Posted inFSA Spy

The FSA Spy market buzz – 15 July 2022

HSBC is hiring, Credit Suisse pinches, T.Rowe Price swoops, Janus Henderson swoops too, Matthews Asia goes ETF, Franklin Templeton goes for gold, Inflation, Advertising and much more.
Market Spy

Spy, even before a drink or two, is battling to keep up. Boris Johnson, the UK’s prime minister wanted to stay but has had to go. Mario Draghi ,Italy’s prime minister, offered to go, but his President has asked him to stay. The Sri Lankan President Gotabaya Rajapaksa wanted to stay in the palace with a nice pool, but then had to go to Singapore, resign and stay there instead.

All around the world, the sudden change of economic circumstance is upsetting political certainties as voters protest rising prices and dimming economic outlooks. For asset managers, things have suddenly got a whole lot harder, too.

One year performance figures are starting to look dreadful and the outflows are accelerating. Calm heads and steady nerves are required, but they seem in short supply.

It is the summer, and one could be forgiven for thinking that things would slow down. Not a bit of it. Spy notes that HSBC has just put out a job search for one of the biggest roles in the entire fund selection industry. The global banking giant is hunting for a new Co-Head of Funds Due Diligence. The role is going to be based in London, for anyone who wants a change of scene.

According to the blurb, the job “will provide global leadership for investment due diligence in the funds and ETFs product line for HSBC Group. The role has management responsibilities for teams of fund and quantitative analysts.” The bank is looking for at least fifteen years of experience. But, any candidate will need to hurry – the job search closes on Tuesday next week.

Spy nearly missed the news that Credit Suisse has persuaded Serene Lim to re-join the Swiss Giant after a lengthy stint at HSBC. Serene was at Credit Suisse in its fund selection team between 2014 and 2016 and joined in June, this time as a Director, Mandate Specialist. At HSBC Serene was a Discretionary and Fund Specialist. Serene remains based in Singapore.

T. Rowe Price has swooped in and pinched Glen Lee from Eastspring Investments to be its new Head of Intermediary Distribution for Asia, excluding Japan. The role is a new one for T. Rowe Price as it expands its distribution across the region. Glen, based in Singapore, will be reporting to regional head Elsie Chan, who is in Hong Kong. Glen was previously with UBS Asset Management and has more than 20 years of fund distribution experience.

In another summer move, Alex Ng has been hired by Janus Henderson notes Spy. Alex, who was previously at Federated Hermes, coincidentally joins JHI as Head of Intermediary Sales, Asia-ex Japan. Alex will remain based in Singapore. He has also held distribution roles with Abrdn and Lion Global.

If there is an investment manager left without an ETF in its stable, Spy would like to hear about it. This week, Matthews Asia joined the inevitable trend and launched a few in New York yesterday. The California-headquartered, Asia-focussed manager has listed three ETFs.

There are all, reassuringly, active offerings: Matthews Emerging Markets Equity Active ETF, Matthews Asia Innovators Active ETF and the Matthews China Active ETF. Each fund has an expense ratio of 0.79%.  There is no indication, yet, that Matthews intends to list the ETFs in Hong Kong or on any other exchanges.

Talking of ETFs, Franklin Templeton has added another one to its collection. The San Jose-headquartered firm has chosen an ethical theme. The Franklin Responsibly Sourced Gold ETF is now trading on ARCA. This seems like a decent idea because so much gold is from countries that have poor labour and mine rehabilitation standards. The bigger surprise is why gold itself has performed so poorly recently with inflation raging across the world. Old school economics suggests that at times of high inflation, gold usually performs well – ethically sourced or not.

Hold on to your hats. The US Federal Reserve is suddenly very worried about inflation after the Producer Price Index jumped above 11%. The market now thinks there is a 90% chance of a 100 basis points hike in the next meeting.

Forward guidance is getting battered. The last time the Fed hiked 100 basis points in a single move? 1981! Leveraged property, leveraged equity, well, leveraged anything is looking particularly vulnerable right now. Even Singapore’s MAS intervened yesterday and strengthened its currency. Investors are just beginning to get an idea of how rocky the road ahead looks.

Experts eh, who needs ‘em, wonders Spy? In March this year, as oil spiked, out of the closets came the doomsters. Headlines popped up that oil would shoot to $180, perhaps even $200, per barrel. Spy remembers Russia’s deputy prime minister, Alexander Novak, saying even $300 per barrel is not out of the question.

Well, yesterday oil dropped back below $90, 30% off its high, as investors start to realise that high prices are leading to demand destruction and recessions are not that supportive of indefinitely high prices. What goes up, must come down.

Spy has always been a touch suspicious of economists’ predictions. The old joke: How do you know economists have a sense of humour? They use decimal points. Boom. In the last few weeks, we have had inflation in the UK at 9.1%. The US followed suit and had a print of 9.1%, too. Yesterday Ireland came out and said its inflation is also 9.1% in June. Either something weird is going on, or these very differently configured nations are all converging? Spy reckons there is at least a 9.1% chance one of these will be revised…

Spy’s photographers have been out and about. Goldman Sachs Asset Management has plastered a Central tram site in Hong Kong with advertising. The manager is promoting its abilities and wants you to be ahead of the curve.

Until next week…

Part of the Mark Allen Group.