The FSA Spy market buzz - 11 August 2017

By FSA Spy

Added 11th August 2017

Changes at Schroders; Hiring at Nordea; Promotions and hires at BNP; T Rowe Price communicates; OCBC chooses well; Hang Seng’s funds; Retail advertising and much more.

The FSA Spy market buzz - 11 August 2017

Spy has been wondering what to do if two of the world’s lunatic leaders, Donald Trump and Kim Jong Un, do not back down. Threats of nuclear war and bombing of Micronesian islands has rather disturbed the summer calm. If you have decided to head for a bunker, Spy suggests downloading Stanley Kubrick’s classic, “Doctor Strangelove” and then stock up on the ingredients for the cocktail known as The Apocalypse. You will need peppermint schnapps, bourbon, vodka and Kahlua and a strong stomach. More sensibly, why not buy a little “barbarous relic”. Yes, gold, ever so unfashionable (unless you are a bride or groom), has been finding its feet. It is up $85 since July the 10th and threatens to break the $1300 resistance line. You may not be able to eat gold, but at least you see it, unlike those mercurial bitcoins.

Spy has come across some changes at Schroders. Alex Prawitz, who has held a GFI role based in Hong Kong, is moving back to Frankfurt at the end of the month after five and half years in Asia. He will take up a new role within Schroders. Spy understands that Alex will be head of Central & Eastern Europe and Mediterranean. Schroders has added to their Hong Kong private bank team by hiring Anthony Yueng, who joins from M&G. No news yet whether M&G has replaced Anthony. In May it was announced that Zal Devitre had joined Schroders in their Singapore office as regional head of private bank sales, reporting to sales head Showbhik Kalra.

News that Nordea has added to its sales force in Singapore had almost eluded Spy. Jerome Tiong has joined the Scandinavian firm, reporting to regional sales director Joanne Kwek. Jerome joined in June from Citibank where he was a portfolio councilor for 7 years. Nordea continues to push its absolute return-style funds where performance has been strong. For example, Nordea’s Climate and Environment Fund is up a healthy 22% over one year (A bit like the average temperature in Hong Kong, or so it feels to Spy).

It caught Spy’s eye that Mandy Lui has been promoted at BNP Paribas Asset Management. Mandy had been handling HK private bank sales when she joined the firm. But according to her LinkedIn profile she is now head of wholesale distribution for China, Hong Kong and Singapore. BNP Paribas AM has also just made another wholesale sales hire: Serena Sim has joined the firm from Legg Mason in Singapore. Spy is aware that BNP Paribas AM has had some tremendous success with its US mortgage-backed securities fund.

T Rowe Price has added to its comms team in Hong Kong. Spy notes that Phoebe Ho is now head of APAC comms. Phoebe was previously with State Street in Hong Kong. With the number of press releases Spy gets across his desk each day, it is a surprise to him that every manager in town has not yet hired a press specialist.

Fund selection teams across Asia must be having a good summer. So many funds are up this year that choosing a fund that has made money has been like shooting fish in a barrel. Take OCBC Wealth for example. Of the 87 focus funds on its list, all but three are currently in positive territory for the year. Take a bow, boys and girls. The two best performing funds on the focus list are:  Deutsche’s China Equity Fund up 27.92% and Fidelity’s China Focus Fund up 27.28% over the last year. That said, neither of those are within its top 9 picks. The best performer there is Neuberger Berman’s US Multi Cap Opportunity with a still very healthy one-year return of 20.16%.

It is an old rule of life: Watch what people actually do, not what they say, thinks Spy. It seems that in Hong Kong no matter how much the drum is banged about equities, investors are just not listening. There may be table chatter about equities, and fintech and tech and China and India, but when it comes down to it, good old fashioned income wins the day when people actually put their money down. Spy peeked again at Hang Seng’s top performing sectors vs its bestselling funds:

 

 

In contrast to the top performers, only one of its top selling funds is not an income fund. The top three? Well, it is an AB hat trick. American Income, Global High Yield and EM Multi Asset with monthly distributions. Spy has said it before: This global equity rally has not been enjoyed by the masses. There is no euphoria after the record Dow, Shanghai or S&P highs. And that probably means there is more to go. Bull markets take as few investors with them as possible.

Do you think ETFs are all about passive? Think again, says Spy. There are now 10 active ETFs with more $1bn in assets according to ETF.com

Nine of them are fixed income funds, with the leader being Pimco’s Enhanced Short Maturity Active ETF with more than $7bn in AUM. Spy has been predicting for a while that active is going to fight back strongly against passive, and 2017 may well prove to be a banner year for active managers.

If you are a REIT investor in Singapore’s retail sector, with some of those shiny Orchard Road properties in your portfolio, it may just be time to do a little review. Amazon is sending shivers through the city state as it dips its toes in the water with it’s Amazon Prime Now service. This is not “full blown” Amazon. It is a far more limited service. Nonetheless, the first arrow has come whizzing across the boughs. Alibaba’s Lazada has been active in Singapore for a while now, and it is unlikely that Singaporean consumers are going to be any different to their Chinese, US, Australian or European counterparts. The convenience of shopping with an app, whether Amazon or Lazada, is going to make a number of those malls, with their endless copies of similar stores, a whole heap less attractive to visit. Just sayin’.

In Singapore, Schroders has been spotted pushing their multi-asset solutions to the retail public. Old fashioned print ads, as below, have complimented app adverts appearing on mobile phones:

 

 

Until next week...

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