For the Mid-Autumn Festival break last week, your humble Spy found himself, along with his domestic commander-in-chief, in the tranquil setting of private Pangkil Island off Bintan, Indonesia. The cares of the world (China’s slowdown, Brexit, dysfunctional European politics, US elections, traffic in Kowloon, bar prices in Central, Pokémon Go players not looking where they are going) all faded away in a haze of pina colodas and ice cold Bintang beers. Thus, Spy returned to Hong Kong with a renewed sense of joy in the world. To complete the happy picture, Janet Yellen and her band of merry minstrels at the Fed have kept rates low and the Bank of Japan ordered in another fleet of helicopters to crush the long end of the curve. Time to open the saké Spy just picked up at the duty free shop…
Lombard Odier, the Swiss private bank and asset manager with offices in Hong Kong and Singapore, is terribly excited about its global rebrand and new logo which now includes the date “1796”, its year of foundation. To Spy’s eye it is not that different from the old logo, but he guesses in timeless Switzerland even a small change is a big change and warrants an enthusiastic shout out. To go with its new branding, LO has launched a global ad campaign called “Rethink Everything”. The press release claims that LO is “in a unique position to be able to confront conventional thinking and where necessary, provide clients and investors with an alternative, imaginative and innovative approach.” Spy is not 100% sure that being old makes LO unique – looking at its competitors, Pictet was founded in 1805, Landolt & Cie in 1780 and Banque Bonhôte & Cie in 1815. However, the bank has weathered “40 financial crises” in that 220-year period and Spy willingly admits that that alone should encourage clients to take the wealth manager seriously.
Blackrock has been providing gold investors in Singapore a reason to be happy in the last year, notes Spy. Blackrock’s Gold World Gold A2 SGD Hedged fund, a high conviction entry for OCBC Wealth, is up 97.77% over that time period. That is not the only thing about Blackrock that has been soaring of late – their shares have just hit a five-year high, too. At $373, Blackrock’s market cap has now breached $61bn and no doubt kept its shareholders as happy as its gold investors.
While the world debates whether China is in a banking crisis and whether its slowdown is catastrophic, some fund managers are seeing a clearer path, notes Spy. Take Matthews Asia’s China Dividend fund, with strong exposure to telecoms: up 18.6% over the last year. Just behind that, Baring’s China Select has managed a healthy 16.5% and Invesco’s China Focused Equity a respectable 14.8%.
Fidelity launched a flurry of ETFs last week on the NYSE. In a we-have-something-for-everyone kind of fashion, they include: core dividend, rising rates, low volatility, momentum, quality and value funds. The American ETF juggernaut rolls on and shows no sign of stopping, even if Asia continues to lag in this regard.
And ETF mania continues. Also in the US, Goldman Sachs AM and JP Morgan AM launched ETFs this month. Don't forget Legg Mason and Franklin Templeton launched ETFs this year and Morningstar recently said it would apply its star and analyst ratings to ETFs alongside mutual funds for easier comparison, with Ben Johnson, director of global ETF research, saying the research firm is “removing a fence from a field of flowers”.
Speaking of Morningstar, the firm's senior research analyst in Thailand, Kittikun Tanaratpattanakit (Spy has a tough time with those Thai names, especially after a few bottles of Singha), said that global funds, which are mainly sold through a master feeder scheme in Thailand, have doubled AUM annually the last three years and the figure currently stands at about $10bn. But hang on. Since January, qualified Thai investors have been allowed to buy offshore funds directly (through a broker) without having to buy the locally-wrapped product. He believes retail investors are likely to be green-lighted next year. Certainly a market to watch.
If you have been wondering about helicopter money and its effects but were too afraid to ask, Spy came across this succint blog note by Columbia Threadneedle’s Toby Nangle.
“Helicopter money is often associated with incidence of hyperinflation. In their study of the 56 incidents of world hyperinflation during the last 300 years, Hanke and Krus found hyperinflation to be 'an economic malady that arises under extreme conditions: war, political mismanagement, and the transition from a command to market-based economy to name a few'”. Could a surprise spike to the upside in inflation catch investors unaware? Spy wonders and worries.
Some giants of investing history had all the best lines, thinks Spy. John Maynard Keynes, the legendary British economist, said: “As time goes on, I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.” It does not sound like rocket science however, in Spy’s experience most investors are only too happy to ignore the wise platitude and put their money in areas of which they have absolutely no clue and with managers of whom they know next to nothing at all.
Spy’s photographers spotted Natixis in the “let’s impress UBS” spot, located in Raffles Place below the bank's Singapore offices:
Until next week…