The FSA Spy market buzz – 10 November 2017

Spy found himself indulging in Indian cuisine and large quantities of beer at the New Punjab Club on Wyndham Street this week. This stylish take on north Indian food, with its punchy décor, innovative menu and a Michelin-starred chef from London restaurant Gymkhana, captured the resurgence of emerging markets rather perfectly: Confident and exuberant but with prices (and spices) that made the eyes water just a touch.

2017 is drawing to a close and Spy has been keeping an eye on which funds, available in Asia, have performed the best. Data from Trustnet highlights a wide range of strategies that are up more than 50% this year, proof, if it were needed, that the market has been frothier than a cappuccino from a hipster’s café. China and tech have had most of the running, but Spy was intrigued to note that Columbia Threadneedle has also pulled a rabbit out the hat in the UK smaller companies market sector.

Last week Spy published the top whinges from asset managers about the fund selection process in Asia. Spy has been diligently collecting concerns from the buy side, too. It is a reminder that at times, the industry appears to be on the same planet, but different worlds.

5.“The fund sales person can’t articulate clearly what the fund actually does or is expected to do.”

4.“Expecting a fund to be accepted for retail distribution with little or no branding support.”

3.“Telling us the lead portfolio manager does not travel to Asia, but still expects to get distribution.”

2.“Expecting a fund to be on-boarded for the Asian market just because ‘we already work with you in Europe or the US’”

And, in the number 1 whinge spot…“Expecting us to on-board a fund that is nearly identical to the one we are already promoting but with worse performance.”

Don’t shoot the messenger, says Spy.

Spy would like to call out again an alternative fund that epitomises the current craving for exotic asset classes, and seems designed to appeal to people with far too much money. FSA has reported on it before, but the launch of the whisky fund is worth repeating (Spy has a weakness for well-made whisky, in case anyone forgot). The Platinum Whisky Fund, which is based in Hong Kong, exceeded its initial $10m target and has raised $12m to invest in rare and limited edition whiskies. The fund launched in June 2014, has taken advantage of a growing appetite in Asia for Scotland’s best known beverage. While investors in conventional funds are usually left with nothing but losses in the event the strategy goes wrong, at least investors in the whisky fund will be able to drown their sorrows with their own investment.

Spy spotted more proof that financials, as a theme, are bubbling. IFast in Singapore has recently on-boarded Blackrock’s World Financials Fund Singapore dollar share class onto FSMOne. With rising rates around the world and background financial stress in the system appearing to be a fading memory, will long suffering investors give financials the benefit of the doubt? The fund, which includes Bank of China in its top 10 holdings, is nearing the peak it reached in May 2007. The fund is up 40% this year but down 0.5% over the last decade.

Singaporean investors will have another option to help them easily invest in the US, reports FSA’s sister publication, International Adviser. Charles Schwab has opened an office in the city-state offering ETFs, options and stocks to local clients. Previously their service was only available via certain private banks. Competition is a beautiful thing, thinks Spy.

Did Donald Trump just score a policy success in China with regards to the opening up of the mainland’s $40trn financial sector, wonders Spy. Bloomberg is reporting that new rules, announced on the back of Trump’s China visit, will soon allow foreign firms to buy 51% of local “securities ventures and insurance companies”. With foreign asset managers now allowed full local licenses, China’s market is looking more and more international by the day.

Tech investors have had a spine-tingling wake-up call this week when Snap Inc announced their results, which looked ugly from every possible angle. Snap has lost $12bn in market cap since its IPO in March, which at the time valued the social networking firm, beloved of teenagers, at $30bn. With 2017 looking like 1999 for tech investors, is Snap the canary in the coal mine that will remind investors to be wary of the sector? Caveat Emptor, says Spy.

Do you want to be taken for a ride? Annually, The Hong Kong Chamber of Commerce promotes tram and ferry use in the Dragon City and gets its members to sponsor free journeys. This year’s event will take place on the 29^th of November. One of Spy’s eagle eyed photographers noted that Value Partners, one of Hong Kong’s best known local asset managers, is one of the sponsors this year. Since the tram is one of Spy’s favourite ways of getting around Hong Kong, he tips his hat to VP and this happy cause.

Spy’s photographers have been scouring Hong Kong and Singapore for new adverts. Jupiter is back out playing again on the MTR with adverts promoting their active approach to investing.

T Rowe Price’s distinctive ram has also been spotted, eh, ramming home the message that T. Rowe is here to stay:

Until next week…