“Try it”, said the long-haired barman with an Aussie twang. At a shiny Hong Kong hostelry on Hollywood Road, the barman was attempting to persuade Spy to experiment with a Tasmanian whisky called Sullivan’s Cove and break a long-standing belief that only the Scots and Japanese really know how to make the stuff. Whisky exports from Australia? Times must be tough in the "lucky country". Spy relented, raised a glass of Cove to the new multi-millionaire PM Malcolm Turnball, who has shown the rest of the world this week what a proper bloodless assasination looks like, and mused on how quickly things change.
Sentiments are slightly gloomy among some asset managers in Hong Kong and Singapore, in marked contrast to May when almost everyone had hit their targets already.
“Everyone wishes their year-end was in June. They are seeing juicy 2015 bonuses fade like a mirage in the desert”, said one fund player to his guest in our Hollywood Road bar. “Depends on what you are selling: Europe is still flying out the door and if you have been selling volatility, alts, long/short and multi-asset, it should be a happy January…” Indeed, notes Spy. Right place, right time springs to mind.
UBS is keen on mandates as reported by Spy, last week. Spy hears that UBS is making it 100% clear to their RMs just how keen they are by sending an unmistakable message in the form of cake – a pandan cake. Apparently, every RM in Singapore who has not sold a mandate this year was sent a pandan cake, which has a big hole in the middle, reminding them that they had sold nothing. Ouch!
In the Lion City the punters are rolling into town for the annual Formula One jamboree, despite the haze. Spy has little time for puffed up petrolheads or geriatric rock stars, but he does admit that F1 does bring a host of little seen faces to Singapore. One such face is a personal hero of Spy: pugnacious Terry Smith of plucky British asset manager FundSmith, who has come to the tropics.
Terry’s equity fund factsheet ‘values’ include such gems as: No Trading. No Index Hugging. No Up Front Fees and best of all, No Nonsense. This straight talking son of a London bus driver, who made a fortune as CEO of interdealer broker Tullet Prebon, raised more than £3.5bn in just five years and has shaken up the UK retail market. Is he about to do the same in Asia? Spy lifts a second glass of Cove to him and says, “You are most welcome!”
Spy won the coin toss this week. He predicted the Fed would bottle their decision to raise rates. For what it is worth, Spy reckons there will be no rate rise this year. The Fed is terrified of the ghost of 1937 and is feeling the responsibility of being the world’s number one money printer. The statement read, “However, in light of the heightened uncertainties abroad…” Take a small bow, China, Ms Yellen was talking about you! Don’t worry Brazil, Russia, South Africa, Indonesia, Canada, she probably also gave a passing thought to your woes as well.
What’s going on at Old Mutual Global Investors, wonders Spy? FSA has reported on the new addition to their Asian Equity team, Oliver Lee, but it is the pace at which OMGI is changing since Richard Buxton took over in August, that raises an eyebrow. Management shuffles in the UK, with COO Paul Nathan leaving soon after CEO Jonathan Ide was deposed, have made some big investors nervous, thinking that without Buxton himself exclusively at the investment helm, stellar performance of late might be compromised. Spy will watch with interest.
Spy’s digital researcher notes that DBS Wealth kindly publishes its five main model portfolios on its website. Commodities and gold get barely a mention, if at all.
Meanwhile, in their aggressive portfolio, Asia Pacific and EM Equities make up fully 41% of their tactical asset allocation. Spy is not too sure how those geographies will outperform without commodities doing well too? Spy assumes that when retail-oriented wealth managers shun an asset class entirely, the contrarian professional investors are quietly accumulating unloved, knocked down and downright cheap bargains.
How big is the world’s mutual fund industry? Spy notes that at the end of 2014 there was $33.4tn in global mutual and ETF fund assets according to the ICI Fact book. Asset management, long the sleepy end of the finance world, is beginning to look very exciting indeed.
Is HSBC’s dance with the UK regulator about their global headquarters’ location coming to an end, in the UK’s favour? Douglas Flint, HSBC Chair has talked enthusiastically this week about how “London has the biggest concentration of international banks and is one of the two largest financial centres in the world, and the regulatory expertise here reflects that need.” Nothing like China’s sclerotic reaction to their market volatility to remind everyone that for all its faults, the UK is still a stable place to be governed from.
Spy’s roving band of asset and wealth management advert spotters has seen a rather lively collection in the Chinese media in Hong Kong with creatives for:
JP Morgan AM - International Bond Fund
Jupiter - European Growth Fund
Pictet - High Dividend Selection Fund
Vanguard - Europe and America ETF
China Citic Bank International - Fund Subscription Fees as low as 0.88%
Shanghai Commerical Bank – All fund subscriptions only1.2%
And Investec is also pushing their European Fund and their partnership with Hang Seng Bank.
In Singapore, Spy’s team had to peer through the dense hazy acrid fog on Robinson Road, to spot a bus with BlackRock’s Global Multi-Asset Income Fund emblazoned all over it.
Henderson is currently in the “let’s influence UBS” spot under One Raffles Quay with their Equity Income funds.
Spy may have gotten the rate rise call correct but feels less certain on the F1 outcome. Bet365.com has Hamilton at clear favourite at 8/15 and with Nico Rosberg at at 11/4. Vettel will get you a nice 7/1. Alexander Rossi is listed at 5000/1, Spy thinks he is better off listening to Bon Jovi this weekend, as he is probably “Living on a Prayer”. Advice? Find out which driver grew up in a mist belt and take a punt.