Posted inFSA Spy

The FSA Spy market buzz – 30 September 2022

M&G’s new chief, BlackRock’s metaverse, NYT goes bad-ass on ESG, Ugly Asia-Pacific performance, Markets woes, Blowing up Nordstream II, Advertising and much more.

With Hong Kong’s newly relaxed quarantine rules, it seems every man and his dog is off to Singapore for the Formula 1 this weekend. It makes Spy nostalgic for the days when a carefree splurging of hundreds of millions of dollars on some snippy cars and ageing music divas was “the done thing”. In this era of expensive petrol and carbon-emissions crisis, the entire jamboree has a whiff of bad taste. Nonetheless, if anyone has a pit-lane ticket going spare, you will find Spy only too willing to take it off your hands. Now, if only he could afford the plane ticket, too.

Asset manager, M&G, has appointed a new chief executive. Andrea Rossi, formerly Axa Investment Managers’ CEO, is taking the hotseat as existing chief, John Foley, is stepping down next month. He joins at a rather tricky time as a number of investors have been calling for the break-up of the insurance/investment company. Mr Rossi will reportedly earn a base salary of £875,000 (US$974,186). This would have seemed a fairly decent sum, reckons Spy, until the British government decided to give the pound a proper kicking.

It seems that BlackRock also wants to get in on the metaverse and is launching an ETF so that its investors can go fully digital. The iShares Future Metaverse Tech and Communications ETF is going to list in New York quite soon. The fund does not have a ticker yet. Considering what poor inflows and equally rapid outflows have taken place in the meta investing space, Spy is rather surprised the big beast of Wall Street is so keen. Still, when you are so large you need to be everywhere and in everything, it does make some kind of logic, if not magic, yet.

Any regular readers of the New York Times will know that it is a veritable bastion of the tree-hugging, the eco-friendly and the woke. It did come as a massive surprise to Spy for the Gray Lady to publish yesterday a scathing article on ESG rating agencies. It starts with the headline, “One of the Hottest Trends in the World of Investing Is a Sham” and gets more vicious from there. “On the face of it, ESG investing could be transformative…But the reality is less inspiring. Wall Street’s current system for ESG investing is designed almost entirely to maximise shareholder returns, falsely leading many investors to believe their portfolios are doing good for the world.” Such is the influence of the NYT in the US, Spy would not be surprised if there are real world consequences to the industry from this broadside.

Everybody knows the world is in a complete shambles at the moment. How are funds riding out the storm in Asia? Spy peeked at the Asia-Pacific equity sector on Morningstar and the results were not pretty. The best, yes, best performing fund is Matthews Asia’s Dividend, which is down a mere 16% in the last year. But here’s the catch. You have to have bought the sterling share class. Oops. The reality is that in US dollars, Allianz Global Investors, Matthews Asia, JP Morgan Asset Management and Fidelity’s Apac strategies funds are down at least 30%. There has been absolutely nowhere to hide.

The stock market ugly-stick stats are piling up. The S&P 500 has declined more than 1% on one out of every four days this year. The only higher readings since 1990 were 2002 and 2008. Bears outnumbered bulls by 43% in last week’s AAII sentiment survey. With data going back to 1987, the only other times we’ve seen sentiment this bearish was 1 October 1990 and 2 March 2009, which turned out to be the week of the GFC lows. 

It was the best of times, it was the worst of times. Spy’s Tale of Two Investors is positively Dickensian. Speaking to a Hong Kong-based wealth manager this week, the miserable fellow quipped, “What is the point of looking at my screen; every single portfolio I manage is taking a beating. Even the ‘cautious’ one is looking like a high-vol growth strategy having a bad hair day. It is thoroughly depressing.” Conversely, Spy chatted to a South African, Australia-based HNWI investor who said “things are now beginning to look very interesting. I am sensing maximum pessimism. I am starting to nibble”. If Spy remembers correctly, at the end of Dickens’ story, somebody loses their head…

For those looking in amazement at the British pound’s gyrations, it may be worth recalling the following, courtesy of Simon Murphy at Tyndall Asset Management. “In March 1981, 364 ‘expert’ economists were so incensed they collectively wrote to The Times newspaper arguing strongly against the monetary and fiscal policies of British Prime Minister Margaret Thatcher’s government. Their concerns were duly ignored, which was just as well as history would show they were, more or less, dead wrong…Wall Street trading legend Bob Farrell wrote his ‘10 rules for investing’. Rule 9 seems particularly apt today: ‘when all the experts and forecasts agree, something else is going to happen.’

There are so many odd stories going around at the moment, even the most ardent newshound such as your humble Spy battles to keep up. The sabotage of the Nordstream II gas pipeline to Germany from Russia has to take the cake. That rather excitable source of gossip, Zerohedge, wrote yesterday: “Germany believes high explosive devices equivalent to ‘500 kilograms of TNT’ was (sic) used to destroy Nordstream.” The filmmakers behind the James Bond series may just have found their latest villain.

Spy’s trusty photographers have spotted a new outdoor campaign in Singapore. At Raffles place, BNP Paribas Asset Management is promoting its Sustainable Cities Bond Fund.

Until next week…

Part of the Mark Allen Group.