Posted inFSA Spy

The FSA Spy market buzz – 05 March 2021

Grab Financial promotes; GSAM pushes retail; Schroders on passive; FAANGMAN vs SGX; Asset manager websites; IPO warning; Hong Kong’s crypto; and much more.

It was Julius Caesar, the mighty Roman emperor who ignored the warnings about the “Ides of March”. As Spy enjoyed some particularly fine Yoho Tokyo Black beers last night with a friend who is in asset management sales, he was reminded that a year ago, the world took a serious wobble. Is March going to be the new October? Spy has no doubt there are some Johnny-come-lately investors this week who are seriously regretting putting their stimulus checks into companies that don’t make a penny. They must be thinking, “Et tu, Reddit?”

A little while ago, Fund Selector Asia reported that Chandrima Das, the co-founder of Bento, was joining Standard Chartered. You may recall Bento was sold to Grab Financial, where Chandrima Das was head of wealth. Grab has now appointed Martin Pickrodt as its new head of wealth at the fast-growing ride-hailing / financial firm. Martin was previously COO of Bento and managed their partnerships. The firm is nothing if ambitious, noted Spy: it won a digital banking license from the MAS, in a JV with Singtel, which is expected to go live in 2022. Numerous media outlets, including Reuters, have reported that Grab is considering raising $2bn in an IPO this year with Morgan Stanley and J.P. Morgan named as investment bankers.

The Goldman Sachs Asset Management retail build continues in Singapore. The American manager has recently added five more strategies to the FSMOne platform. These include Asia High Yield, ESG-Enhanced Global Income, Environmental Impact Equity, Future Technology Leaders, and most recently, Future Health Care Equity. All of the strategies are active and several have different currency and share classes. GSAM has grown enormously in the last decade adding more than $1tn in AUM to its business which now has about $1.9tn under management.

If there is one major firm that is resisting the siren call of passive, it is British manager, Schroders. The company’s CEO, Peter Harrison, told Financial News in London “We are not ready to put the white flag out to passive.” He is apparently concerned about the razor-thin margins and giants already dominant in the sector. Good on Peter, reckons Spy. As market moves this week have made clear, large passive holdings can cut both ways. As enormous concentrated technology positions moderate, entire portfolios can take a tumble. Active can help avoid this, if managed well.

The Nasdaq has had a torrid week. It is in correction territory. When falls happen to such a valuable market, the numbers are quite staggering. The market cap of the FAANGMAN group:  Facebook, Apple, Netflix, Google, Microsoft, Amazon and Nvidia has now dropped in value by $700bn from its February high. By comparison the entire market capitalisation of Singapore’s stock market is only $647bn according to SGX. Still, it was fun while it lasted.

Spy has a bugbear. To any asset management marketing professional who wants to listen, your websites have a memory problem. Every week Spy roams asset managers websites hoping to pick up on juicy nuggets of new and interesting things going on. Almost every week those same sites ask Spy to tell them where he is (Hong Kong) and what type of investor (Institutional). And every week he goes back, they ask the same question. Again. It really is rather tedious. Are cookies that unreliable?

A picture is worth a thousand words. A chart is worth, er, a million dollars? Well, maybe not but this is one of those charts that made Spy go “hmmm” and then promptly go “hmm” again. The ETF that tracks IPOs and holds them for 2 years after listing, has just had a tumble. Its outperformance of the S&P500 is immense. The last time it tumbled, the rest of the market was due a fall. Food for thought.

Pre-pandemic, most Hong Kongers would trip up and down to Shanghai these days as easily and as often as going to Kowloon from the Island. News this week will make future travellers awfully happy. Shanghai has declared that by 2025, half of all new cars in the mega-city must be ‘New Energy Vehicles’, or NEVs. These include electric, hybrids and hydrogen fuel cells. Shanghai is going to be a much quieter, cleaner city and Spy is all for it. If other cities follow Shanghai’s lead, perhaps the lofty valuation of Nio will be justified after all!

It had to happen sooner or later. Hong Kong is getting its own pure crypto funds. Huobi Technology Holdings Ltd, China’s largest cryptocurrency exchange platform said its asset management division is launching 100% crypto funds in Hong Kong. The firm itself is already listed in Hong Kong, but now it has regulatory approval to launch competitor funds to Grayscale in New York and Purpose ETF in Toronto. Bitcoin’s wild ride continued this week the currency moving above and below $50k.

Mark Mobius, of Mobius Capital, and veteran emerging markets investor added to the chorus of voices saying parts of the market are overvalued. He cited crypto and non-profitable companies as areas of concern. He said, “We are in a bubble in some areas of the market… and in some companies that are popular for one reason or another.” Spy wonders which ones he could possibly mean?

Spy has heard dozens of commentators say the frothiness in markets is nothing like the bubble in 1999. Maybe, but there is one area it is definitely similar: day traders. The Reddit phenomenon has made it all too clear that millions of retail investors are punting like never before. Here, in one glorious chart, one can see the frenzy, thanks to Arbor Data Science. This is a chart tracking internet searches for day trading, etc. Parabolic is the word you are looking for.

Quote of the week from Twitter, “When you focus on short term gains, you often lose out on the long term big gains. Interestingly, multiple short term gains always do not add up to long term big gains. It may in fact hinder it.” Seldom a truer word spoken, despite its origin.

Until next week…

Part of the Mark Allen Group.