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The FSA Spy market buzz – 7 August 2020

Goldman Sachs AM pushes retail; Big tech stats; Amundi sounds some caution; Ninety One rallies; Bitcoin vs gold; Robin Hood traders; Consumer advertising, and much more.

Spy is wondering whether he is living in some sort of fairy tale. He keeps looking around for his fairy godmother and her wand.  A few months ago, the stock market seemed to imply that the end of the world was nigh. And yet, in a truly remarkable turn of events, with this week’s extraordinarily buoyant trading, the S&P 500 has pretty much erased its losses for the year as if there was not a care in the world. If this is sustained, it will be the fastest recovery from a crash in history. Citizens of the world will, surely, think there is never, ever a reason to worry about market risk again when money printed from thin air can magically take away one’s investing blues. Now that is certainly a fairy tale, if ever Spy read one.

If there is one asset manager who has clearly decided to push on with its retail strategy in Singapore, it must be Goldman Sachs, reckons Spy. On 3 August, the US manager added no fewer than 30 funds and strategies to the FSMone platform. These included a wide range of funds from Japan and India equity to global and Europe high yield, to name but a few.  This volley of funds into Singapore’s deep retail space must surely signal an even more aggressive push by the GS team. The manager has had success in the last year with its Emerging Markets Equity Base Fund, up nearly 24%.

The numbers out of Big Tech are beginning to scare Spy. It is not surprising that lawmakers are now targeting Apple, Amazon, Microsoft and Google for some sort of antitrust or tax action, at the very least, when they avariciously eye the numbers. Take this stat: on 9 March 2009, their combined market caps were a mere $326bn. That seems almost quaint compared with today’s $6.2trn — which, incidentally, is now greater than the GDP of every single country on earth except China and the US. Apple, alone, is now just shy of a $2tn market capitalisation and has added more than $300bn in market cap in five trading sessions. For Apple that works out at $10bn a trading hour or $156m per trading minute.

Amundi’s CIO, Pascal Blanqué has sent out his August newsletter, which has some rather interesting snippets. Spy liked this line: “In Asia, despite recent strong performances, China is still close to 10-year lows versus the US, and there is room for a catch-up. China is one of the few countries in EM (together with Indonesia) where the fiscal response has matched or been stronger than the short-term GDP fall. Therefore, it is one of our favoured countries.” In what must be the understatement of the summer, the newsletter adds, “On the other hand, some market excess continues to build up — the outperformance of the Nasdaq versus the S&P 500, for example. The momentum and valuation divergence between the big five US mega caps, plus that of the higher-growth large caps versus. the rest of the market, looks extreme, back to tech bubble levels even. And the growth versus value ratio is extreme globally. It is difficult to call the timing for a reversal of this trend, but certainly this is an area to focus on, in our view.” Precisely.

Earlier this year, in timing that did not look ideal, Investec Asset Management changed its name to Ninety One on 16 March, and floated as a separate company on the London stock market. Spy was wondering how the firm has been weathering this unusual period. Very well, it turns out. The Anglo-South African firm listed at 135p and has rallied to a closing price of 218p last night, giving the business a current valuation of about £2bn ($2.63bn). That is a healthy 62% rally for those who had been willing to back the future of active asset management. Ninety One’s long time management of gold strategies is paying off, too. Its Global Gold Fund is up 62% over the last year.

Bitcoin or gold? That seems to be the question. Well, it turns out, if one has lingering suspicions about the sanity of current monetary policy and infinite money-printing and is searching for something of an alternative, age plays a role in which asset you buy. Oldies, apparently are buying gold, the young are buying bitcoin. Both asset classes have rallied hard this year and Spy has no idea which is the better choice. But, both seem to send one strong message: the inflation genie is getting out of the bottle…

Unless one has been living under a rock, one must have heard of Robin Hood, the trading platform by now. The service is, of course, named after the English mythical figure, beloved of film makers, depicted as the daring outlaw who re-distributes money from the corrupt rich to the needy poor. Spy can’t help but notice that governments have dished out free furlough money to all and sundry who seem to have done nothing but trade the stock market with the cash or, to judge from Apple’s results, buy new Apple gear. Perhaps a new myth needs to be written where the central bankers of the world steal from future generations and give it to the wealthiest people in history who then buy shiny technology goods…

Asset managers have had precious few opportunities to advertise outdoors in 2020 in Asia. Conferences have been off limits. Taxis and trams have felt unnecessary with WFH. So where has that consumer advertising been going? Online. Spy’s photographers have turned to internet sleuths and have spotted a number of campaigns being delivered “programmatically”. JP Morgan AM has been pushing A-shares. T Rowe Price has been asking consumers to worry about credit quality. Fidelity is looking at income. Franklin Templeton is providing thought leadership on global markets and China AMC has been promoting the Direxion CSI 300 ETF.

Spy wishes all his readers in Singapore a very happy 55th National Day.

Until next week…

Part of the Mark Allen Group.