Spy is beginning to get the impression that most industry players want to leave the markets alone and slip off for the summer holidays. Getting hold of people this week was harder than finding a Trump supporter who wants to ban guns. One group that is probably sticking to their desks, however, are the ‘hedge fundies’. Volatility in EM and global currencies are giving those boys and girls the fertile conditions they crave to provide some truly juicy returns. Spy was chatting to bankers and selectors this week and he noted that alternatives have seldom been more prominently talked about. Spy has a healthy scepticism for some of the huge claims made by hedge funds, but this year they may just have a point. Just saying.
News reaches Spy that Beonca Yip, who was formerly Investec Asset Management’s regional head of adviser distribution for nearly five years, has stepped down from that role. Investec has recently hired Diya Lowe to manage Southeast Asian distribution. The whole region continues to be overseen by Mark Samuelson, the managing director of APAC. Spy has no news on Beonca’s replacement or where she is moving to. BTW, Investec’s All China Equity Fund is up an impressive 23% over the last year, significantly outperforming the MSCI All China Index.
Spy is always happy to spend time with people and companies who see the world in a “glass half full” kind of a way. It makes life far more fun to spend time with the optimists. Even so, Spy gets a tad sceptical when there is no downside. For example, DBS has published its buy, hold, fully-valued and sell recommendations on its website. Despite recent volatility and tricky markets, DBS can still not find a single company to sell, if its filter is to be believed. Spy has been monitoring this list for several years, and can’t remember a time when a sell recommendation was made. Perhaps they should simply scrap the section?
Speaking to portfolio managers over the last month, Spy is hearing, almost without exception about how difficult the market conditions are at the moment. In unguarded, wine-assisted moments, the PMs are complaining about the cross currents they are dealing with – politics, disruptions, currency swings and much more. Spy wants to tip his hat, therefore, to three global funds that continue to navigate well. T Rowe Price’s Global Focused Growth Equity is up 19% over the last 12 months. Jupiter’s Global Value is up 23% over the same period and romping home is Morgan Stanley’s Global Opportunity up 29%. Looking at each fund’s top 10, only Alphabet and Amazon are held in common between Morgan Stanley and T Rowe – otherwise the funds hold completely different stocks. Just goes to show value can indeed be found everywhere if you look hard enough.
This week, Spy heard the line, once again, that “blockchain is a neat solution looking for a problem.” There remain some significant sceptics about whether blockchain is really going to deliver the perceived benefits or fade into obscurity. One group that is clearly a believer, is Reality Shares – they have just launched a new ETF in conjunction with Nasdaq which invests in Chinese companies that are set to benefit from blockchain tech.
The fund, Reality Shares Nasdaq NextGen Economy China ETF, launched last week with the ticker BCNA. As blockchain crypto darling, Bitcoin struggles under $6,000 per coin, down 70% from its peak, Spy wonders if many would-be investors are thinking, “This just isn’t fun anymore.” Brave new world.
Spy can just imagine the way the discussion went. “Let’s put our best analysts and quants on the job. It will be great PR. It will get lots of headlines.” Spy is referring to UBS’s ambitious, and, in retrospect, misguided decision to loudly predict the winner of the FIFA World Cup. Certainly, when UBS announced last month that after 10,000 simulations involving 18 analysts, Germany would win the Cup, it got plenty of news coverage. With Germany’s ignominious exit this week, that prediction is looking as foolish as an IMF economist’s typical prediction on world GDP growth. Next time UBS wants to do a football related PR-stunt, they may consider Scottish footballer, Bill Shankly’s wise words: “Some people think football is a matter of life and death. I assure you, it’s much more serious than that.”
Speaking of football, most commentators like to refer to it as a game of two halves. Trailing in the first half does not mean it is all over. For listed asset management companies reporting their half-year results, they may be using a similar analogy, thinks Spy. Spy surveyed the first half performance of many listed groups in 2018 and most are closer to their 52 week lows than their 52 week highs, reflecting, quite succinctly, how difficult investing conditions are. Two exceptions stood out, T Rowe Price and Alliance Bernstein. The market clearly likes what it sees – both are just off their five-year highs.
In news that will shock nobody who lives in the Fragrant Harbour, Hong Kong’s Central was the most expensive place for office rentals for the third year running. Established businesses, it seems, can’t compete with Chinese mainland companies who want a Hong Kong presence and will pay almost any price for a prime location. Apparently Goldman Sachs is succumbing to the pressure and moving its back office to Causeway Bay in December. When even the bluest of blue chip banks needs to move, it is a wonder anyone can afford the space at all.
In Asia, where consumers are crazy about the benefits offered by credit card companies, the challenge to find a truly innovative reward must keep bank marketing executives up at night. Spy has spotted something new from Amex that raises a few eyebrows. The card is offering to give airmiles in advance as long as you spend the required money equivalent within the required time period. Is there no end to the way banks will encourage credit-based spending? With a world drowning in debt, Spy is not sure whether to smile in admiration or cry in despair.
In a first for Spy’s trusty photographers, they spotted an outdoor advert in Singapore targeting corporates to use asset management services. Hats off to UOB AM for going after this segment of the market that often gets completely overlooked from a marketing point of view. Spy has never, in his many travels, seen an ad with this particular focus outdoors.
Until next week…
