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The FSA Spy market buzz – 28 August 2020

BNP Paribas AM loses; Change at Unigestion; Nikko disrupts; Fidelity loves Bitcoin; Dual share classes; All celebrate market cap heaven; Vanguard closes HK and much more.

Last night, Spy, nursing a stiff bourbon and ice, watched Jerome Powell justify the Fed’s new inflation tolerant framework and could not help but think of a cult classic film, The Big Lebowski. The opening narrative includes the immortal line, “..sometimes there’s a man… I won’t say a hero, ’cause what’s a hero? But sometimes, there’s a man and I’m talkin’ about ‘the Dude’ here; sometimes, there’s a man, well, he’s the man for his time and place.” Jay Powell, you are The Dude, if ever there was one. The stock market simply loved him and anyone worried that asset prices are stretched can now sit back and relax, because, the Fed Dude, well, he has your backs… and perhaps even a nice carpet that completes the room.

News reaches Spy that BNP Paribas Asset Management has had a major change in its Asia marketing team. Janis You, BNP Paribas AM’s APAC head of brand and communications based in Hong Kong, has stepped down after nine years. Janis has not jumped ship to another asset manager but is, instead, pursuing a long dream to be a family therapist and corporate trainer. Janis held a number of key responsibilities for BNP Paribas AM including sitting on the Apac Management Committee. Guillaume Wehry, also based in Hong Kong, remains chief marketing officer of the firm in Asia and will be taking full marketing responsibility across the region. Spy has no news on Janis’s direct replacement. The French firm has had success in the last 12 months with its Energy Transition strategy, up a staggering 96%.

In another move, Swiss specialist Unigestion has lost its general manager and executive director for Asia. Nicholas Hulme, who has been with the firm for 13 years, has stepped down from the business and created his own company based in Singapore. Nic has launched Contineo Capital, a firm focussed on helping managers raise assets in Asia and providing advisory services in the Asia Pacific region. Contineo will provide connectivity to HNWIs, single family offices, institutional investors and IAMs.

The best performing fund in a period is seldom the bestselling fund in a period, in Spy’s humble experience. It was thus a pleasant surprise for Spy to see on Singapore’s FSMone platform that Nikko AM’s ARK Disruptive Innovation Strategy, which is up a healthy 14% over the last month, is also in the platform’s top three bestsellers this month. The fund is sub-advised by New York-based ARK  Investment Management with a large team of analysts scouring the world for ideas that will change the way we live and work. The fund is managed by Catherine Wood, formerly the CIO of Alliance Bernstein’s global thematic strategies. Areas of interest include AI, DNA sequencing, robotics, fintech and blockchain to name but a few.

Fidelity has always had a reputation for being crypto-friendly. This week, that friendliness got even friendlier. The firm has applied to the SEC to launch a Bitcoin-only fund. When, or perhaps Spy should say, if, the fund is approved, the minimum investment will be $100,000 and it will be managed by Peter Jubber, the head of Fidelity Consulting. The fund is merely a passive and will sit in a newly created division, Fidelity Digital Funds. That sounds to Spy that more funds in this realm are planned. For those who love the idea of Bitcoin and crypto in general, this would appear to be another boost to the alt asset’s credibility.

Spy can’t help shake off lurking suspicions about dual-share class stocks. For every mega-success such as Facebook, there are dozens of others ,which simply allow the founders to milk corporate assets with less accountability. Spy can’t deny, however, that dual share classes are a favourite of both Silicon Valley and China’s entrepreneurial class. With that in mind, there may be some investors tempted by The North Shore Dual Share Class ETF (Dual) which has just debuted on the NYSE ARC platform. The blurb states, “many young, innovative companies issue dual share classes as a way to secure financing in the US equity market, but still have enough corporate control to execute their vision for the company.” Of course, Spy was expecting, with that in mind, for the top ten holdings to be young companies he had never heard of…sadly, just the usual suspects: Alphabet, Mondelez, Mastercard, CME Group, Prudential Financial, VISA, etc. Pass.

Looking for a feel-good story? How about the combined value of global stock markets? This week, they reached a new all-time high. In the midst of the worst global recession in decades, stock markets have risen with enthusiasm caring not one jot for job losses, sales slumps, airline collapses and virus deaths. Markets are now worth a staggering $90tn. When executives are asked, “Why put up with the pain of being public?”, perhaps this chart might help to explain it…


The news this week that Vanguard is closing its offices in Hong Kong and Tokyo came as a bit of surprise. But the real news was that the firm was making its Asian headquarters in Shanghai. To Spy, nothing quite says, ‘Hong Kong is now just another Chinese city’ as this bit of news. Forget that it is Vanguard – it simply fits with the growing narrative of  “If you are going to be subject to China’s rules, why not be at the heart of the action?” And so it goes.

It is late August and the news is peppered at this time of the year with odd stories. Today’s news that Walmart is teaming up with Microsoft to try and buy TikTok’s US assets strikes Spy as bizarre. For anyone who has ever shopped at the American behemoth, it could not be less TikTok-ish if it tried.

Spy can feel vindicated: a while ago he predicted that foreign asset managers with JVs in China would soon be falling over themselves to buy out their partners, as China allowed AMs to be wholly foreign-owned. JP Morgan announced it was buying out its partner in April. This week we learned the cost. At $1bn, a reported 50% premium to net value, it would seem, to Spy, to be cheap at the price.

Until next week…

Part of the Mark Allen Group.