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The FSA Spy market buzz – 26 October 2018

Manulife loses; Views on sell offs; JP Morgan Chase and passives; Nikko and FSOne; Boutiques and mega-managers; Robo-advice in Thailand; advertising and much more.
The FSA Spy market buzz - 06 April 2018

October is living up to its reputation as a ghastly month. Rather violent moves are shaking investor confidence across the world. The standard line Spy usually hears when he speaks to market contacts is, “It is all a bit of a mess.” Spy was sharing a modest glass of Montrachet with a wealth manager this week who found it all too easy to list off the negatives: “Brexit, Italian budgets, trade wars, US mid-term elections, China slowdown, Australian property meltdown, rising interest rates” and so on and so on. “But above all”, my companion told me, “the one thing that wealth managers around here in Asia have refused to talk about with any seriousness is that the US market, and others, are rather expensive.” Well, muses Spy, that is not quite as true, as of this Friday morning. Surely, that is a good thing?

Spy has learned that Win Win Iskander is stepping down from his role at Manulife in Singapore. Win Win has been part of the product management team including fund selection for the Singapore market. There is no news on where Win Win is moving to, although Spy understands he is staying within the industry. There is also no news of his replacement as of yet.

Spy heard several things this week about attitudes to this recent bout of market volatility, or should Spy say, “sell off”. One asset manager Spy spoke to said, “Our PMs are loving this, we have been waiting for a pull back and looking to buy.” One discretionary manager told Spy, “I took too long to sell and now it is too early to buy back in – I guess I just have to wait.” One private banker said, “We are really encouraging clients not to sell – the main reason being, we have absolutely no idea what to recommend they buy with the money and we don’t want them sitting on more cash.” Spy was especially touched by this banker’s frankness.

For a very long time, it has been hard to argue against some of the key benefits of being in passive funds, especially in the large, liquid, mega-cap section of the market reckons Spy. Spy has always felt that in the more exotic, less liquid parts of the market, passives represent huge risks and those are significantly misunderstood by investors. This week, Spy noted that JP Morgan Chase, itself no small fry in the passives market, was quoted by Bloomberg as saying, “beware passive investors…”. The bank is worried that $7.4trn in passive assets will exacerbate the rout in the next downturn. Passives, reckons Spy, have the significant problem that if you sell, you often throw the baby out with the bath water. There is the rub.

The last few weeks have seen a range of new funds put on Singapore’s fund platform, FSOne. Nikko Asset Management has listed its newly launched All China Equity Fund on the site, with a zero % sales charge. Franklin Templeton has added no fewer than eight different funds, although Spy suspects these are merely new share classes, such as the SGD or USD accumulation version of its Thailand fund, among others.

What kind of asset management firm does one want to be? It seems these days, one either wants to be a boutique or one wants to be a mega player. The in-between size is a rather uncomfortable place to be with many offices and staff to support. As one CEO of a large Scottish asset manager put it: the bigger you get, you end up with “many offices to feed”. One firm remaining unashamedly “boutique” is Merian Global Investors, according to CEO Richard Buxton, the firm has a loose rule that it does not want more than about 300 staff. Spy found it intriguing that nominal staff numbers were a key factor, rather than AUM.

Singapore and Hong Kong have been making fintech and robo waves in the last few years. Thailand has quietly been getting in on the act, too. A Thai fintech player, Robowealth, founded in 2016, has now launched its proposition to the public. The service is called “Odini” and it requires a minimum monthly investment of just THB 1,000 ($30). Odini promotes “easy investing” for Thai nationals. According to their team one can simply download the application and open an account completely via your mobile phone. Once up and running, the system will automatically invest according to the conditions selected by the investor. Well, if nothing more, it sounds awfully similar to a lot of other services available around the world. The platform has B2C, B2B and hybrid solutions (to help private banks and their HNWIs, for example), in addition to a fund marketplace.  Spy will watch this company with intrigue as its website indicates Asia-wide ambitions, not just Thai ones.

Remember Bitcoin, the most volatile ride around? How the times change! Charlie Bilello of Pension Partners points out that Bitcoin volatility over the last 10 days has only been 8% versus a rather stunning 25% for the S&P 500. Something rather wild is going on.



Spy’s photographers have been overwhelmed spotting new outdoor advertising from the industry.


This week, BEA Union has been out at Hong Kong Airport promoting its bond and currency fund:



Schroders has been on the MTR asking Hong Kongers about their retirement plans:



BNP Paribas Asset Management has decided to make music with the entire world and is promoting its water fund:



Janus Henderson has been on the sides of trams, promoting its Horizon Asian Dividend Income Fund:



Also on trams is BNY Mellon, promoting the art exhibition it is sponsoring in Hong Kong:


Until next week…

Part of the Mark Allen Group.