Brian Bollen's Blog

ECB To Loosen Up

The latest Coutts Wealth Watch, entitled 'EBC to loosen up', comes from investment strategist George Tsapouris

Thursday’s eurozone data, showing very low inflation and unemployment stuck at a record high, stress the need for greater stimulus. We see further monetary easing, supporting our positive view on European equities.

Not reacting to the Fed

Central banks in developed markets continue to provide abundant liquidity to support the global recovery. But as the latest eurozone inflation (0.7%) and unemployment (12.2%) figures highlight, more easing from the European Central Bank (ECB) will ultimately be needed.

Asia Pacfic Adapts To Risk

Asia-Pacific Adapts To Risk

Speed read

·        APAC institutional investors with combined AuM exceeding USD2.2tr unanimously note changing risk culture in their organisations

·        63% of institutions across 11 APAC countries agree that financial crisis has changed their investment approach

·        Australia, Japan and Hong Kong asset owners favour risk budgeting when modifying their investment strategy

·        60% mention regulatory risk reporting as having some or significant impact

·        44% report asset allocation as having become more conservative

·        Regulatory reporting requirements key challenge for Australia, Indonesia and Indian asset owners

·        Chinese asset owners moving towards developing their own credit rating systems for investments

Source: BNP Paribas Securities Services/KPMG

Islamic Finance Continues Forward March

Islamic finance would appear to be very much one of the topics of the moment. Hard on the heels of UK Chancellor George Osborne's plans for the UK to issue Islamic bonds comes further news from the Islamic Financial Services Board (IFSB), the International Organization of Securities Commissions (IOSCO) and the Securities Commission Malaysia (SC).

Maisonneuve Finds New Home At PIMCO

Congratulations to Virginie Maisonneuve on her recruitment as PIMCO's managing director and global head of equities portfolio management. She joins PIMCO from Schroders Plc, where she most recently served as head of global and international equities. Maisonneuve will be based in the firm’s London office. Her official start date is currently expected to be in January 2014.  

Are You Worth It? Find Out Here

Carlton Senior Appointments, part of the Phaidon International group, has just contacted me regarding a Salary and Bonus Report for 2013 that it thought might make an interesting feature.

It draws particular attention to:

·               IBD/ M&A Salary Benchmarks;

·               Buy Side Sales Salary Benchmarks;

·               Fund Management/ Buy Side Analytics Salary Benchmarks;

·               Finance Salary Benchmarks;

·               Sector Comparison.

BNP Paribas Supports World's First UCITS Vietnam Fund

BNP Paribas Securities Services reports that it successfully supported the launch of Dragon Capital’s world first UCITS-compliant, actively managed Vietnam equity fund.

It describes Dragon Capital as one of the largest fund managers in the IndoChina market with around $1bn in assets under management including equities, private capital, fixed income and real estate. In September, BNPPSS adds, it launched the first actively managed UCITS equity fund that gives international investors exposure to Vietnam’s blue-chip companies.

The Three Maladies Of Institutional Investing

Herding, Performance Chasing and Committee Structures

Herding, Performance Chasing and Committee Structures are the Three Maladies of Institutional Investing, according to a Roundtable of financial experts convened in Stockholm in September (the Opalesque Nordic Roundtable). The following is a lightly edited of a communique detailing its highlights.

Particularly since the global financial crisis, institutions find that they have more or less made the same investments with the same, brand name managers. How could such a level of herding have happened? Which investor groups have invested differently, and how and why?

Don't Write Off The Dollar

By Gary Dugan, chief investment officer Asia and Middle East at Coutts.

Investors are probably being overly pessimistic on the US economy, and it may be time to buy dollars again. But don’t expect big gains from here, with the uncertainties remaining around the Federal Reserve’s (Fed’s) plans for scaling back quantitative easing (QE) and more fraught negotiations around the US government’s budget and debt ceiling still to come.

Marking To Markit

Market participants caution that the recent news from Markit, the global financial information services company, that MarkitSERV handled more than $1 trillion of swaps traded on swap execution facilities (SEFs) in the first 10 business days of SEF trading, is of symbolic significance rather than evidence of a great market leap forward. In a market estimated to be worth around $600 trillion in notional outstandings at any given time, $1 trillion is little more than pocket money (or chump change for US readers).

Definitely a day for second and perhaps third breakfast

Mint – Blain’s Morning Porridge  - October 25 2013

As I arrive back into the office to the sound of the Nikkei crashing, sorry for lack of porridge this week – I’ve been travelling round Asia on a roadshow for a new London property deal. Effectively it’s a managed CLO of prime London properties and it really struck a chord with the potential buyers we met. I’ll describe it more fully below. Meanwhile, I’ve been really struck by meeting so many Asian investors at how “can-do” they are. Despite the many market hurdles, their positive market attitude is most refreshing.

