Posted inFSA Spy

The FSA Spy market buzz – 21 May 2021

Golden fixed income; Aviva’s property woes; First Sentier’s washing; Cindicator’s madness; What’s Amazon up to? Ransom as an asset class; HKEX’s new standards; advertising and much more.
Market Spy

Spy suspects that more than a few people had a touch “schadenfreude”, this week. Taking pleasure in other people’s misfortune. Those taking the pleasure, would be anyone without a crypto portfolio, as the entire basket fell out of bed and went on a rollercoaster ride. The laughing did not last too long. Those who sniggered on Wednesday might want to look up the Ancient Greek word, “kefi”. It means, “you just want to have a good time, enjoy good company over a good meal, dance, drink and be merry”. After all, when you see your crypto portfolio jump 30-40% from the lows, you might just want a little kefi in your life, reckons Spy.

Unless you have been living under a rock, you must be aware that inflation is popping up everywhere like an unwanted rash after a date with someone you met on Tinder. The problem, asks Spy? Well, everyone still loves fixed income, because, well, there are bills to pay. Strategy Shares think they have a solution neatly packaged up in an ETF that is built for the current era. Recently the Strategy Shares Gold Hedged Bond ETF, launched with the nifty ticker, GLDB.  David Miller, who is the portfolio co-manager of the strategy, explains, “We combine a gold overlay with bonds in one portfolio to give investors what we believe is an optimum way to generate income while maintaining purchasing power.” It might just work, too.

It has taken a while but a few of the property dominos seem to be falling. For some investors, it was WeWork’s massive loss this quarter (again). Spy has been keeping an eye on more traditional property funds run by asset managers. This week Aviva Investors threw in the towel on its UK Property Fund with £367m ($521m) in assets. The firm stated that it was “increasingly challenging” to generate positive returns, while — and here is the kicker — providing liquidity to investors who want their cash when the fund opens up again. Spy will keep an eye on European property funds across the board – the work-from-home phenomenon, can’t be ignored by property investors forever.

Last week it was Schroders depressing Spy about chocolate. This week, First Sentier Investors is making Spy nervous about keeping a clean wardrobe. The asset manager that was doing ESG investing before the term was even invented, reminded anyone who will care, that up to 1.5 million plastic microfibres are released with every 1kg of washing. Just like we all had to ditch CFCs in our fridges in the 1980s, it seems now we all need new washing machines to enjoy plastic free sushi.

Spy was almost falling over himself this week to reach for his cheque book. A company called Cindicator tried to persuade him to invest his meagre pennies into their new crypto hedge fund that, wait for it, uses “hybrid intelligence”. $5,000 put into their super-doopa, mega-fabulous, can’t-lose strategy’s demo account last January, would be worth $130,235 now, claims the breathless marketing blurb. Their offer: 5% annual fee for their vanilla fund or the higher (!) performing new long/short strategy with a 40% success fee, as long as Spy deposits more than $100K. Call Spy a tough old cynic, but he is going to wait this one out.

Spy has been hearing rumours for years that Amazon is going to get into asset or wealth management or possibly both. Spy spotted a hire by the giant retailer that gives more credence to the rumours. The former CEO of Standard Life in Singapore, Neal Armstrong, has just joined the unstoppable machine. His LinkedIn profile does not give much away, merely saying his new role is about: “working to launch a news business within Amazon, responsible for business development and partner integrations.” Spy will watch with interest and no doubt many asset and wealth managers will watch with concern…

Has the world gone completely loopy? This week seems to have been Annual Ransom week. Spy can hardly reach for his daily cup of coffee and a browse of the news not to read about hackers demanding and getting paid large ransom fees for unlocking hacked technology. It was Colonial Pipeline with $4.4m, then the Irish Health Service (denied) and now American insurance firm CNA supposedly coughed up $40m to the ransomware slimeballs. And if there is an ETF provider out there thinking, “You know what? This is a great, underserved asset class”…just forget it, Spy has already secured the ticker RANS, unless, of course, you are willing to pay a very large fee for it…

The Hong Kong Exchange (HKEX) said it was going to raise its standards this week and require companies to have made at least HK$80m ($10.3m) over three years to qualify for a main board listing. Spy was not shocked to hear that local banks who manage most of the IPOs, won an epic battle to water down far more strenuous requirements that HKEX had mooted. Bloomberg quoted law firm Charltons as saying, the harsher rules would have “not only adversely affect[ed] these potential issuers, but also the local financial advisers, legal practices and accounting firms who act for them, as well as other businesses such as printers…” The concern shown for local printers is heart plucking stuff. Not a peep about investors who might lose their shirts to shady issues, though.

It is the summer and the quips are getting louder online. This was Spy’s favourite this week: “Tomorrow, I am going on vacation for the first time since the pandemic. This means I can finally stop bothering my friends and family about the market and bother complete strangers instead.”

Spy has been bereft of decent outdoor advertising. It was a pleasure to see Jupiter is back on the trams building its brand again in Asia. Spy understands this expands on the theme, “the value of active minds”.

Until next week…

Part of the Mark Allen Group.