Posted inFSA Spy

The FSA Spy market buzz – 08 September 2017

People moves aplenty; Fidelity gets passionate; Bitcoin bubbles; Mobius wants some rebranding; MPF investing; advertising galore and much more.

“That will be HK$256, sir”, in a sugared voice, were the words delivered by Spy’s waitress this week. “256 dollars for a hamburger?! For a bun, with some ground up mince, and potatoes dipped in old oil?” Spy felt a few capillaries in his brow expand to the point of explosion as he impotently raged at the injustice of it all. Yet it is no use complaining: Hong Kong’s prices continue to defy gravity. It is no wonder so few new asset management firms have made the move to Asia of late. The costs of doing business in the region are sky high and the competition particularly fierce. “That doesn’t include the 12.5% service charge, sir.” I’ll bet it does not, grumbled your humble Spy.

Spy has come across so many people moves this week, it is as if his entire Rolodex needs refreshing. Spy is beginning to think the one stable job in Asia is being a business card printer…

Danielle Chua has re-joined First State Investments in Singapore as an associate director within the retail sales team. Danielle joins from Fullerton Fund Management which has, in returnhired Brian Sng to take on a wholesale distribution role. Brian joins from Hermes Investment Management. No news on his replacement yet. Value Partners has hired Kevin Lo as a new associate director of Hong Kong sales. Kevin was previously at Investec Asset Management. Karina Law has joined Fidelity International in Hong Kong as a vice president of retail sales. She joins from JP Morgan Asset Management. Finally, William Tan has stepped down from his intermediary sales role at Capital Group in Singapore. No news of his replacement yet, either.

M&G has added to its marketing team in Hong Kong with the addition of Stella Leung. Meanwhile, Livia Tse has joined Invesco to bolster the institutional marketing team. Livia was previously with JP Morgan Asset Management in Hong Kong.

George Lee has stepped down from his role as head of investment consultancy and research at Wing Lung Bank in Hong Kong. There is no news of his replacement or where George is moving to.

You would literally have to be living on another planet to be unaware that cryptocurrencies have been on a tear. Is that the word “bubble”? I hear you asking. It is extremely hard to think otherwise. Spy has come across two charts this week that compare other recent asset bubbles to Bitcoin. They speak for themselves. Bitcoin is looking like a world record beater. If you think you have missed this stellar rally, Spy has some very nice tulips for sale…If anyone wants to swap their apartment in Hong Kong for a very fine Tulipa Praestans ‘Unicum’ bulb, just drop Spy an email.

In sales, getting the name right may be just as important as the product, thinks Spy. Selling at a car boot sale, your second hand stuff goes for a pittance. However, rename it as “retro” and voilà the price of your old junk goes through the roof. Or, how about those 1980s ‘junk bonds’? Rename them ‘high yield’ and they shift off the shelf faster than retro gear at a Kowloon market. Spy spotted an amusing clarion call for a snappy rebrand from Mark MobiusFranklin Templeton’s Grand Old Man of emerging market investing. He suggested, this week, we should rebrand “emerging markets” to “high growth countries”. Spy thinks it may just catch on…investors would much prefer to think of rapid growth than sclerotic and volatile local politics with questionable corporate governance.

Spy stumbled across some fund performance that gave him serious pause for thought. It was data by Phillips Unit Trusts in Singapore on their 5 best performing funds on their platform over 5 and 10 years, respectively. What was striking was that only one 10-year fund had outperformed its 5-year rival time period. That is the First State Regional India Fund, and, admittedly, that was not by much. The rest of the top 5-year performers, have all performed better in the last five years than the last ten. It rather speaks to what an incredible bull we have been experiencing – should you be in any doubt, whatsoever.

If you want a single chart that tells the growth story of the domestic China market, better than almost any other that Spy has come upon – look no further than this one from Mirae Asset Management. It shows the wage growth of factory workers in China since 1980. And you wonder why Donald Trump has followers. Enough said, reckons Spy.

MPF investors rejoice. In the latest data published, a total of 397 funds are listed as available for HK’s MPF investors. The numbers tell a staggering, but very happy tale. Over one year, only 37 of the funds are negative and over three years a measly 24 are negative. And, all of those, not by much.  This level of positive return reminds Spy of a classic old anecdote: an investor asks his broker, “How are things going?” “Couldn’t be better”, says the broker. “Everything is at a record high; business is going as well as it possibly could.” The investor thinks for a while and says, “Please sell everything. If things couldn’t be better, then they only have one way to go…”

Do you want a bit of passion in your life? Investing in bonds and stocks just a little staid for you? How about some art, exotic cars, or a rare collectible – so called “passion assets”. Spy came across a lively article by Fidelity’s Nick Train who manages the Lindsell Train UK Equity Fund debating the merits of these alternatives. Nick notes that “Coutts, the UK private bank, has been tracking the performance of some of these asset classes for the past 12 years… and overall, Coutts reckons what it calls ‘objects of desire’ have the edge. It calculates that passion assets rose by 77% over the whole dozen years compared with a return of 52% for the FTSE 100 over the same period. Classic cars have not had a good couple of years, falling more than 10% in 2016, but since 2005 they have appreciated by 330%. The prices of 1960s Ferraris and other rare and desirable cars have gone through the roof over the past decade or so. As Mark Twain said of land, ‘they don’t make it any more’. There will never be another 1961 Ferrari 250 GT like the one that was found in a barn and sold for more than $18m last year.” That all sounds very well and good, but as Nick points out, when it comes to selling – it is an all or nothing proposition. You can’t just sell a wheel of a vintage car, or just a corner of your Picasso. Therefore, in times of distress, the realisable value of your investment may be very different to its indicated value. That may well be a passion killer, reckons Spy.

In June one might have thought the asset management industry had died there was so little public fund advertising. It seems its death was greatly exaggerated, if Spy’s trusty photographers are anything to go by.

Pimco has chosen the Raffles Place underground in Singapore to remind everyone they need income. Apparently we are living in a low yield world. Now where has Spy heard that line before?

Spy senses the continued fight back against passive investing with Franklin Templeton’s new tram shelter in Hong Kong. Benchmarks are so 2007, don’t you know?

Meanwhile, Manulife Asset Management is promoting their Asia Total Return Fund which has a lit bit of everything inside it. Multi-Asset is going nowhere, folks.

Until next week…


Part of the Mark Allen Group.