Spy found himself in the company of one of the smartest fund managers in Asia at a rooftop bar this week, surveying the twinkling lights of Hong Kong spread out below. Drinking overpriced Tsingtao beers, my guest said, “Look all around you, do you really think that every person in the city is sitting paralysed about volatile bond and equity prices and doing nothing? No, they wake up each morning and think about how to grow their businesses; capital and financial markets be damned. That’s why we believe in and are investing in Asia. All around you are hard-working, entrepreneurial people who have seen every cycle under the sun. Ignore the naysayers. Asia will emerge from this slowdown stronger than before.”
Spy notes that M&G has long had a reputation for being a superb fixed income specialist and many professional investors have enjoyed their witty Bond Vigilantes blog. Hat tip to the M&G team for bringing their impressive equity thinking to a wider audience, too. Last September M&G launched the deceptively banal-sounding www.equitiesforum.com. It follows in the easy and insightful style of Bond Vigilantes but focuses on equity ideas. Spy enjoyed discovering this gem from their recent blog: Chow Tai Fook is the world’s largest jewellery brand by global market share, with nearly 3%. And of the top 14 jewellers, 7 are Asian. Spy learns something every day.
Spy recalls that pure independent asset managers often moan about the ease with which asset managers owned by insurance firms or banks can raise AUM from their “captive markets”. In private, the independents claim this "ease" makes these firms “less competitive in every fashion”. Well, congratulations to Nordea Asset Management. Their total AUM managed for third parties has reached about 50% over the last year. Of 2015’s new €12.7bn in flows, 60% came from third parties. A milestone indeed and a sign it is breaking out from the parent company’s shadow. NAM’s best performer over the last year: Nordic Equity Small Cap Fund, up 11.7% to the end of January. Nordea AM has a marketing and sales office in Singapore to service Asian clients.
According to Spy’s diary, Warren Buffet, the jovial and folksy CEO of Berkshire Hathaway, will release his annual letter to shareholder’s tomorrow morning. This yearly missive usually generates much excitement within the investment fraternity. Shareholders may wonder whether in recent years an investment in an anthology of Buffet’s much quoted witticisms, wisdom and insightful observations may have been a better bet than buying BH shares themselves. “The price of a Berkshire Class A share fell 12.5% in 2015, compared with a 1.4% gain in the Standard & Poor's 500 including dividends. That was the worst underperformance since 2009, and between 2009 and 2015, the S&P gained about 163%; Berkshire, just 105%” according to Reuters. In the last two years, it has been Asia-based individuals that have paid for the annual charity lunch with Mr. Buffet. In 2014, reclusive Singaporean Andy Chua, chairman of AMES United, coughed up $2.2m to have lunch with the 85-year old maestro.
Aviva’s Navigator fund platform in Singapore has felt like a rather neglected son in the Aviva stable for the last few years and it was competitor iFast that seemed to gather momentum and mindshare. That could be changing: Navigator has a new CEO, Warwick Young, recently promoted internally from the position of head of risk. Spy understands new technology, new funds and new services are on their way in the summer. Since Aviva lost its DBS distribution deal, Aviva Investors, Friends Provident International and Navigator are all feeling the corporate parental love in Asia. iFast may be in for a much stiffer ride from Big Yellow.
Spy worries about his personal credit card debt, largely the result of his fine wine habit, but takes some solace in the fact it is not growing anywhere as fast as the world’s debt base which is exploding and now stands at nearly $60trn. In fund manager speak, I am “underperforming the benchmark” and, apparently in this case, it is a good thing. National Debt Clocks is monitoring debt across the world and publishing the stats online in real time. Hong Kong currently owes about $103bn and Singapore has domestic debt of about $291bn. Prudent Singapore has no net external debt as it is a creditor country. The US will shortly hit $19trn in debt and counting.
We have now had a week of Brexit excitement since David Cameron got his “deal”. The pound has taken a hammering this week, falling below 1.40 to the US Dollar, the worst rate in a decade. The FTSE has also withered a little in the face of uncertainty, giving everyone something new to worry about instead of China. It made Spy smile to note that Cameron has chosen June 23rd for his EU referendum, which is also the day Independence Day 2, the action thriller movie, will hit the screens. Spy reckons there will be so much sound and fury, wasted ink and noisy soundbites and then the Brits will vote to stay in the European Club they love to hate.
Finally, PIMCO’s woes are being channelled by Google. If Google searches represent the zeitgeist, Spy thinks the tough times are not over for the boys and girls of Newport Beach.
Spy’s photographers have seen some new creatives. In the Hong Kong Central MTR station, Allianz is promoting its Income and Growth Fund.
Jupiter is undertaking a brand building exercise at a Hong Kong tram stop also in Central:
Until next week…