Norway and UK To See O&G PE Exits

Norway and the UK are set to see a burst of private equity portfolio company exit deals in the European oil and gas sector, as a potential further 24 billion barrels of recoverable oil and gas reputedly remain in the North Sea, suggests research from S&P Capital IQ.

S&P Capital IQ notes that transaction activity remains concentrated at the ‘upstream’ end of the industry – whose significance continues to grow – and reflects the historic profile of active sellers such as 3i - the private equity and venture capital company.

European Equities: This Way Next

Martin Skanberg, European equities fund Manager at Schroders, comments on his expectations for Europe and where he is currently seeing opportunities in the region:

Europe has started to show signs of economic recovery at a time when investors have become increasingly aware of the investment opportunities available in the region. Some risks clearly still remain, but we would argue that the pick-up in economic activity is sustainable and that there are still further gains to come for European equities. Key to this will be an improvement in the credit cycle and a return to positive earnings momentum.

Franklin Templeton Boosts European Fixed Income

Franklin Templeton Investments has named Rod MacPhee as research analyst/portfolio manager in its fixed income Group, as the next step in the firm’s initiative to grow its European fixed income capabilities. MacPhee, based in London, will focus on the European portfolios and report to David Zahn, head of European fixed income.

Not A Happy Year For India

Not A Happy Year For India

Craig Botham, emerging markets economist at Schroders, reflects on how and why 2013 has not been a happy year for India.

GDP growth started badly and is getting worse. Real GDP growth has decelerated, with Q2 growth of just 4.4% year-on-year, against 5.5% growth the same time last year.

Asset Allocation A La Mode

An important the theme of the week seems to be asset allocation. First we had the publication of the Evercore Pan-Asset analysis showing that UK pension funds would perform better if they invested passively rather than actively (turning gold into lead, as the FTfm story on the subject put it). Now we have

Schroders announcing the findings of its second FTSE DC report. This  project, undertaken over the past three months, has studied the pension investment allocations of a selection of the UK’s top FTSE 350 listed companies.

Schroders Boosts Insurance AM Team

Schroders has appointed David Thompson to its insurance asset management team as a client director responsible for relationship development. 

Johnny Paycheck Spirit Hovers Over US Job Market

“Participation in the US labour market looks set to fall to levels not seen since Johnny Paycheck reached the top of the US country music charts with his 1977 hit Take This Job and Shove It,” writes Gary Dugan, chief investment officer, Asia and Middle East at Coutts.

“The shutdown-delayed employment report for October, due out on Tuesday, is expected to show 152,000 new private-sector jobs were created. That should leave the unemployment rate unchanged at 7.3%, but the more important piece of information may be the number of people who are actively working and looking for work. This has fallen from 66% of the working age population in early 2008 to 63.2%. This downward trend explains a large portion of the recent drop in the unemployment rate.

From DC Tricks to S&P Treats

By Dr Jerry Webman, PhD, CFA, chief economist, OppenheimerFunds

Following a somewhat Kafkaesque two weeks of trying to handicap whether the partially shut-down US government would breach its debt limit, investors greeted last week’s resolution of the DC standoff with a flurry of buy orders that pushed US stock prices to record highs.

As was widely expected, Congress squabbled until the 11th hour before finally voting to fund the federal government through January 15, 2014 and to increase the debt limit until February 7. Lawmakers also agreed to form a bipartisan committee to work on a 10-year budget plan.

IOSCO Hedge Fund Report: So What?

Anyone who has witnessed at close hand the compilation of surveys by certain international institutions is instinctively wary of taking the findings of and reports from such surveys at face value. Like the vast majority of annual Budget speeches delivered by the UK's Chancellor of the Exchequer, whoever that might be at any one time, they really should come with a stealth warning. As was uttered so often in the cult TV series Twin Peaks almost a generation ago, the owls are not what they seem.

This is not for a minute to disparage the efforts of IOSCO, the International Organization (sic) of Securities Commissions in compiling its second Hedge Fund Survey. It must be extremely hard time consuming and resource intensive work carrying out a survey of a sub-set of the financial industry when no single definition exists of the very term 'hedge fund' (IOSCO report page 4).

Small Is Beautiful: Allianz Global Investors

In 10 of the last thirteen years, small listed companies, so-called small caps, performed better than companies with large market capitalisations, or large caps. This is one of the results of the study, “Is small beautiful?” by Allianz Global Investors (AllianzGI). While the MSCI World Large Cap Total Return Index rose by approximately 80% between January 2001 and September 2013, the corresponding small-cap index almost tripled over the same period. Only in the years 2007-08 and 2011 did large companies fare better than small ones.

Investors rewarded for taking risks