell the word ‘compliance’.” Indeed, it is not just asset managers who are frustrated by their compliance departments whose default tendency is to say “no” (in their humble opinions). Disdain stretches across the wealth world, too. Misery loves company, thinks Spy.

Spy, during the course of extensive drinking with asset managers, has been compiling a list of the top five whinges about the fund selection process in Asia, as perceived from an asset managers’ point of view. Interestingly, the list seems to apply to both wholesale and institutional buyers.

5.“Fund buyers are not interested in a partnership, it is transactional only.”

4.“If performance dips for just two quarters, you are likely to be dropped off a focus list.”

3.“Highly technical jargon is used to request fund metrics when a simple request will do”

2.“The `take it or leave it ‘pricing offered by the distributors and investors”

And, in the number 1 whinge spot…

1.“They would rather trust a weaker fund from well-known brand than a brilliant fund from a lesser-known manager.”

In the interests of industry fairness, Spy will be publishing, next week, the top five whinges about asset managers, also gleaned during some dedicated late night drinking, from the fund selectors’ point of view. Spy remains a neutral, committed and, at times, less-than-sober observer of the great game…

“Give us a ‘D’ – ‘D’, give us an ‘E’ – ‘E’, give us a ‘B’ – ‘B’, give us a ‘T’ – ‘T’….‘D – E – B – T, ’. He may be getting carried away with his sporting analogies, however, it really does seem that the era when Spy’s grandparents’ lived by the maxim, “Neither a borrower or lender be” is now gone forever, replaced by a world of excess that is drowning in cheap debt. There is no form of credit that is not enticing to governments, corporates or individuals. M&G’s Bond Vigilantes produced the pretty graph below as a Halloween special. Indeed, it is scarier than any jack-o-lantern or zombie prowling the streets of Hong Kong.

Schroders has launched a new advertising campaign in Hong Kong. Rather than sticking to traditional sites in Central, the firm has ads in Tsim Sha Tsui promoting the China Asset Income Fund. Spy understands the new campaign involves buses in Hong Kong, too. It feels like a John Candy film, just without the planes:

Spy’s memory can be dodgy at times, but he does not remember many public campaigns for warrants. On the occasions that he can remember them, they usually appear at frothier times in the market cycle. It raised an eyebrow with Spy when he spotted Vontobel with a very public warrant campaign on buses in Hong Kong.  Just sayin’.

Until next week…

Part of the Mark Allen Group.