Spy caught up with a private wealth manager whose clients are mostly higher net worth Hong Kongers this week. As usual, Spy asked what clients are buying. “China, high yield, infrastructure and Asian tech” was the swift reply. “And, a remarkable level of interest in private opportunities” Spy was informed as we drank 8Wired’s IPA craft beers from New Zealand. Despite Hong Kong’s current malaise, the remarkable thing was the sheer amount of cash rolling around looking for a home. What an odd year it has been, mused Spy.
News reaches Spy that Vontobel Asset Management is losing its head of intermediary distribution. Suzanna Wong, who has been with the Swiss manager for three years in Hong Kong is stepping down. Suzanna also covered institutional sales in Southeast Asia. Vontobel AM has been in the news this week as it has opened an office in Singapore – as reported by FSA yesterday. Benny Gay, formerly at DWS, has been appointed Head of Intermediary Clients, succeeding Suzanna. Spy has no news yet on where Suzanna is moving to, although it is understood she is staying within the industry. The firm has done well this year with its Clean Technology fund up 26% year to date.
A little while ago, Spy reported that Yofi Chan had stepped down as marketing manager from Gam. At the time, Spy was unaware of where she was moving. This mini mystery has now been solved. Yofi has joined BNY Mellon Investment Management in Hong Kong. BNY Mellon IM continues to expand across the region. The firm has had success this year with its Asian Equity fund up a whopping 49% over the last year.
Spy extends his condolences to friends, family and colleagues of Eddie Chu, the founding partner of LCA Solutions, who sadly passed away this week. A well-known figure in wealth management circles in Hong Kong, Eddie, regularly assisted with the judging of FSA’s Annual Fund Awards. He would cheerfully, and with healthy criticism, comment on funds, often sharing his insightful views with our team. He will be missed.
Spy has been keeping an eye on Nikko Asset Management’s E-Games ETF for the last few months. The active ETF, listed in Hong Kong in June, seems about as on target with the zeitgeist as is possible. According to Nikko, “the E-Games industry’s total revenue reached a record US$152.1 billion in 2019, surpassing combined revenues of the movie and music industry. Growing at around 10% annually, it is estimated that revenue will reach US$200 billion in 2022.” One of Spy’s favourite facts about the industry is viewership. Watching people play games is now a massive business. Eight times as many people watch League of Legends (an eSports competition) than watch the globally renowned Wimbledon tennis tournament. The fund is up about 25% since launch. With lockdowns being imposed around the world and cinema-going curtailed, Spy can hardly think of a better way to, eh, play the market?
Every now and then Spy sees something that makes him go, “hmmmm”. This week it was the website of Hang Seng’s Fund SuperMart. The Quick Links, one of the site’s most important ways to entice clients, now includes “ESG Fund”. It just shows how much the industry has changed in the last few years. Not so long ago, deep retail in Hong Kong was considered an ESG no go area. Not any more.
Did Spy just hear a massive bubble pop? Earlier this year, every RobinHood trader who was unhappy she had missed Tesla (or perhaps simply wanted another Tesla), piled into Nikola, the electric truck maker – with no product, no profits and not much technology of its own. The stock rallied hard and has now come tumbling down to earth. The stock jumped to $80 in June and is now trading at $23.30. Spy is acutely reminded of the dot.com bubble burst when investors, who had made money on the way up, bought cratering stocks – repeatedly – on the way down. Millions discovered the painful lesson that it is very hard to hold on to trading profits in a really frothy market. The question Spy has is: “Who’s next?”
Do as I say and not as I do. Spy heard this a hundred times from his mother as a small boy. It seems that central banks are very keen on this. They tell the market to buy up government debt or even corporate debt but they are not doing much themselves. What are they doing? They are buying gold and a lot of it. Spy loves this chart. In the last six years, Central Banks have only acquired a net $28.9bn of US Treasuries but a whopping $226.4bn of Gold. Inflation, oh yeah, that is coming. You had better believe it.
Shall we play a game of Spot The Odd One Out? Spy does not put much store in the GDP forecasts of the IMF but on this occasion, he will go with it. China’s handling of Covid does seem to have left it in a better position than most other major economies. With Europe squabbling about Brexit like two six-year-olds over a favourite toy and America having to choose between two hopeless cases for President, Spy is not overly shocked at the forecast. Those China funds may indeed have a lot more room to run in 2021. No wonder the Shanghai market hit an all-time high this week.
For everyone with a distinct feeling of cabin fever, the news that Singapore and Hong Kong may soon have an air travel bubble is most welcome, especially for Spy. The Hong Kong-Singapore flight route has always been one of the busiest for fund distributors with many seeing the cities as two sides of the same wealth management coin. The details still seem rather sketchy or, at least, unfinalized. Spy’s hopes of a Singapore laksa and chilli crab in black pepper sauce with a Tiger beer before Christmas may just be viable.
Until next week…