A few years ago Spy was unable attend a dinner in Hong Kong without some rather smug guest boasting of their property investments and not just locally. Vancouver, Toronto, Melbourne and Sydney were often listed as favourite destinations. Vancouver came off the boil a few months ago and now Australia’s bubble seems to have finally popped with prices receding for the first time in 6 years and expectations growing that Melbourne and Sydney will see prices as much as 15% lower, if AMP’s chief economist, Shane Oliver, is to be believed. Apart from a touch of schadenfreude, why is this relevant you ask? Spy hopes that this will remind Asian investors that blind allocations to property, which suck in such huge amounts of capital, are not the only way to invest. Funds are easy to buy and to sell, they can move capital quickly, they can compound easily, and they are seldom constrained to narrow geographies. It might be Spy’s turn to be a dinner party bore.
The lure of Fintech continues to swirl around Asia. Heather Dale, who was formerly comms manager at Pinebridge, has joined Diginex in Hong Kong. Diginex claims on its website that it is “The intersection of the distributed ledger technology revolution” and that it “is building the best in class, blue chip approach to all aspects of the distributed ledger technologies space”. Wading through the tech jargon, Spy assumes that Diginex is betting that blockchain is going to transform the financial services industry for real. Watch this space.
Will people speak of “before the 1st of June 2018” and “forever after”, wonders Spy? Today is the day MSCI finally includes 230 China A-shares into its emerging markets indices. China has been reforming its capital markets at pace over the last decade, and, today, must surely be part of the reward. China’s new international stockholders will need to learn a bit about the way the local Chinese market functions, thinks Spy. It may come as surprise that 80% of the market is made up of retail investors who have an, umm, creative approach to buying and selling stocks. Among other quirks, it is renowned that these mom and pop investors often choose stocks the same way Spy chooses horses at Happy Valley – by the name alone. Brave new world, indeed.
As China opens up, its local asset managers are venturing abroad. This week, Harvest Global Investments, the subsidiary of giant Harvest Fund Management has been celebrating 10 years of activity in Hong Kong. Much speculation goes on about which Chinese asset manager will become the “Blackrock of China”. Harvest, as one of the oldest and most developed players, with products launched in the UK and in New York, must surely have ambitions in this regard.
FSMOne’s robo-advisor service in Singapore has made it even easier for retail players to get market exposure. A few weeks ago their My Assisted Portfolio Solution (MAPS) dropped the minimum lump sum investment to merely $1000 from $5,000 to get going. MAPS, for all the breathless marketing, is nothing more than five good old fashioned risk-rated portfolios with real portfolio managers in the background. The “robo” bit in their marketing seems to be nothing more than “use our internet site to choose your portfolio and give us the money.” Still, Spy is all for saving and can only see lower minimums with low charges as a good thing.
A few years ago, Europe was the darling of regional equity plays. Europe’s dysfunction seemed to be passing and eloquent Europhiles were enthusiastically punting a new European renaissance. After Italy’s chaotic government-forming shenanigans this week, Spain’s impending vote of no confidence in prime minister Rajoy, trade wars with Trump and, of course, Brexit, a colder reality is setting in. Spy looked up European funds authorised in Hong Kong and only a handful are meaningfully positive over the last 6 months. The leader is Jupiter’s European Growth Fund – up a respectable 5.8%. Hat tip to their team who appear to be deftly navigating the stormy waters. Looking at Jupiter’s top ten holdings, a notable absence is any exposure to Deutsche Bank – the European poster child of how to destroy shareholder value in a decade.
Mirae’s latest infographic caught Spy’s eye. Spy has been bullish for a while on Vietnam since a visit to Ho Chi Minh last year. The growth in Vietnam’s stock market size tells a healthy story all on its own.
Trying to work out what is going on is a complex and often frustrating business. John Maynard Keynes once said, “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” Who to believe and what to believe – today’s challenges writ large. As M&G’s Christophe Machu, quoting Laurence Peter, put it at FSA’s Long Term investing Forum, “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.”
Spy reckons a vast amount of market commentary is pure bunkum. Causation is often mistakenly attributed to unrelated news. A picture tells a thousand words?
Spy’s photographers have spotted some advertising from a robo-adviser in Hong Kong, Aqumon. Apparently what investors want when they open an account is a Dyson hairdryer or some Airpods from Apple. Well, maybe..
Until next week…
