Over the last few weeks, Spy has been sent many cards, digital or physical, wishing him and the FSA editorial team ‘Kung Hei Fat Choy’. Most have a design that includes a rather mousy-looking rat. Spy is not sure if asset management marketing departments have become squeamish over rats and have succumbed to Disneyfication, or the designers live in a blissfully rat-free world, never going to Wanchai, and they have forgotten its distinctly pointy characteristics. Right on cue, however, the Wuhan coronavirus has spread out from Hubei reminding all and sundry that not everything is cute and cuddly and, perhaps, a rat is indeed an apt animal for 2020 and the year ahead. On the bright side, rats have a remarkable capacity to endure tough times and those of us sitting in Hong Kong might all take a survival lesson from those furry friends (or should that be fiends?)
Between the annual New Year and Chinese New Year, there are always some changes of personnel at asset management firms, reckons Spy. This year, however, Spy had come across surprisingly few moves, until a little birdie whispered in his ear that Yifei Li had stepped down from Blackrock. Yifei has been head of Blackrock’s Southeast Asia client business ex-Singapore, but during her career managed clients within the city state, too. She is one of the most respected distribution heads in the industry and, no doubt, there will be much speculation on where her next move is. For now, Yifei is taking a sabbatical after two decades of hard work. Damien Ng remains in charge of the distribution business in Singapore. Spy is not sure who is replacing Yifei. Blackrock has had success in the last year with its Next Generation Technology Fund, which is up a massive 46% in the last year.
This week Spy has chatted to numerous fund selectors and asset managers as FSA has been hosting its annual fund awards in Hong Kong and Singapore.
The wheel of asset allocation and fund promotion does indeed seem to be turning. Although no player, on either side, was willing to go all-in on equities for 2020, despite last year’s incredible returns, Spy has repeatedly heard a much more moderate appetite for fixed income versus equity. One fund selector told Spy, “My clients are finally seeing what a lot of them have missed out on being too cautious in 2019 and equity risk appetite is bouncing back.” The contrarian in Spy wonders if that is, in itself, a rather ominous omen?
The tech stocks that have driven US indices, and the Nasdaq in particular, to record highs seems to defy the pull of gravity. A few years ago, a prominent fund selector in Hong Kong told Spy that at his bank, tech had moved from tactical to core holding and, from an asset allocation point of view, he has been proven absolutely right. No doubt that bank’s clients who followed this advice have made pots of money as tech profits have boomed and bloomed. Spy wonders what, if anything, can drag tech stock share prices downward and, in turn those juicy tech funds so beloved of the industry, after such a stellar run? It seems France, the UK and the EU Commission itself are hatching a plan to try and tax the tech giants more substantially and the US may, just may, go along with it. It is not much of a bearish case, especially since the EU has a woeful track record of making its corporate tax regime watertight – it currently leaks like a government department. Still, in Spy’s experience, the greed of large companies is only matched by the greed of taxmen, and few industries have been allowed to nab outsize profits indefinitely. It would not surprise Spy if the only threat to tech’s dominance is the avaricious, faceless bureaucrat; it is certainly not the smartphone and gadget-loving consumer.
Goldman Sachs has raised an eyebrow this week with news it will only perform an IPO in the US and Europe if the board of the designated company is “diverse” enough. For diverse, read female and black directors, lest one be in any doubt. It is admirable that GS is using its substantial power to force positive change upon the industry. That Goldman chose not to make the criteria explicit in Asia begs two questions. 1) Is it because the GS brand is not strong enough in the region to make that demand, that it has not done so? 2) Or, is it simply Goldman bowing to reality in Asia where boards typically resemble an old boy’s golf club committee with practically no substantial change in sight and therefore this is not a hill worth dying on? It will be interesting to watch the company’s ESG PR in Asia when this highly laudable issue gets more closely examined, thinks Spy.
Spy’s photographers have searched in vain for new outdoor advertising, but alas, it seems asset management is firmly in holiday mode. Spy did spot one new online campaign for consumers being run by Fidelity. The beautiful lantern image caught his eye:
Until next week, Spy wishes all FSA readers abundance, prosperity and Kung Hei Fat Choy / Gong Xi Fa Cai…
