The FSA Spy market buzz – 13 September 2019

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Jupiter loses; SCB and Julius Baer’s symphony; Mario channels Gandalf; PMs returning to town; Spying in Asia; The Kleptocrats; Value bounce; OCBC’s Singligh and much more.

Earlier this morning your, ahem, refined Spy was drinking a particularly fragrant Lapsang Souchong tea whilst munching delicate white lotus mooncakes, in one of Hong Kong’s finest establishments with a portfolio manager of rare talents. She has a performance track record in China Small Cap that would make a 1990’s hedge fund manager blush with shame. The subject of discussion this mid-autumn turned to Hong Kong Exchange’s audacious bid for the London Stock Exchange. “It is not going to happen”, she told me emphatically. “Practically every ‘free trading’ nation has an instinctive aversion to their share exchange being owned by foreigners. Just look at the fuss Australia made when Singapore tried its luck.” Of course she may be wrong but with a track record such as hers, Spy would not bet against her. Still, it was extremely good to be talking about Hong Kong on topics other than tear gas.

News reaches Spy that David Conway, Jupiter’s global sales director, has stepped down from his role at the firm. David was based in Asia for a number of years servicing the wholesale sector and has recently been focussed on GFIs and key clients, including Asia-based tier one private banks. Jupiter is undergoing some changes and Spy understands a number of redundancies have been made at the firm of late. The boutique asset manager has been hit by a number of cross currents this year, most particularly with the announcement in July that Alexander Darwall, its star European equities manager, was leaving to set up his own boutique. Still, Jupiter has had a good year with its Asia Pacific Income Fund, up a healthy 9% over the last 12 months.

There is cheese. There is cheesy and then there is private bank PR – or so it would seem. SCB and Julius Baer recently celebrated the launch of their PB joint venture with a gala night at the Oriental Bangkok. 150 HNWIs were invited to an evening themed “The Symphony of Trust” with the Bangkok Symphony Orchestra performing an opening concert. The rather breathless PR statement claimed the performance conveyed “a perfect harmony of trustworthiness, expertise and experience”. Attendees then had 1980’s crooner Michael Bolton deliver a private concert. Spy wonders if the veteran singer was asked to modify his hit, “When a man loves a woman” to “When a bank loves its client”. Spy apologises if you are now going to hum that tune all afternoon.

In Lord of Rings, the Hobbits and men of Middle Earth are facing imminent destruction by Saruman’s Orc army at the battle of Helm’s Deep and are desperately hoping, against the odds, for a saviour in their hour of need. Desperate European politicians, facing the economic disaster that is Europe, have also been praying for a saviour, as the Eurozone descends ever further into deflationary Mordor. Spy imagines Mario Draghi, channelling Gandalf the Grey, saying, “Look to my coming, at first light, on the fifth day. At dawn, look to the East.” On Thursday, Draghi may have arrived in a chauffeur-driven S-Class Mercedes instead of a blazing white horse, but he came, nonetheless, in the guise of saviour. Yet another interest rate cut and €20bn a month of fresh QE may indeed stave off the Europe recession-Orc for a bit. However, Spy strongly believes, that even greater tests lie ahead for Super Mario’s successor, Christine Lagarde, as she leads her Fellowship of the Damned in a valiant fight against Sauron’s evil deflationary forces [Editor’s note: Spy may have had too much whisky last night, but let his flights of fancy pass because he shared his mooncakes with the team].

Cathay Pacific has just reported truly dreadful numbers of inbound passengers to Hong Kong in the last two months. Spy can attest that very few portfolio managers have been making friendly pop-ins of late. And yet this week a flurry of PMs have come to town. Spy is not too surprised that most have been emerging market equity specialists. These are the sort of fellows who take coups, crises, wars and social unrest with a dash of salt and bag full of bravado. When chronically risk-averse fixed income pansies start returning to the Fragrant Harbour from America, then Spy will know the Hong Kong protests have truly abated.

Spy spies on the Asian asset management industry, but who spies on Spy? Last week a friendly asset management reader emailed FSA’s editor demanding to know who the Spy is. A request that arrives frequently, it so happens. Spy was watching a documentary on the new breed of highly accurate, facial recognition cameras being used in China and elsewhere. These truly invasive beasts of the apocalypse are spreading like gossip does after a stag weekend in Manila. To paraphrase Ernest Hemingway: Do not ask for whom the cameras spy, they spy for thee. Spy’s spying, usually alcohol-fuelled, is very amateur compared to the ever present surveillance state rapidly growing all around us.

Spy’s colleagues return to Kuala Lumpur next week for a special luncheon on emerging markets hosted by Merian Global Investors. Right on cue, Spy noticed that the award-winning documentary about Malaysia’s devastating 1MDB scandal, The Kleptocrats, is being aired on new docu-streaming service, With Malaysia currently shrouded in smog, Spy imagines a number of Malaysian politicians will be hoping The Kleptocrats does not penetrate the haze of financial corruption too clearly as some big trials loom ahead.

Spy is not sure who gets quoted more, Warren Buffet or Oscar Wilde. This week Oscar springs back to Spy’s lazy mind. In Lady Windemere’s Fan, Wilde had Lord Darlington quip that a cynic was “a man who knows the price of everything and the value of nothing”. Well, the value players may at last be having the last laugh over the cynics. Value has had a proper bounce in the last few weeks, defying several years of gloom as growth and quality have outperformed. Who knows whether the value bounce will persist but Spy would observe that so many funds have underperformed of late, that funds themselves may be rather good value…

OCBC bank is reveling in its local understanding. This week the bank launched an app with artificial intelligence that understands Singlish – that unique creole language both loved and derided in the tropical city-state. Spy is not sure if a user may ask the app yet, “Buy top fund, lah?” Spy would only hope the answer will soon be, “Can, lah.”

Spy’s band of trusty photographers have spotted a tram in Hong Kong promoting Allianz Global Investors and active management. Allianz is not hiding from that message one iota:



Meanwhile, Merian Global Investors has taken over a Central tram stop offering Asia’s favourite – a decent yield:



Until next week…


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