Posted inFSA Spy

The FSA Spy market buzz – 23 July 2021

CSOP’s healthcare; UBS’s female hedgies; Man’s meme insight; HKEX’s opportunity; Fintech funding frenzy; $1000 now and then; Apple’s money problem; Capital Group and Global X ads; and much more.

Spy is drowning in reports showing how well asset managers have done in the last twelve months. Singapore’s GIC reported this week that it had the best year since 2015. The most significant change for GIC? Asia now accounts for 26% of its investments, still lower than the US, but growing all the time. Spy likes to follow the BIG money and big money is continuing to back Asia. Despite the pandemic, despite the lockdowns, despite the politics, despite the travel restrictions, Asia continues to shine, and Spy will raise a glass to that. Cheers!

Hong Kong got a new ETF this week, notes Spy. CSOP has launched the China Healthcare Innovators ETF. The fund is seeded with a tiny HK$100m ($13m) to get going, but is covering a sector that is itself massive and clearly has enormous potential. According to data from the World Health Centre, China already has the second largest healthcare market in the world and is growing at a very, eh,  healthy 17% compound per annum. If the trend carries on, the Chinese healthcare market will be worth $2.4trn by 2030, according to CSOP. The fund is not exactly cheap – total charges are 1.5% annually. It trades under the ticker 3174HK.

Sometimes change needs to be explicit, reckons Spy. Hats off to UBS which is drawing a line in the sand in the world of male-dominated hedge funds and has decided to actively target hedge funds run by women. According to the FT, UBS’s Carmen portfolio, is hunting for between 10-15 hedge funds helmed by women to offer to clients. Countless surveys across the asset management world over the last few years have demonstrated, that although women play an increasingly important role in the industry, within actual portfolio management itself, they are still underrepresented. This is good step in the right direction.

Is the meme-stock, Reddit, WallStreetBets phenomenon drawing to a close? Spy strongly recommends an article by Man Group that plots the rise and fall of meme stock excitement. Their researchers have created some dynamic graphs that track the mention of meme stocks and how they have changed over time. One thing that emerges is the extreme volatility of the retail-frenzy crowd. What’s interesting is that the Buzz ETF, which aims to track meme stocks, has actually underperformed the broader S&P 500 and Nasdaq 100. Noise, certainly, does not equate to profits.

One man’s meat, is another man’s poison. The old adage could just be true for the Hong Kong Exchange, reckons Spy. With China’s crack down on firms listing abroad if they have more than one million users, Hong Kong could be an even more attractive place to list for Chinese firms. Hong Kong is, rightly, not deemed foreign by the Chinese authorities or its cybersecurity rules, so while New York may miss out, Hong Kong is well placed to benefit. The Didi Chuxing saga of the last few weeks is almost certainly making local potential IPO candidates think ‘wisely’.

Has there ever been a better time to be a Fintech start-up? According to research firm BC Insights:

  • Q2 of 2021 was the largest funding quarter on record for Fintechs.
  •  Across 657 deals, global VC-backed fintech companies raised a record $30.8bn, shattering last quarter’s funding record by 30%.
  • This represents a 29% increase year-over-year.
  • There was an explosion of so called “mega-rounds” of fundraising. 88 companies did deals worth $100m+, up from an already decent 60 equivalent deals in Q1.
  • The average deal size grew 28% from nearly $37m in Q1 to $47m.

One thing Spy is sure of, with this level of investment going on, the future of finance, including asset management, is going to look very different to the last decade.

If you had $1,000 kicking around a year ago and you invested it in the following places, what would you have now?

1. Dogecoin: $60,014

2. GameStop: $47,163

3. Ethereum: $8,014

4. Moderna: $3,954

5. Bitcoin: $3,418

6. Tesla: $2,088

7. Square: $1,985

8. Twitter: $1,878

9. PayPal: $1,707

10. Nike: $1,630

11. Google: $1,628

12. Starbucks: $1,582

13. Apple: $1,496

14. Disney: $1,492

15. Amazon: $1,134

Spy compared the returns above to a similar amount invested in the top five performing funds available in Hong Kong, according to Morningstar data. It shows what a remarkable year it has been for the fund industry.

1. BNP Paribas AM Energy Transition $1,900

2. Legg Mason Royce US Small Cap Opportunity $1,820

3. Nikko Asset Management Asian Small Cap Equity $1,800

4. Ashoka India Opportunities $1,720

5. Wells Fargo US Select Equity $1,670

* Fees not taken into account.

What would you do if you had $195bn in the bank, asks Spy. While most companies can only dream of this parlour game, Apple, does have that much cash and equivalents hanging around. Of the S&P 500, Apple now has the firepower to buy 460 of those companies outright without even bothering Wall Street for a loan. In the last five years, the tech giant has given away, in dividends or buybacks, more than a quarter of a trillion dollars and still the cash builds up relentlessly. Is it any surprise the company is found loitering in almost every possible portfolio around?

Talking of hundreds of billions, if you seized 100% of Jeff Bezos’ net worth you could fund the US federal government for merely sixteen days.

Do you want to see the world’s most important chart, wonders Spy? It is surely the one below. This is the UK infection rate of Covid versus the hospitalisation rate. As every single one of us is literally craving a return to normality, the big question is: how effective are the vaccines in the real world? In the next three months we are about to find out and all eyes are on the UK. But, to Spy this looks like a pretty hopeful start.

Our intrepid snappers have been braving the rain and the heat of Hong Kong to capture Capital Group advertising on the tramlines…

and Global X by Mirae Asset – well they’re everywhere these days.

Until next week…

Part of the Mark Allen Group.