It is early July, and therefore Spy has done the only sensible thing and left Hong Kong’s hot and humid, and it must be said, rather febrile environment, to travel to one of Asia’s more pleasurable and serene destinations where thoughts of asset and wealth management are further away than mojitos and piña coladas – which, seem to appear with a reassuring regularity on this island jewel overlooking the Wallace Line. If managers were hoping that the old adage, sell in May and go away, providing for a lazy summer, would repeat this year they must be feeling a touch disappointed. The last few months have seemed to be a “buy anything” type of environment as asset managers’ best friends, CBSOPM, (Central Bankers Spending Other People’s Money) have been turning up the printing press and, where they can, also knocking interest rates even lower. Where does that leave us for the rest of the year? Spy will share some scattered musings below, but suspects they should all be taken with a pinch of, eh, pineapple?
It is a pithy aphorism: people leave (or follow) bosses not companies and Spy suspects this to be the case for Chiong Kong Chan, who was until recently director of investments at Bordier & Cie. Chiong Kong has joined the family office, Karuna in Singapore. Who joined Karuna a while back? That would be Bryan Goh, the former CIO of Bordier & Cie in Singapore. Coincidence, Spy thinks not.
Discretionary fund manager, Purple Asset Management, which is based in Singapore, has had a bit of a coup, thinks Spy. The DFM, part-owned by wealth manager The Fry Group, has managed to hire Johan Jooste as managing director. Johan was head of rates at Bank of Singapore and previously held the position of CIO. He will be working with Gary Dugan, Purple’s CEO. The DFM space is steadily growing in Singapore as wealthy clients increasingly give their trust to the investment managers to act on their behalf.
Spy could not help but notice it was the 4th of July yesterday and our American friends like to celebrate their Independence Day. Some perpetual Eeyore’s will find some things to moan about, but Spy feels the Americans have much to celebrate, if only looking at the world through the lens of the market. The S&P 500, the Dow Jones Industrial Average and the NASDAQ 100 are at record highs. US bonds are pretty much at record highs. The US economy will record its longest expansion in history this month. The S&P has had its best start to the year since 1997. The US unemployment rate of merely 3.6% is the lowest it has been since 1969. There have now been 104 straight months of US jobs growth. With all this super doopa news, one would naturally expect interest rates to be rising…but, of course, the market is gleefully telling us that in less than four weeks we can expect a rate cut. Welcome to the CBSOPM party. It just gets better.
Asset managers have been in the spotlight the last few weeks, often for not the best reasons, notes Spy. Woodford has had his well-publicised woes in the UK, H20 has had, rather ironically, liquidity problems giving Natixis a headache. This week the perils of having a “star manager” were laid bare at Jupiter as the business announced their European equities guru, Alexander Darwall, was leaving the firm to set up his own boutique. Jupiter’s shares tumbled on the news. Franklin Templeton’s parent company, Franklin Resources has been hit by short sellers with hedge funds gunning for the firm according to the Financial Times. Before one gets too gloomy about the industry outlook though, Spy would rather reference EY’s 2018 report that estimates by 2021 HNWIs will have $70trn of investable assets all looking for a home. Those assets won’t simply manage themselves…
Spy was wondering which funds, registered for sale in Hong Kong, have had the best six months. The top ten are dominated by two themes: tech and China. All the top 10 are up more than 30%. In third place, we have Hang Seng’s China A Share Focus A2 up nearly 38%. This is followed by JP Morgan AM’s China Pioneer A Share up 38%. The winner of the first half is Blackrock’s Next Generation Technology Fund returning a whopping 40%. Last year, Spy heard several bankers suggest that tech is now a core holding. For anyone who did not panic out in 2018, it looks like 2019 is proving a vintage.
What does the rest of the year hold, wonders Spy. Expect bears to throw in the towel soon. Don’t fight the Fed has been true for decades. Now the Fed has been joined by a coterie of dovish friends. The ECB is getting über-Dove Christine Lagarde as its new head, Australia is cutting rates faster than a grass trimmer in mid-summer, The Bank of Japan, well, continues to pump money like it always does and China is competing for largesse as if it was an Olympic sport. The mantra seems to be: “Savers, ye shall take risks, but for those risks, ye shall be rewarded.” Cash was king in 2018 don’t bet on a repeat this year.
There has been a dearth of new outdoor advertising according to Spy’s roving photographers. One eagle-eyed contributor did see an ongoing campaign in Singapore from Allianz GI promoting its thematic active investing:
Until next week…
