Did you hear about the three Hong Kongers who went into a bar? No, neither did Spy. Hong Kong’s bars are back in lockdown and Spy is thoroughly annoyed. Life had returned to a semblance of normality and now the fun police have told everyone to go home. Everyone that Spy speaks to, right across the world, seems to be plain virus-fatigued. The depressing thought is beginning to sink in: “Will life ever get back to normal?” Spy remains an optimist that people respond and adapt to difficulties but basic human social desires won’t change forever. Bars, restaurants, theatres, cinemas, sports events, music festivals and nightclubs will all rebound – Spy just wishes he could find the fast forward button.
News reaches Spy that fintech firm additiv has hired a new general manager for Asia-Pacific. The Swiss specialist has recruited former Blackrock managing director and Singapore country head, Kevin Hardy, to lead the business in Asia. Kevin used to be head of Blackrock’s beta strategies in Apac, too. He is also a board member of Conservation International. Addtiv, headquartered in Zurich, is no startup – it was founded in 1998. The business is focussed on wealth and credit technology and provides its suite of tools in a software-as-a-service format, or as additive puts it, “digital wealth management-as-a-service”.
HSBC Global Asset Management has made a key hire in Hong Kong, notes Spy. The firm has lured, Caroline Maurer, to be its new head of Chinese and Hong Kong equities. Caroline was formerly at BNP Paribas Asset Management and has more than thirteen years of experience. Caroline was also, previously, a portfolio manager at Henderson Global Investors (now Janus Henderson). HSBC GAM has had success in the last 12 months with its BRIC Markets Equity fund, which is up more than 28%.
Spy has often felt that MPF investors in Hong Kong get a relatively poor deal. Looking through the hundreds of funds offered, many make poor returns and have costs that are fairly high – not a winning combination. As residents of the city know, investors may choose funds from baskets – i.e. European equity, global equity, etc. This week one of those baskets caught Spy’s eye: Pacific Basin ex-Japan equity. The basket has eight funds to choose from. Six of those are negative over the last year. One is up a paltry 0.45%. But, hold on to your hats and take a deep breath… Allianz Global Investors’ Oriental Pacific Fund is up a whopping 40.29%. Talk about doing something right when your peers are not up to much.
Spy has already noted the “oh so up to date Work From Home ETF” and now comes another one for the investor who likes to paint by numbers in their spare time. Yes, you guessed it, it is a pandemic-themed ETF with the handy ticker VIRS (geddit?). Ladies and gentleman, Spy reveals to you the PACER Biothreat Strategy ETF (ta-dah) which has just launched and will invest in “US-listed companies whose products or services help to protect against, endure or recover from biological threats to human health”. The list of exciting pandemic themes it covers gets Spy all breathless. For example, the fund will invest in companies that “provide research of current and future pandemics; companies that produce combat agents of biological warfare; companies that secure national borders and ports”. At this stage, Spy almost loses the will to live. Still, there will no doubt be some tin-hatted enthusiasts who will stock up on this alongside their baked beans, too.
Is there anything that highlights the difference between the US and China more than the respective decisions of Disney theme parks? Here in Hong Kong where cases of Covid have inched up a bit, Disneyland has closed immediately for public safety. Contrast that with Florida which has just had another 10,000 cases in a single day and Disney World is open for business. Perhaps it is not such a small world after all.? In fact, worlds apart Spy might say.
Do you remember all those delightful recovery shapes? Well, Spy got hold of a snappy graph which is beginning to let us all know what that shape really is. Does it look like a square root, a W, a V, the Arabic letter baa? Spy will be generous and say it looks a bit like the much-ballyhooed Nike Swoosh sign but would not, personally, bet against a very wide or stretched W as the year goes on.
The conversation may have been apocryphal but Spy still likes it. F. Scott Fitzgerald is quoted as saying to fellow novelist, Ernest Hemingway, “The rich are different from you and me.” Hemingway responded, “Yes, they have more money.” What they plan to do with that money is rather interesting. According to a recent survey by UBS of more than 120 family offices, one third say they are planning to raise their allocations to both developed and emerging market equities. Perhaps this little chart from Bank of America explains why. Nearly 80% of S&P 500 companies yield more than the US 10 year treasury note. TINA is at the bar again, folks.
For those investors who have been enjoying the Chinese equity boom, they are probably now wondering when the music stops. The punch bowl gets taken away and the bouncer tells everyone they have had enough and it is time to go home. Yesterday’s brutal sell-off in Moutai, reducing the leading Chinese liquor firm’s value by $25bn at a stroke, is a reminder that the A-shares stock markets dance to the government’s tune. The record can change at any time.
You almost have to feel sorry for Netflix. What is a growth company to do? Their revenues were up 24.9% over the last year, they signed up 10.1 million paying users in the second quarter and had the 29th consecutive quarter of greater than 20% year-on-year growth, and yet their shares got pummelled yesterday evening on a softer outlook for the next quarter. When you have a PE ratio of 88, Mr. Market does not like disappointments or surprises.
Until next week…
