The FSA Spy market buzz – 17 August 2018

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Principal hires two; Capital group adds; Zico gets licensed; Fidelity and Ant Financial survey; Axa and longevity; Schroders on Musk; advertising from JP Morgan and Franklin Templeton and much more.

The FSA Spy market buzz - 06 April 2018

Years ago, Spy heard a grey-haired wealth manager in a plush New York office say, “Investing in emerging markets is like picking up pennies in front of a steam roller. Sooner or later you get squashed and all those pennies aren’t worth it.” With this week’s volatility in EM and Turkey’s spectacular currency collapse, those thoughts came back over several glasses of chilled Montrachet with a very friendly banker at a Swiss boutique. This wise woman pointed out that “Asia has never been so disconnected with the rest of the EM complex. You can’t put Asia, with its strong inter-region trade, in the same group as Turkey.” She opined, “ETFs really can be the enemy of sensible asset allocation. Turkey’s problems hardly justify selling out of Thailand or China.” If this does not make the argument for active management, Spy is not sure what does.

News reaches Spy that Principal has been in a hiring mode. The multi-boutique asset manager, headquartered in Des Moines, has recently added sales staff in Hong Kong and Singapore. Ricky Cheung, formerly an investment councillor with Credit Suisse in Hong Kong, has joined the firm to boost sales in the region. Meanwhile, in Singapore, Li Wen Chong, who was previously with Eastspring, has come on board to develop sales in the Lion City. Both of the new recruits report to Suresh Singh, who is based in Singapore. Principal’s GIF US Equity Fund is up a very healthy 22% over the last year.

Spy has also learned that Capital Group has made a newish hire in Singapore. The American giant has recruited Kit Toh, formerly with JP Morgan Asset Management, to help with business development in Southeast Asia. Kit, who joined in July, will be reporting to Jeik Sohn, who is also joining Capital from M&G. Capital’s star performer has been its AMCAP fund, which focuses on large cap US Equity. The fund is up about 20% over the last year comfortably outperforming the S&P 500.

Zico Asset Management, the fund management arm of pan-Asean professional services network, Zico Holdings, has just been awarded its Capital Markets License from the MAS in Singapore. Zico, which is traditionally centred around legal and advisory work, uses Zico AM to help HNWIs manage money. The firm, headed by ex-UBS director Simon Lim, is, essentially, an external asset manager relying on private banks to execute. According to Zico’s website, the network helps families manage their wealth, assets and business across the region.

The first thing anyone moving to a new part of the world is usually told is that you are going to face some cultural challenges because everything is going to be different. True, true, says Spy. However, there are also myriad ways in which we are all the same regardless of where we live. This week Fidelity International with their Chinese partner Ant Financial, released a study which showed that only 44% of Chinese millennials – i.e. those people aged between 18 and 34 – have started saving for their pension. Sound familiar? Apparently 4 in 10 of those surveyed had never even thought of it. Here’s the kicker, though. Apparently this same group want to retire early. It seems many of China’s citizens are just as deluded as those in the West about their long-term savings requirements.

Bearing in mind the early-retirement ambitions of our deluded Chinese millennials above, Spy was intrigued to see a report from Axa Investment Managers that people born today have a 50/50 chance of living to be 100 years old. That is going to require a whole lot of savings, probably a tad more than just cutting out the daily skinny-soy-no-foam latté.

Have you heard from the portfolio manager who does not believe in “market timing”? Spy hears all the time from PMs, often at press conferences, who tell the audience, “You can’t time the market, so don’t bother.” In the next breath, they may say with equal confidence, “We are seeing a rotation from x sector to y sector and will be taking advantage of that” or something very similar. As David Kuo, of Motley Fool in Asia, succinctly puts it, “Rotation is just another word for market timing!” Spy could not have put it better himself.

A lot of ink has been spilled over Elon Musk in recent days. His tweets have caused angst, potential lawsuits, and some stinging losses for short sellers. Spy came across a really insightful piece from Schroders in Singapore providing analysis on Musk’s key gripe: the short-termism of analysts when you are a listed company. The blog post is worth reading in full, but one paragraph stood out in particular, “Musk is right that the cost and hassle associated with a stock market listing count against it. To give an example, increased regulatory requirements have driven the median number of words in a US 10-K filing (the regulatory filing of a US public company’s annual results) to more than double between 1996 and 2014. Expensive, time-consuming and not much fun for budding entrepreneurs.” Is it any wonder that “the number of public companies has collapsed by around 50% in the US, UK and parts of western Europe since the early 1990s”?

 

Spy’s photographers have spotted new advertising from asset managers.

JP Morgan Asset Management in Singapore is promoting flexibility with highly apt ballerinas:

 

 

In Hong Kong’s local press, Franklin Templeton are promoting the Franklin Select Global Multi-Asset Income Fund with hot air balloons:

 

 

 

Until next week…

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