Posted inFSA Spy

The FSA Spy market buzz – 3 September 2021

Blackstone hires; Hang Seng’s ESG; Beijing’s new exchange; Schroders’ vaccines charity; Another fund that looks the same; Guarantees pilloried; Ark’s bank shade; ABBA; advertising; and much more.

Spy enjoyed a Don Papa rum or three this week with a person who works with a specialist medical logistics company. He told the same story Spy is hearing and reading everywhere: a shortage of everything, especially transport people. Spy offers, free of charge, to any asset manager willing to use it, a name for their next instant thematic fund: Global Supply Chain Disruption ETF, ticker EMTY. After all, that seems to the be case for everyone. The shelves, especially if they require microchips, are a tad empty. And the problem seems to be getting worse.

Sometimes companies fly under the radar. Blackstone, a firm Spy traditionally associates with pension funds and large institutional investors, has been steadily venturing into the wealth management realm. The American firm has just hired Yuan Jun Khor in Singapore to help grow the distribution of their products in the wealth space. Yuan Jun was previously with HSBC Private Bank as an alternative investment specialist for three years. Prior to that, he was with DWS Group in Hong Kong helping distribution to private banks and other intermediaries. Spy is not too surprised: with equity markets at record highs, investors are desperately searching for real alternatives, which is something Blackstone thrives on.

How times change. Spy can still remember the profound scepticism that greeted the FSA team as they raised awareness of emerging ESG strategies in Asia. At the time, cynical fund selectors shrugged and argued: “Our investors care primarily about returns, not what is in the investments.” This week, second on the list of top fund sellers at Hang Seng Bank in Hong Kong, is none other than Allianz’s Global Sustainability Fund. When deep, deep retail is buying ESG, truly, a revolution has occurred. Another distinct change of leadership is that the number one top seller is Allianz’s European Equity Dividend. European dividend funds? A few years ago, fund salespeople battled to give these away!

Beijing this week announced it wants a stock market all of its own. China already has three exchanges, Shanghai, Shenzhen and, of course, Hong Kong. Beijing wants to focus on SMEs and is going to throw resources at helping small companies raise capital. Spy has always felt exchanges are particularly useful, if being used to raise money, rather than simply providing an electronic casino. Thus, he tips his hat to the powers that be. There is no exact time frame for the new exchange, but it is being described as a Nasdaq-style exchange for smaller, innovative firms. Bring it on.

Does one wear one’s jab on one’s arm, wonders Spy? In an era of vaccine hesitancy, one asset manager has firmly put its syringe to its epidermis. Schroders has used its charitable foundation to help raise enough money to provide 100,000 vaccines via a Unicef programme. The firm matched donations by staff, clients, suppliers and friends. Spy, for one, is all for getting vaccinated, if at the very least it allows him to travel freely again. He will gladly cheerlead Schroders and any others keen to do the same.

Spy has heard of plenty of SRI funds excluding tobacco, gambling, vice, alcohol, oil and gas — but banks? Cathie Wood, of ARK Investment Management Fame, is bringing a new fund to the market that will exclude banks as part of its SRI screen. The new fund, named ARK Transparency, will focus on companies which are transparent in their dealings and focus on companies with an excellent corporate reputation. Spy likes to banker-bash a little every now and then, but this seems a step too far.

Different Friday, same story. “The __________ Fund is a high conviction portfolio of approximately 40-50 companies that we believe are well positioned to take advantage of the secular growth trends that will drive both the economy and the markets over the next several years.” This absolutely true blurb taken from a press release this week, was associated with which fund? Well, it could have been just about any fund in the last two years, reckons Spy. Is there any manager out there not looking to the future? As it so happens, this one is named the Future Fund, because, absolutely every investor on earth wants to invest in the past, don’t they? Something tells Spy it is time for a marketing revamp, chaps.

It has taken a little while, but China has finally decided that using the term “guaranteed principal and high returns” will acquire a financial fraud label, according to the Consumer Protection Bureau of the China Banking and Insurance Regulatory Commission. Spy has long lamented the unrealistic, heavy-sales techniques of certain wealth managers and providers across the world. The thing most typically guaranteed with these products is that one is being taken for a ride. Guaranteed.

Dust off the disco balls, get out your best flares, shun a haircut for a month or two. Global superstar Swedish band ABBA is back with a new album, forty years after their last one, reminding everyone that the ‘70s are not dead. As inflation soars, oil rockets and central bankers lose control, nothing like a geriatric rock group who once sang, “Money, money, money; Must be funny; In the rich man’s world. Money, money, money; Always sunny; In the rich man’s world”, to remind everyone that economic cycles are never vanquished. Frustrated investors in Germany have president of the European Central Bank, Christine Lagarde, in their sights. A doctored, very fake €1000 note is doing the rounds. As much as central bankers protest that inflation is transitory, Abba’s rumoured billion dollar album and tour deal, tells us a very different story.

Spy’s photographers have been out in Singapore, despite the wet weather. CSOP is in the centre of the Lion City promoting Chinese government bonds. 2.91% is not exactly blowing the lights out but, it is above the base Central Provident Fund rate, and that is the not something bond managers have been able to say, too often in the last five years.

Until next week…

Part of the Mark Allen Group.