In Spy’s world, economists and their opinions are a dime a dozen. The economists speak (and write) with the studied elegance of the fine universities they attended. However, the cynic in Spy does prefer, if at all possible, to hear from real-world business people, rather than financial model jockeys who all seem to have several hands. This week Spy had a fascinating call with the former COO of a Singapore headquartered giant multi-national business. He had one message for Spy that came across loud and clear: “Business is not going back to normal any time soon.” He was almost contemptuous of those who believed that travel, meetings and the trappings of business pre-2020 would suddenly happen again in the same volume. When you have been in charge of 10s of thousands of staff across the world, that is a view Spy takes very seriously indeed, for what it is worth.
Capital Group has been busy hiring in the last few days, notes Spy. The American giant has added two distribution-focussed roles in Asia. Keith Wong has joined the business as associate director for Asia financial intermediaries. Keith was previously at JP Morgan Asset Management. Keith will report to Jeik Sohn, managing director for Asia financial intermediaries.
Jasmine Huang has also joined the firm as associate director for product marketing or Asia and Europe. The role is responsible for product marketing strategy and delivery. Jasmine, who was previously at Franklin Templeton, will be reporting to Janelle Li. Both Keith and Jasmine will be based in Singapore at Capital Group’s regional headquarters.
Outside of Asia, Capital Group has bolstered its ESG credentials with a major hire. The firm has pinched Jessica Ground from Schroders to be Global Head of ESG. Jessica is going to be responsible for further incorporating Capital Group’s ESG approach into its investment process across the globe. Jessica is highly experienced and was Schroders’ Global Head of Stewardship.
Jessica will be based in London. Capital Group has had success in the last year with its flagship New Perspective Fund up 24%.
To get a feel for what investors continue to buy on the ground, Spy had a peek at Hang Seng’s bestselling funds, as he does periodically. The list has not changed much with income and China funds dominating, as usual. AB’s American Income fund has been on the list for what feels like years. The interesting thing is that American Income is having a weaker year. The fund is down 3.2% to date. Not exactly a terrible return compared with some, but not exactly blowing the lights out, either. The fund was negative in 2018 and in 2015. Why are you telling us this, Spy? Well, the point is that brand counts during times of weaker performance. AB’s reputation among income investors is such that a period of inevitable weakness does not result in a dash for the door. Quite the contrary, it would seem. Asia’s famously fickle investors are clearly happy to back a brand they know. At a time like this, brand has never, in fact, been more important.
For those people who care about such things, America managed to outdo itself again yesterday on initial jobless claims. Unemployed Americans number 10s of millions and the economists predicting a V-shaped recovery in jobs (and the economy) are probably now wondering how they can bend their funky recovery shapes. Not that the market seemed to care a jot – once again it bubbled up in the face of weak data. The fact that the Fed is now shamelessly buying individual company bonds, may, possibly, have just introduced a touch of moral hazard into investors’ views, speculates Spy.
So Wirecard has filed for bankruptcy. Spy would imagine equity and venture capital managers are now looking very long and very hard at their portfolio of fintech darlings. Wirecard has become an acute embarrassment for Germany Inc. with failures at every level. The regulators are looking particularly silly. Spy suspects before the year is out more shenanigans will come to light. It is odd, but these things seldom happen in isolation.
For anyone else interested in contemplating financial scams, a book was recently published that is worth a few hours of your time. Don’t Fall For It, A short History of Financial Scams by Ben Carlson covers a litany of dodgy schemes from Nigerian email frauds to that clown, Bernie Madoff.
Every now and then a fund comes along with a title that makes Spy say to himself, “I need to know more.” This week, a reference was made to Direxion’s “Fallen Knives ETF” which caught Spy’s eye. Fallen knives? Bent spoons? Crooked forks? What next! Upon closer inspection, Fallen Knives is a recovery fund, investing in stocks that have fallen significantly in the prior twelve months. Spy is not prone to catching falling knives and neither are most people. “There is no guarantee that the fund will achieve its stated investment objective” is written boldly on the product page. Well, quite.
Singapore is not messing around, thinks Spy. The inner political core of steel that has been clothed in a friendlier sheen in the last decade showed itself this week. According to a report in the Straits Times, six out of seven people who were fined on Thursday 25th of June for breaching the Covid “Circuit Breaker measures at Robertson Quay last month” also had their work passes revoked immediately. Singapore could not be sending a stronger signal that it won’t tolerate anyone breaking its lockdown rules. These six individuals are part of a total group of 140 people who have had their work passes revoked for similar rule breaking. Ouch.
Until next week…
