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The FSA Spy market buzz – 09 October 2020

Capital Group recruits; Aberdeen Standard promotes; Sad news from Columbia Threadneedle; Morgan Stanley buys; Lufax goes to New York; BlackRock’s rally; Think Again and much more.

Spy’s plans to spend time in Europe over the Christmas period is rapidly looking like a pipe dream as Covid cases rocket in every country on the continent and travel restrictions abound. Whilst Europe grapples with what to do about their economies and their public health, something quite remarkable is happening in China. An industry colleague, with whom Spy shared several beers this week, pointed out that for the first time in a year, China’s hotel occupancy rate has exceeded last year. This is the kind of tourism numbers the rest of the world can only dream of. I guess Spy will be looking north, not west, for that year-end break.

News reaches Spy that Capital Group has made another senior appointment in its marketing team. The American giant has hired Schroders’ former chief marketing officer, James Cardew. James has been appointed head of marketing and client experience for Europe and Asia and will be based in London. James spent 18 years at Schroders and is one of the most well-known marketers in the asset management industry. As reported by Spy last month, Cap Group appointed Alexandra Haggard as head of product and investment services for Europe and Asia in September. These two hires send a strong signal that the firm is serious about is global marketing effort outside of the US. The manager has had success this year with their New Perspective Fund – it is up 20%.

Standard Life Aberdeen announced that Alex Hoctor-Duncan has been promoted to the newly created position of global head of Aberdeen Standard Investments and has been appointed to the company’s main leadership team. Effectively, Alex is the new global head of distribution for the Scottish firm as Campbell Fleming left the business last month. Alex will now report directly to SLA CEO, Stephen Bird. Alex is a veteran of the industry and joined Aberdeen Standard two years ago from Blackrock.  The manager has had success this year with their Global Innovation Fund which has delivered 35% year to date.

Spy is saddened by the shocking and tragic death this week of Columbia Threadneedle’s head of emerging markets debt, Tim Jagger. Tim was one of our industry’s most cheerful faces with a brilliant mind sitting snugly behind it. He had spoken at several Fund Selector Asia events over the years and was based in Singapore for a decade before moving back to London in 2018. Tim could always be relied on for several big glasses of Aussie red as he joyfully played devil’s advocate on numerous investing ideas, not just fixed income. He previously held roles at Aviva Investors and Royal Bank of Scotland. Tim is survived by his wife Suzie and sons Leo and Ollie.

And the gobbling continues. This week it is Morgan Stanley snapping up Eaton Vance for $7bn. This adds about $500bn to Morgan Stanley’s investment management business and raises it into the $1trn+ club. The buy seems a good fit as EV is mostly a domestic US business while Morgan Stanley IM manages most of assets outside of the US. Spy thought it was interesting that Morgan Stanley’s CEO, James Gorman said in an interview, “It was sort of obvious, if we didn’t do this, someone else would have.” And therein lies the truth – the consolidation in asset management continues at pace. The appeal of asset management over trading is growing among Wall Street’s large banks with its lower capital requirements and fairly predictable revenue streams. Well, that is the big idea, anyway, reckons Spy.

Not every Chinese firm is shying away from the US despite the ongoing trade and tech cold war. This week, Lufax, one of China’s most valuable fintech unicorns has filed for an IPO in New York. The firm which manages investment and lending platforms in China has about $53bn in wealth management assets from its clients and made a remarkable $1bn on $3.6bn of turnover in the first half of the year. The firm is backed by insurance giant Ping An. The IPO is due before the US election and will trade under the ticker LU.

Fancy a scary chart for Friday, just as you head into the weekend? Spy recommends this little one below. With both sides of the US political divide pushing for more stimulus spending, this is the one chart that is only going to get worse. The US is literally gorging itself on debt. How long the dollar holds up is anyone’s guess


In a remarkable year for stock and bond markets, one firm, if its share price is anything to go by, is reaping huge rewards from the volatility. Blackrock’s shares closed yesterday pretty much at their all-time high of $604 – up 2% for the day. The shares have rallied 50% over the last twelve months making the S&P 500, up a mere 21%, look like a laggard. The company is now worth $92bn and is heading towards a $100bn valuation making it one of the world’s most valuable financial firms. Spy is old enough to remember when asset management was considered one of the dullest areas of all financial services. Not any more.

Spy usually likes to recommend books he has actually read. This week he is going to alert his loyal readers to a book that is going to be published early next year and has already had some ringing endorsements. The book is by highly rated Wharton professor, Adam Grant and it is titled, Think Again. Adam argues that rethinking and unlearning is a skill we all need as the world changes rapidly. We need the ability to reimagine things, remove our biases and squash our prejudices. Don’t just take Spy’s word for it that the book is worthwhile, this is what Bill Gates had to say,  “Think Again is a must-read for anyone who wants to create a culture of learning and exploration, whether at home, at work, or at school… In an increasingly divided world, the lessons in this book are more important than ever.”

Until next week…


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