Spy has spent the Christmas holidays covered in large quantities of snow in North America, away from the ongoing disquiet in Hong Kong and studiously avoiding the financial markets. If the last twenty-four hours are anything to go by, we are in for a volatile ride as the new decade emerges into the sunlight. Markets roared on the first day of trading, brimming with enthusiasm and confidence like a rooster in a hen house. As Spy writes these words, the markets are now reacting very negatively to America’s bombing of a top Iranian commander outside of Baghdad, bringing that opening rally to a grinding halt. Spy, like most other prognosticators has dusted off his crystal ball (and his New Year’s eve hangover) and has been peering through the glass, darkly, hoping to see some faint glimmers of what lies ahead for wealth and asset management in Asia. For what it is worth, these are the five things Spy can discern:
5) Growth of discretionary mandates. The tide that turned in favour of discretionary wealth management a few years ago is going to accelerate in 2020 as Asian wealth starts to look a lot more like European wealth.
4) Consolidation among multi-family offices. The MFOs have found it hard enough to compete against each other, let alone private banks. Banks will be buying outright and MFOs will be merging, too. Expect at least one announcement before the Nin Gou is eaten at Chinese New Year.
3) Equity funds get higher billing. 2019’s rally was simply too good to be ignored by asset management’s marketing departments. Equity, which has been woefully under promoted in Asia, will get some time in the sun at last. Whether their messages will be taken seriously by wealth managers, is more doubtful.
2) Hong Kong’s troubles will not be resolved any time soon. The tough and resilient nature of Hong Kongers suggests to Spy that the protests, which have rolled for more than six months, have time to run yet, despite the economic downturn affecting practically every section of the retail market. Keep your umbrellas handy.
1) The relentless march of ETFs. Asia avoided the ETF juggernaut for longer than expected, but in 2020 ETFs will gain even more of a foothold in Asian wealth. Discretionary mandates will be the main driver, but expect mom-and-pop investors to be buying ETFs directly, too.
On that note, Spy wishes every FSA reader a happy, prosperous and exciting new year. If there is one prediction Spy did not include, for it hardly needs saying, the year is unlikely to be dull. And that, for one thing, is surely good news.
Until next week…
