Happy New Year to all!
Spy was smoking his favourite Romeo y Juliet last night, watching the meltdown in equity and oil markets with a sense of déjà vu. Retail investors are running for the exits, having bought with leverage at interim highs. It was always thus. No amount of grandstanding by regulators is going to change the oldest investment behaviour in the world: the weak hand securities to the strong at cheap prices and buy it back again at expensive prices.
Spy hears that Bank of Singapore’s long serving investment councillor Alvin Poh has been moved up to Hong Kong from Singapore to perform a similar role there. Bank of Singapore has been expanding its presence in the SAR, and, along with sister company OCBC Wing Hang, is making a much bigger impact in the local wealth management industry.
Spy knows Chinese leaders are fond of studying history. Perhaps they should look to late 20th century financial mismanagement in the UK for clues as to how to handle its current equity volatility. Britain, under leader John Major, tried to keep the pound locked in the so-called Exchange Rate Mechanism at huge expense to the Treasury. But the Major government soon discovered that strident predecessor Margaret Thatcher was right: “You can’t beat markets”. Britain exited ERM on 16th of September 1992 and let the pound free-float, making George Soros a fortune but saving Britain billions in the long run. Spy notes this morning that China has suspended its “circuit breaker” after two 7% declines this week. You can’t beat history or the markets; they will have their way in the end.
What’s going on at UOB? Spy wonders. According to their website, they have not added a new fund group to their wealth management platform since April 2015. Does this mean they have seen no new compelling managers or are they entirely happy with the meagre 23 groups already represented?
Spy notes that UBS has held it annual fund summit in Hong Kong this week. The great and the good have been promoting their strategies and insights to UBS’s esteemed private bankers, who are required to attend the jamboree or face cessation of chocolate rations. With rumours swirling that UBS is vastly increasing the amount of in-house product it sells, Spy wonders whether UBS Global Asset Management was promoting their UBS (Lux) Equity SICAV Emerging Markets High Dividend (USD) Fund, which has only had one positive year in five: 2015: -24%, 2014: -4.2%, 2013: -6.7%, 2012: +16.1% and 2011: -5.5% or will they be looking elsewhere….?
Spy hears that Dimensional, the wonkish and academic investment manager based in Austin, Texas, is looking to enter the Hong Kong and Singapore wholesale markets. Dimensional is considered by many to be the granddaddy of smart beta strategies. The firm is looking to locate sales people in Singapore alongside their institutional team to promote their range of absolute return strategies to wealth managers in the region.
A hat tip to BNP Paribas Investment Partners. During a year of wild market swings, the firm’s Flexi Equity Small Caps China A-Shares Fund was the year’s top performer in Asia with a 148% calendar year return.
BNP also ranked in fixed income. The firm's Flexi Bond RMB Fund was the third best performer in that asset class, returning 13%. Asia’s worst performing fund in 2015, across all asset classes? The Guosen RMB Renaissance Fund, with a -46.5% return.
Spy is permanently jaded with the nonsense jargon that comes out of the investment industry. He came across a new favourite this week: garbatrage. According to Investopedia it means: “An increase in price and trading volume in a particular sector of the economy that occurs as a result of a recent takeover, which initiates a change in sentiment toward the sector. Garbatrage is also known as ‘rumortrage’.” Insider trading? None of that here….
With 2016 already off with a bang, Spy is making a few predictions for the year. 1) Janet Yellen is already regretting that rate rise in December and will be on hold ‘til beyond June. 2) Barclays will sell its Asian wealth arm for a knock down price as it beats a hasty retreat from Asia. 3) Hong Kong and Singapore domestic property prices will fall, with Singapore getting hit the hardest. 4) Fund managers will continue to use the well-worn quotes from Warren Buffet in their power point presentations.
Amundi had been gearing up all year for its November IPO in Paris, which raised $1.6bn, according to Dealbook. The IPO seems to have put the firm in a boasting mood. It is therefore no surprise to Spy, that his roving band of photographers spotted Amundi’s blunt advertising below in the Lion City.