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The FSA Spy market buzz – 15 May 2020

Big change at Fidelity; GAM loses, Matthews Asia too; Press conference live; Naming of teams; Merger thoughts; Handbags at dawn; Counting your debts and so much more.

Spy has been enjoying the new-found freedom to return to bars and see people. This week has been a veritable carnival of face-to-face coffees and, thankfully, the lockdown has not prevented Scotch whisky from arriving in Hong Kong. One asset manager Spy spoke to this week told him, “I am actually delighted with the new home working arrangements, apart from the fact it is harder to meet up with clients living in Clearwater Bay.” Ah, there is the rub, thought Spy. Real business gets done face-to-face, thus the ‘ideal’ of working from home and ditching the commute is simply not going to work indefinitely. Spy is deeply sceptical that the asset and wealth management industry is going to go all virtual and, like Twitter, have everybody work from home forever, if they wish. Not going to happen.

People are moving around, and Spy is not just talking about the end of lockdown in Hong Kong. This week, news reached Spy that at the end of June, Fidelity International is losing Bryan Collins, who has been head of Asian fixed income and also managed the Fidelity Asian High Yield Fund. Bryan is taking a career break after 14 years at Fidelity. Replacing him will be Marty Dropkin, currently based in London, but expected to move to Hong Kong later in the year. Fidelity’s Asian High Yield and China High Yield products will be co-lead from the 1st of July by long time team members Tae ho Ryu and Terrence Pang.

GAM, the Swiss manager, has lost its regional marketing manager, notes Spy. Yofi Chan, who has been in the role based in Hong Kong for the last four-and-a-half years, has her final day at the firm today. Spy has no news on where Yofi is moving to or who is replacing her. Whilst the firm has had a tough few years, GAM’s China Evolution Equity Fund has had a great run, up 15% in the last year, according to FE Info.

Matthews Asia has lost its head of Asia, Lindsay Wright. Lindsay, who also held the role of head of global operations at the San Francisco-headquartered firm, has recently stepped down from the role which she held for less than two years. The industry veteran was previously with BNY Mellon Investment Management as head of Asian distribution. Matthews, similar to many active firms, has suffered significant AUM reduction in the last few months as market volatility has taken its toll. Despite that, Matthews’s China Small Companies Fund led by Tiffany Hsiao, continues to dodge the hammer — it has had a stellar year, rallying 56%.

Spy has a warm and cuddly feeling in his tummy. An invitation has arrived for the FSA journalism team. Not just any invitation, a real one. To an actual event, at a venue, not a cyberspaced, Zoomed, Teamed, virtual one. But one with other people in a room and coffee and quite possibly a piece of cake, too. It is from Value Partners Hong Kong, who will be chatting about China. It brought a ray of sunshine today. This is, very hopefully, a sign of normality and better things to come.

As asset managers try and work out how to get their teams back into their offices safely, Spy has heard that HR teams are managing the delicate task of naming the groups of employees who will attend the real office on different days. According to a reliable source, who chatted with Spy as we sipped Monkey 47 Schwarzwald dry gin, Blackrock initially decided on “Team A” and “Team B”. Because it carries the suggestion of rank, this met some understandable resistance and Team Black and Team Rock were chosen instead. This got Spy thinking, will other firms follow suit? Will we have The Vans and The Guards? The Franklins and Templetons. Or the Leggs and the Masons? Suggestions on a postcard, please.

If there are any marketing managers still in any doubt about the value of building a brand, Spy would direct them to a story out of the Korea Times today. Apparently, a rumour spread around that Chanel was due to raise the prices of its handbags and this prompted huge queues of eager fashionistas to form outside their boutiques, causing a social distancing nightmare. Seoul authorities have threatened to force the boutiques to close to avoid new clusters of Covid-19. Just think about it for a minute: in the midst of a global recession, people are willing to risk getting THE BUG, just to beat a price rise for an already hugely expensive, entirely discretionary item. That, dear readers, is the power of brand. And it is something every single company wants in tough times.

Two asset management mergers are taking place at the moment. Franklin Templeton is buying Legg Mason and Jupiter is buying Merian Global Investors. Has this market volatility prompted their management teams to get cold feet? It would seem not. Both mergers appear due to go ahead despite any falls in AUM of the target companies. Perhaps, if anything, this recent market sell-off has reminded managers that size counts in challenging times. Expect more announcements before year end.

Deutsche Bank has given another nod to ESG, reads Spy. This week, the German giant, announced that by 2025 it wants to have at least €200bn of investments and “sustainability-linked” loans under management. In the grand scale of things, that is still relatively small beer, but the trend is undeniable. Those people who laughed at ESG investing a few years ago? They ain’t laughing now.

J Paul Getty, once considered the world’s richest man, is reputed to have said, “If you can count your money, you are not rich.” Spy wonders if the reverse applies to debt? Spy imagines that when the world’s central bankers get together, they say to each other, “If you can still count your debts, you are not really indebted!” Spy, along with many other commentators, are finding it hard to keep up with all the money printing; Spy, for one, has now lost count. All this money printing out of thin air, does remind Spy of another quote, however. Joseph Addison, the English poet and playwright wrote, “They were a people so primitive, they did not know how to get money, except by working for it.” And how the central bankers chuckled.

Until next week…

Part of the Mark Allen Group.