The FSA Spy market buzz – 21 September 2018

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Julius Baer’s SCB JV; Equity funds in Bangkok and Kuala Lumpur; ifund launches; DBS’s healthy incentive; Bull market wisdom; advertising from Blackrock, JPM AM and much more.

The FSA Spy market buzz - 06 April 2018

Whatever else one can say about Hong Kong (housing is too expensive, it is too crowded, it is a bit grubby – all spring to mind), Spy will be eternally grateful that the city sure is efficient in a crisis. After Typhoon Mangkhut wreaked havoc across the region and did its best to shake Hong Kong to its bones, within hours, the bars reopened and Spy was able to saunter into town in search of craft beer and single malt whisky to fortify his rather battered nerves. Yes, the show goes on. A big storm may produce a bit of inconvenience, but the Hong Kong response proves that Asia is more than ready to ride out the physical and metaphorical storms that get thrown at it. When considering the growing trade war hurricane, Spy recommends thinking about that. As the t-shirt might put it: Keep Calm and Carry on Investing in Asia.

Spy’s colleagues have been enjoying sticky mango rice and durian-flavoured mooncakes in Southeast Asia this week at FSA Forums in Kuala Lumpur and Bangkok. However, it was not the dessert treats that caught Spy’s eye – it was the results of the polling done of more than 80 people involved in fund selection, analysis and distribution. In both cities, delegates overwhelmingly responded that they were buying equity funds at the moment. A sea change from a year ago when fixed income dominated. Even multi-asset, which has been in favour, trailed equity enthusiasm. And what sort of equity? US, of course, but Asian equity seems to be back in demand, and even emerging markets was getting a little look in. Property was the least favoured asset class of all – well, certainly in a fund format.

In Thailand, Spy’s ear (on the drinking glass held to the wall) overheard employees at the SCB-Julius Baer private banking joint venture. And the mood music seems very good. Spy is sceptical of JVs but in this instance, the feedback seems overwhelmingly good. In the Land of Smiles, it was all smiles for JB. Apparently assets are gathering nicely, staff numbers are ramping up and both sides are enjoying the honeymoon. There was talk that negotiations are taking place between SCB’s competitors and other Swiss banks to do something similar. If there is one wealth market in Southeast Asia that cannot be ignored by wealth and asset management groups, it is Thailand – the assets are growing fast and the government is being distinctly friendly.

Spy has complained for years, to whomever will listen, that fund distribution has traditionally been too expensive in Asia. This week marked the launch of a new direct-to-consumer fund platform in Hong Kongifund, owned by retail wealth manager Noble Apex Advisors and fintech player Lion Rock, is aiming squarely at the mass retail consumer. The platform has low fees, tiny minimums and a very wide choice. Apparently, getting a little carried away with enthusiasm, the site is also planning to use AI, big data and blockchain tools to help investors select the right fund in the future. Hyped tech words aside, anything that encourages consumers to understand funds better has Spy’s support. The platform has launched with 45 different fund groups and more than 1000 funds.

Spy is not 100% sure what goes through the minds of marketing people at wealth management groups. A few years back, UBS touted Park ‘n Shop vouchers as an incentive for attending a warrants trading seminar. This week, one of Spy’s sources sent in this little gem from DBS Treasures. Apparently, when opening a wealth management account at the affluent channel of the pan-Asian bank – what investors really want is…yes, you guessed it – some vitamins vouchers. Spy can vaguely see the connection between a healthy bank balance and some supplements, but he is not convinced that one would choose to buy a fund because you are getting some free Ginkgo Biloba tablets.

 

 

For the world’s third largest economy, Spy reckons Japan is often overlooked unless one is talking about dinner options. Teppanyaki and sushi aside, some Japan-focused funds have had a cracking year – not that you may have heard much about it. According to data specialists FE, out of 41 Japanese equity funds available in Hong Kong, not a single one is negative over the last year. And the top three funds would make any wealth manager smile, even if they had eaten too much wasabi, reckons Spy. Looking at US dollar funds only, Pinebridge Japan Equity is up 11%, First State Japan Equity is up a juicy 14% and JP Morgan Asset Management has managed more than 20%. Kanpai!

Richard Russell, a prominent and highly successful American investment newsletter writer for 50 years, who espoused a system of investment known as Dow Theory, had a favourite saying: “Bull markets love to take the least number of investors with them and bear markets love to take the most.” This US large cap rally, which has been described as “the most unloved in history”, would have had Russell smiling, imagines Spy. It continues to defy the critics and keeps on grinding higher while the money sitting on the side-lines watches with befuddled jealousy…

The advertising is ramping up. Spy’s photographers have been spotting new ads almost daily.

In Singapore, Blackrock is back promoting its Dynamic Income Fund in Raffles Place MRT. In contrast to a lot of generic imagery in asset management marketing, Spy was impressed to note the imagery was local to Singapore with Gardens by the Bay and Marina Bay Sands providing a backdrop to its high flying kite.

 

 

JP Morgan Asset Management is also targeting income investors and has been spotted on buses in Hong Kong. Spy understands this campaign is also in Raffles Place in Singapore, going head-to-head with Blackrock.

 

 

Finally, Fidelity is tapping in to consumers’ emotions. It has a generic campaign with no specific fund attached but is all about outcomes. Happy people achieving their dreams. This campaign has been seen online in both video format and shiny pictures.

 

 

Until next week…

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