Published by Fund Selector Asia – 12th May 2017
Spy was as surprised as the rest of the market that NAB sold its Asian wealth management business to OCBC this week. NAB had flown so far under the wealth radar that most people were surprised it had a wealth management business in Asia. The sale was the first publicity it seems to have had in years. In a discussion about this development with a prominent fund sales person this week (over a very modest glass of Chianti) one message rang out loud and clear: in Asia, the distributors are gaining power. Competition for a place on the shelf is getting tougher by the week. Best to sharpen those relationship skills.
According to several sources, Lina Lim, who has been in charge of third-party fund selection at JP Morgan Private Bank in Asia, is going to be shifting roles within the group. Lina is apparently taking a new role as an investor at JP Morgan’s Endowment and Foundation Group in Asia, a part of institutional wealth management. Lina will report to Chris Blum, head of investments in Asia. It is not clear who is taking over from Lina at this stage.
Spy has heard of a couple of people changes at Pinebridge. It seems that Stephan van Vliet, the former head of Pinebridge’s insurance asset management business, has left the firm to join British insurance giant, Prudential, as their CIO in Asia. Additionally, Jacinta Reddan, who was managing director, head of marketing and comms, has stepped down. With a touch of coincidence, Jacinta was formerly with Eastspring, Prudential’s Asian asset management arm. Spy understands that she is on gardening leave and is staying in the industry. Spy is not sure where she is moving to but will keep an eye out.
Have you got yourself an ETF strategy? No? Well, better get one thinks Spy. According to consultancy ETFGI, ETF/ETP assets in the US hit a record a new record $2.87trn at the end of April 2017. Big winners in April were iShares, Vanguard and Schwab (no real surprises there). Whilst Asia continues to be slow on ETF uptake, Asia is seldom immune to American trends in the long term. It seems only a matter of time before the dam wall breaks.
Happy Birthday, Mr Bull Market. For the more observant among you, you will recall that the low point of the current cycle was reached in March 2009, just when we all thought the world would fall apart and we would live in a Mad Max-style, post-apocalyptic world bereft of joy and investment banks. It has now been eight years since the bull started running. And how it has run! The S&P 500 is up more 300%. In a fabulous observation, T Rowe Price’s Laurence Taylor, a portfolio specialist within their global equity team, reminds us of things that did not exist in 2009.
- Half of China’s GDP (in current prices)
- The “Game of Thrones” television series
- WhatsApp, Instagram, and Uber
- The term “Brexit”
- “Abenomics”
- The iPad
- Fitness trackers
- The Tesla Model S
Whilst considering the ramifications of the above, Spy would add one vital entry to that list, “Fund Selector Asia”…
Have you heard the champagne corks popping? Spy would be surprised if you did not have to duck this week as the market reacted with relief and joy at Emmanuel Macron’s presidential win in France. Indraneel Karlekar, MD, global research and strategy at Principal Global Investors waxed a little hyperbolic when he wrote on their blog, “France, no stranger to monumental battles since 1789, witnessed an epic conflict of ideas on May 7. Although no blood was shed in the final round of presidential elections, the victory of Emmanuel Macron, a centre-right moderate candidate against Marine Le Pen, an avowed populist and nationalist politician, is probably one of the more important results in modern politics.” Blackrock joined the chorus of approval, writing, “We are positive on European shares and see potential for renewed investor inflows as focus returns to the region’s improving growth. European purchasing managers’ indexes point to the strongest economic activity in six years. Europe stands to benefit from global reflation, and we see attractive valuations in cyclical shares.” Forget ordinary champagne, best to get a bottle of Cristal…
A little while ago Spy warned that Snapchat’s IPO rang alarm bells for its lofty valuation. Well, yesterday the chickens came home to roost. Snap’s shares plummeted 20% when its first public earnings disappointed. Before we all gloat too much, Jim Strugger, a derivative specialist at MKM Partners, points out that when Facebook, Yelp, Twitter and LinkedIn reported their first quarterly results as public companies, the stocks fell by an average of 14.1 percent the next day. As much as Spy abhors Facebook, it is fair to say that would have been a good time to buy.
Spy’s quote of the week comes from Schroders’ equity fund manager, Andrew Evans, “No matter how much some investors might wish it was not so, the biggest driver of whether or not you make money as an investor is the price you pay for an asset”. Nailed it.
Have you heard the one about the strange case of missing volatility? I thought so. Bloomberg’s Matt Levine has made the same observation, but comes to a contrarian conclusion which caught Spy’s eye. “There seems to be a sort of consensus that there is too little volatility now, and we are due for a reversion to the right amount of volatility. But it is also possible that there was too much volatility before, and now we are getting the correct amount of volatility.” Spy can’t accuse Mr Levine on being a half glass empty sort of a guy.
The billboard companies of Hong Kong keep on winning advertising from asset managers, in strong contrast to their Singapore counterparts, according to Spy’s photographers. This week, AB is out advertising its emerging market equity and bond strategies:
