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The FSA Spy market buzz – 29 March 2019

Change at Bordier; Amundi ETFs; Lyft off; Women and the LSE; Long suffering MPF investors; Chinese corporate debt; Happy Brexit Day; Gold vs currencies; advertising and much more.
The FSA Spy market buzz - 06 April 2018

Spy was sharing more than a few glasses of vintage port this week with a portfolio manager who has a rather maverick streak in his outlook. He lamented the double speak of big corporates when it comes to the investing world. His bugbear this week was UBS, although, it must be said, this fellow was an equal opportunity critic – not holding his fire on the big firms. He pointed out that Sergio Ermotti, UBS’s CEO, said last week that in the first quarter of 2019 the “investment banking environment was one of the worst in recent history”. Fair enough. This week, however, Mark Haefele, UBS’s chief global CIO, reported in his “Deeper Dive” report that global growth expectations have rebounded sharply and the backdrop for stocks is positive (although he did recommend trimming positions at the margins). The portfolio manager was not sure how those two facts sat comfortably with each other. Spy finds it hard to disagree.

News reaches Spy that Bordier’s CIO in Singapore, Bryan Goh, is stepping down from the Swiss private bank. Spy understands that today is Bryan’s last day before he leaves to join a family office in Singapore. Spy has no news on who is replacing Bryan at the bank. Evrard Bordier remains the managing partner of the firm in Singapore. The private bank continues to be an unlimited liability partnership, something highly unusual in this modern wealth management world, where the very first risk reduction taken is usually for the directors’ benefit.

If one wants to see the difference between Chinese and European investment markets, one could look no further than Amundi. In Europe, the firm’s ETF division is offering nine ETFs in its “prime” range, targeted at retail investors, where the annual charges are advertised at a mere 0.05%. One can choose to invest in “Largest Eurozone Equities” or “Euro IG Bonds” at that breath-taking rate. Contrast that with its China A50 Index ETF with charges of 0.48% per annum, nearly 10 times higher. China, in Spy’s humble opinion, has a long way to go before the depth and efficiency of its capital markets would enable such aggressive pricing at the retail level.

So Lyft, the ride-hailing company that competes with Uber, got its IPO away yesterday valuing the business at about $25bn, notes Spy. Priced at the top of the range, raising more than $2.5bn, this successful IPO must give tech investors a much needed dose of enthusiasm. Pinterest, Slack and Uber are all expected to follow later this year. Spy shall watch with a wry eye whether these eye-watering valuations hold by year’s end.

Spy’s meandering eye caught the fact that this is the anniversary week of the decision, in 1973, of the London Stock Exchange to get over its horror of breasts. Yes, dear readers, the LSE, after nearly 200 years of trading decided to admit women as members of the exchange on the 26th of March that year. The decision at the time was restricted to membership only; actually being allowed on the trading floor where all the men stood around shouting out numbers like a bunch of fools, was still prohibited. Apparently, one of the idiotic reasons regularly proffered on why women couldn’t join the exchange up until that date was because there were not enough female loos.

Hong Kong’s MPF investors have had a rather dismal year – again. Spy looked over the performance list and in almost every category of fund in the last year MPF investors have had to suffer losses. There is only one stand out equity category where the average fund is positive for the year and that is US equity. The star performer is Mass Mutual’s US Fund, up 6.45%, which is in fact is nothing more than a feeder for Franklin Templeton’s US Opportunities Fund. Hat tip.

It is often said that China is the great “copier and improver”. Chinese companies are regularly accused of copying western-developed technology. However, as consumers will all-too-often testify, the end result is often an improvement on the original when it finally leaves the Shenzhen factory floor. One area the Chinese may not quite be so proud of their ability to copy is the habit of American debt bingeing. Spy came across a chart on Wolfstreet showing how much the Chinese have “improved” on their Yankee counterparts in this regard.  Chinese corporates have borrowed the most staggering amount of money, making the Americans look positively parsimonious. Spy doubts this will end well.



For any of Spy’s readers who are British, Happy Brexit Day. Of course Brexit is no longer actually happening today, despite Britain’s hapless prime minister promising the country it will be off from ‘the clutches of the EU’, more than one hundred times in the last two years. Outsiders must, by now, think Britain with its traditional stoical stiff upper lip, has completely lost its collective mind and needs a few months in a strait jacket, in a padded room, sipping chamomile tea while it comes to its senses. Spy has read a few narratives that suggest the UK should be included in emerging market indices instead of developed ones, and seeing the behaviour of its parliament of late, it is hard to disagree.

Much ink has been spilled this week that JP Morgan is cutting roles in its wealth and asset management division. With 24,000 staff, it hardly seems to be the end of the world if the corporate broom sweeps out a few underperformers from time-to-time. “Not much to see here” would be Spy’s take.

If Spy hears another economist on Bloomberg say “there is not much inflation around”, he might just throw his bottle of craft beer at the screen in disgust. The next time you hear one of those charlatans claim such nonsense, show them this chart published by Barron’s recently. It shows gold’s performance against 27 currencies in the last 19 years. Enough said.



Spy’s photographers have been pounding the streets looking for advertising. This week new campaigns were spotted.

Pimco is back at the bus stops, asking people to get ready:



Allianz Global Investors is pushing their active campaign with a natty blackboard theme. Not sure a school child has seen an actual blackboard these days, but Spy may be mistaken:



Until next week…



Part of the Mark Allen Group.