“Inflation is so last month”, said a French private banker to Spy this week. “Now it is all about recession and people are running for the hills.”
Spy’s drinking companion was excited about German bond yields, (it must be the summer heat), which have been plummeting. 10-year inflation expectations are already back down to 2%.
“You mark my words, we are about to see a roar back in the fixed income markets”, he said confidently sipping a chilled Chablis overlooking the Harbour. You heard it first here, folks.
Spy can barely grab a morning coffee before he hears about private markets, these days.
If that is your bag, UBS is hiring in Hong Kong, notes Spy. The Swiss giant is looking to add to its GWM Direct Investment Group, facilitating private market transactions for global family and institutional wealth clients as well as UBS’s sophisticated investors. The job involves working on direct investments and co-investments in private companies as well as distributing private market funds with a specific focus or strategies such as venture capital, real estate or private credit. UBS is hiring in Hong Kong, notes Spy. The Swiss giant is looking to add to its GWM Direct Investment Group, facilitating private market transactions for global family and institutional wealth clients as well as UBS’s sophisticated investors.
The job involves working on direct investments and co-investments in private companies as well as distributing private market funds with a specific focus or strategies such as venture capital, real estate or private credit.
The news that Stuart Kirk, HSBC Asset Management’s global head of responsible investing has quit, has probably not surprised too many people.
His comments at a conference attacking “group think”, “sloppy logic” and saying “there is no place for virtue signalling in finance” caused the powers that be to freak out and led to his suspension.
In Spy’s humble opinion, there are literally thousands of people who think he is absolutely right but are literally too scared to say a word. In private Spy has had this mentioned to him over and over again from a wide range of sources.
Trying to bring some balance to these big sustainability issues has become a fraught culture and political war. Will Kirk have the last laugh though?
He wrote upon resignation, “I’ve been gathering a crack group of like-minded individuals together to deliver what is arguably the greatest sustainable investment idea ever conceived” Spy shall watch with interest.
Yesterday, Schroders, published the results of its annual survey into responsible investing by more than 770 institutional investors who manage more than $27trn of assets.
Surprise surprise, performance is now the top concern of more than 53% of respondents, which is up from just 38% last year.
People are also worried about greenwashing. With DWS and Goldman Sachs in the regulators’ spotlight, Spy is not exactly shocked by that. Spy expects a lot more scrutiny of fund green claims in coming months.
One firm that is still enjoying green flows is BlackRock. The world’s biggest manager revealed yesterday that its greenest ETFs, i.e., those that align with the Paris climate accord, have seen a “30 per cent increase in inflows” as investors seek out the most credible ESG products.
Those funds’ net inflows are US$2.7 billion up to mid-June, bringing the total amount held in the funds to US$11.6 billion.
First Sentier’s Martin Lau has consistently been one of the industry’s most thoughtful China investors. He put out an insight piece this week, which was filled with his usual calm clarity and worth reading in full.
Lau argues, in what is a really big change ahead, that the Chinese “government would [be] happy to see other countries pick up the mantle of being the world’s lowest cost producer” and transition to high value manufacturing and services but “what hampers the rate of transition, is the continuing difficulty in hiring good quality people.”
Spy’s thought: It is hard to do high value services, without extremely well-educated people who can, and importantly are allowed, to think for themselves.
After a torrid few months, markets have given investors some respite. Is this a change in the world, or merely the “early part of July” effect?
Since 1950, traditionally the early part of July delivers decent returns, probably because rebalancing takes place. The median return in the first two weeks of the second part of the year is nearly 1.7%. Thanks to Jeroen Blokland for the chart below.
Do you want to gamble, eh, trade unique or alternative data sets? A company called Quiver Quant has some auto strategies that are based on ideas such as, “Short whichever new company has gained the most followers on Twitter,” or “Buy the most talked about companies on Wall Street Bets” amongst others. Cynical? Absolutely! Likely to make you much money? Doubtful.
If you have a great asset and are tempted to sell it, remember this: America bought California from Mexico for just $15 million after the war of 1848, which must be one of the greatest property investments of all time. Hold on to your good assets and sell the dross.
Spy’s quote of the week is anonymous, but no less true for that: “Spending money to show people how much money you have, is the fastest way to have less of that money.”
Spy’s trusty photographers have been out and about and spotted all sorts of asset manager outdoor campaigns rolling around Hong Kong.
First up, Jupiter is promoting its fixed income capability with a musical theme. Some might argue the British manager is banging the drum for the industry.
Axa Investment Managers is also on the side of trams with a sustainability theme. Spy rather likes the fact the trams have been around for years, to complement the idea.
Finally, Franklin Templeton is pushing the simplest of all ideas, Progress. Its brand campaign is also on the sides of trams. Spy has not seen the adverts on the side of a Tesla yet, but that might not be a bad idea.
Until next week…
