Posted inFSA Spy

The FSA Spy market buzz – 10 February 2023

Van Eck’s nuclear, Hong Kong MPF volatility, Google’s Bad Bard, handbag fund in the hold, Tesla disruption in numbers, optimism is infectious, Homer Simpson wisdom and much more.

Spy had the privilege of lunch with a very experienced deal-making lawyer in Singapore this week. The conversation turned over sushi, sashimi and sake to the explosion of family offices in the city-state of late. He wryly said to Spy, “There are more smoke and mirrors in those numbers of family offices than a circus illusionist’s act. For sure, some office space has been leased and an entity opened; perhaps an apartment has been acquired, too. However, often these are mere fancy post boxes and the real assets are held elsewhere. Every fund salesman or investment banker knocking on their doors may well find the decision maker is never there and the assets are all abroad, too.” This rather cynical view was echoed by a few more people Spy spoke to on his trip.

As the world struggles to provide affordable energy, those in favour of nuclear power are, once again, being heard, reckons Spy. Right on cue, Van Eck has launched an ETF in Europe that is focused on uranium and nuclear technologies. Here in Asia, the Fukushima disaster still looms large in people’s memories and thus Spy can understand a certain reluctance to get enthusiastic. However, for Europeans facing air-condition-less summers and heater-less winters, that squeamishness may just disappear, rather rapidly. In an ironic twist, knowing Germany’s own nuclear reticence, Van Eck Uranium and Nuclear Technologies UCITS ETF has listed on the Deutsche Börse Xetra with a London listing expected imminently.

Spy has not looked at MPF fund performance for a while. He took a little peek at which funds were performing well and in which sectors. Out of hundreds of funds available, over a one-year period almost every single one of them is negative. Only two sectors have managed to avoid the carnage: MPF Conservative and MPF Guaranteed. In every other sector, Spy could not find a single fund that was positive. The Sun Life Rainbow fund, for example, is down more than 20%. No pot of gold at the end of that one. However, there is some good news, too. The last three months have seen a remarkable bounce back and the reverse is now almost entirely true, too. There are hardly any funds at all that are negative over that period. The Sun Life MPF MT-Schroder MPF Hong Kong strategy is, for example, up a whopping 20% in just 90 days. Easy come, easy go?

In Spy’s younger days he was known to tread a floorboard or two at a local theatre in his spare time. The local director used to mutter the well-known phrase, “It will be alright on the night” as the amateur actors fluffed their lines in last minute rehearsals. Those wise words spring to mind with Google’s Bard AI demo that went so disastrously wrong this week, leading to Alphabet’s $100bn share rout. It was certainly not alright on the night despite the Shakespearean overtones. And yet, Spy can’t help but think the market has got this one entirely wrong. The chance that billions of users are suddenly going to stop using Google search any time soon is both absurd and fanciful. ChatGPT and other advanced chatbots are very interesting, amazing even, but they don’t replace the core Google search functionality. Answering things and finding things are different experiences with different uses.

The odd story in the press this week that Joseph Lau, the billionaire former CEO of Chinese Estates Holdings and fugitive from Macau justice, has sold 77 handbags for more than $3m, gave Spy an idea. Surely, like fine wine, vintage whisky, rare art, vintage cars and other assorted alternative asset classes, a Luxury Handbag Fund might just have legs for alternatives afficionados. If all else fails, at least that Kate Spade or Hermès bag can be used for a party. More than can be said to Dog E-Coins, reckons Spy.

Sometimes a table does paint a remarkable picture. Tesla may have had a rocky few months but the numbers are truly staggering.

Sales, 10 Years Ago…Sales Today…
General Motors: $152bnGeneral Motors: $157bn
Ford: $134bnFord: $158bn
Tesla: $0.4bnTesla: $81bn
Net Income, 10 Years Ago…Net Income Today…
General Motors $6.2bnGeneral Motors: $10bn
Ford $5.6bnFord -$2bn
Tesla: -$0.4bnTesla $13bn

Spy is not too surprised to see some of the growth funds such as Ark Disruptive Innovation bounce back of late. That is disruption, writ large.

One of Spy’s all-time favourite industry polling questions, is to ask wealth management professionals: What is your outlook for the industry? This is followed up by: What is the outlook for your own business? In almost every poll Spy has seen in the last decade asking these two questions at wealth management industry conferences in Asia, the respondents are always more optimistic about their own business than the industry at large. This “optimistic bias” is, ironically, a good reason to be optimistic on the long-term general outlook. People will make a plan, no matter how tough it is out there.

Spy’s quote of the week comes from that all American genius, Homer Simpson: “After years of disappointments with get rich quick schemes, I know I’m gonna get rich with this scheme. And quick.” Spy wonders if 2023’s crypto investors are feeling just like this?

Until next week…

Part of the Mark Allen Group.