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The FSA Spy market buzz – 31 May 2019

Natixis IM loses and adds, Capital Group adds; HSBC is ESG hunting; ESG funds and attitudes; S&P 500’s wobbly history; Countries drinking in a bar; advertising and much more…

So China, Germany, Mexico, the UK and Singapore walk into a bar. (Bear with me, pleads Spy, who best understands macroeconomics through alcohol). China orders a baiju, Germany a schnapps, Mexico a tequila, the UK a warm pint of ale and Singapore a cold Tiger Beer. “Welcome to the Tariff Club, Mexico”, says China as he downs his baiju, “Get ready for a long walk.” “We are ready, hombre. We have been walking north for decades”, says Mexico as he necks his tequila. “Hey Germany, are you going keep making those VWs in Puebla or move the factory north of the border?” asks Mexico. Germany sips his schnapps, “I will tell you in six months. But, we are not buying one Harley Davidson any time soon.” China orders another Baiju, “So, Singapore, is it going to be the Middle Kingdom or the Yankees?” Singapore looks at his Tiger Beer, “You know we love you China but I just need to watch my currency for a bit.” The UK, who has been uncharacteristically silent, suffering a severe case of Brexitis, mumbles over his ale, “At least you don’t have to roll out your most revered Queen so she can attend his state visit….”

News has reached Spy that Jean Tan, the regional head of marketing for Natixis Investment Managers in Singapore, has stepped down from the business. Jean has been in the role for five years and was previously with Fidelity and UOB Asset Management. Spy has no news about where she is moving to or about a replacement for her role. In Hong Kong, the firm this week announced that Kylie Chan was brought in as senior director and head of wholesale and retail sales in the SAR. Kylie was formerly head of North Asia sales at Merian GI. The Natixis Loomis Sayles Multi Sector Income F USD fund is up 7.8% over the past year.

Capital Group in Hong Kong has recently added to its marketing team. In a new hire, the American firm recruited Rev Hui as investment writer for marketing and communications. Rev was previously with Value Partners. Capital Group has had a rather good six months according to FE. Out of twenty-two funds listed for sale in Hong Kong all but two are in positive territory. A rather impressive feat considering recent volatility.

Spy’s colleagues have been immersed in the world of ESG this week at sister publication, ESG Clarity’s Symposiums. Numerous interesting things came out of the discussions, but the one that pricked Spy’s ears up, was the fact that HSBC Hong Kong Retail Bank is actively hunting for suitable ESG strategies to add to their platform for a big push. Does this herald a sea change when a Hong Kong retail bank starts making a big ESG push to what, hitherto, has been an unaware or disinterested collection local investors?

Attendees at the Singapore leg of the ESG Clarity Symposium were polled with the following question:  “If you had a non-ESG strategy that consistently outperformed an ESG strategy in the same sector by 0.5% annually, would you:”

  • Recommend the ESG fund?
  • Recommend the non-ESG fund?
  • Let the client decide?

Whilst most attendees (64%) copped-out and said they would let the client decide, 14% freely admitted they would happily recommend the non-ESG fund. Merely 0.5% was too much of a price to pay for the fund that performs and concurrently ‘does good’ for those fund selectors, wealth managers and analysts. It is a tough school out there for those who genuinely want to do well and want to do good. On the plus side, plenty of evidence was offered that companies with higher ESG scores do well over the long term, so perhaps the point will be moot?

Have you spoken to a wealth or portfolio manager of late who is feeling rather nervous about the current market correction? Spy was fascinated to come across some data showing market corrections of 5% or more in the S&P 500 over the last decade. There have in fact been twenty-four wobbles, with the market off just under 10% on average in the correction. No doubt every single time the doomsters proclaimed the imminent end of the world and yet the market always bounced healthily higher after the sell off. Of course, there is always the chance that they are correct this time and the apocalypse is round the corner.



Until next week…

Part of the Mark Allen Group.