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People moves: Amundi bags ex-hedge fund economist; Credit Suisse names new Asia-Pac CIO
Asset Management
<p>Credit Suisse appoints new Asia-Pac CIO. John Woods, a 25-year veteran of the investment arena, has been named Chief Investment Officer Asia Pacific, Private Banking &amp; Wealth Management by Credit Suisse. He will be responsible for developing the unit’s investment views across all assets, and will also help expand the firm’s strategies for its clients.</p> <p>Prior to joining Credit Suisse, Woods was Head of Fixed Income Asia Pacific for Citi Investment Management, and held the role of Chief Investment Strategist for Asia Pacific at Citi Private Bank before that. He also held several key roles in HSBC, including Global Head of Credit Research and Strategy. He will report to Nannette Hechler-Fayd’herbe, the Swiss firm’s Global Head of Investment Strategy, and will be based in Hong Kong. Credit Suisse</p> <p>Amundi Hong Kong nabs economist from Azentus. Mo Ji, an economist who studied under Nobel Laureate Joseph E. Stiglitz, has been appointed Chief Economist, Asia ex-Japan by Amundi Hong Kong.</p> <p>She joins Amundi after four years at Azentus Capital Management – the global macro fund run by ex-Goldman trader Morgan Sze – where she held the role of Global Chief Economist. Before that, Ji spent almost two years Deutsche Bank, working as a research associate for the German firm’s Hong Kong and China research unit. She will report to Amundi’s Global Head of Research, Strategy and Analysis, Philippe Ithurbide. Asia Asset Management</p> <p>M&amp;G Investments Asia MD steps down. Andrew Hendry, M&amp;G Investments’ point man in Asia, will be leaving the British investment firm by the end of the year. This is what they had to say about it:<br /> “His departure follows the successful completion of the first phase of our expansion in the region. Under Andrew’s leadership, M&amp;G has opened offices in Singapore and Hong Kong, hired teams in both locations and manages over $4.5bn of assets for clients.”<br /> Singapore-based Hendry was M&amp;G’s Managing Director for Asia the past 4 ½ years, joining the firm back in 2011 after a two-year stint as a director for Marpac. He also spent 10 years at the Capital Group, taking on several roles including Vice President of Global Distributor Relations. FundSelectorAsia</p> <p>For Capital Markets moves, click here.<br /> Photo: Luke Ma</p>
Asia's bulging unicorn birth rate is close on US heels
Venture Capital
<p>When it comes to churning out unicorns - startups valued over $1 billion -  the US rides high, but the Asian stampede is growing. For now at least. </p> <p>Business Insider points out that while many expect a  unicorn extinction event soon, this does little to stop the rise in the number of unicorns coming into existence.</p> <p>CB Insights' Unicorn Tracker reveals that of the current 137 unicorns, 83  are in the US. The rest are found in Asia, Europe, and South America. China alone had 25.</p> <p>But the gap between Asia and the US is closing, In the second quarter of 2015, the US produced 12 new unicorns and Asia created nine, buoyed by several mega-financings. These included  Tujia, Panshi, and One97 Communications which each raised in excess of $200 million.</p> <p>A look over the past year shows that Asia has produced 20 unicorns, nearly two-thirds of the US's 34. This is impressive considering the relative infancy of Asia's start-up ecosystem compared with that of the US.  The only issue is whether Asia will maintain this kind of momentum in the face of slower economic growth in China.<br /> Photo: Owlana<br /> &nbsp;</p>
It’s not easy
Hedge Funds
<p>Memo to: Oaktree Clients</p> <p>From: Howard Marks</p> <p>Re: It’s Not Easy</p> <p>In 2011, as I was putting the finishing touches on my book The Most Important Thing, I was fortunate to have one of my occasional lunches with Charlie Munger. As it ended and I got up to go, he said something about investing that I keep going back to: “It’s not supposed to be easy. Anyone who finds it easy is stupid.”</p> <p>As usual, Charlie packed a great deal of wisdom into just a few words. Let’s take the first six: “It’s not supposed to be easy.” While it’s pretty simple to achieve average results, it shouldn’t be easy to make superior investments and earn outsized returns. John Kenneth Galbraith said something similar years ago:</p> <p>There is nothing reliable to be learned about making money. If there were, study would be intense and everyone with a positive IQ would be rich.</p> <p>What Charlie and Professor Galbraith meant is this: Everyone wants to make money, and especially to find the sure thing or “silver bullet” that will allow them to do it without commensurate risk. Thus they work hard (actually, study is intense), searching for bargain securities and approaches that will give them an edge. They buy up the bargains and apply the approaches. The result is that the efforts of these market participants tend to drive out opportunities for easy money. Securities become more fairly priced, and free lunches become harder to find. It makes no sense to think it would be otherwise.</p> <p>And what about the next seven words: “Anyone who finds it easy is stupid”? It follows from the above that given how hard investors work to find special opportunities, and that their buying eliminates such prospects, people who think it can be easy overlook substantial nuance and complexity.</p> <p>Markets are meeting places where people come together (not necessarily physically) to exchange one thing (usually money) for another. Markets have a number of functions, one of which is to eliminate opportunities for excess returns.</p> <p>Ed calls me and bids $10,000 for my car. Then he offers to sell it to Bob for $20,000. If Ed’s lucky and we both say yes, he doubles his money overnight. To put it simply, anyone who expects to make money easily trading cars this way either thinks (a) Bob and I are idiots or (b) the market won’t function in a way that enables us to know about the fair value of my car. If these conditions were met, it would be an “inefficient market.”</p> <p>But if Bob and I have access to market data on used car pricing, Ed’s chances of pulling off this deal are greatly reduced. In most markets, transparency tends to reveal and thus preclude obvious mispricings. (Thanks to the incredible gains in access to data by way of the Internet, this is certainly more true today than ever before.) In my view, this is a good part of the basis for Charlie’s comment: anyone who thinks it’s easy to achieve unusual profits is overlooking the way markets operate. This memo is largely about the challenges they present.</p> <p>Second-Level Thinking</p> <p>I always thought that when I retired, I would write a book pulling together the elements of investment philosophy discussed in my memos. But in 2009, I got an email from Warren Buffett saying that if I’d write a book, he’d give me a blurb for the jacket. It didn’t take me long to move up my timing.</p> <p>Columbia Business School Publishing had been talking to me about a book, and when I told them I was ready, they asked to see a sample chapter. For some reason, I was able to sit down – without previously having given the topic any organized thought – and knock out a chapter about the importance of something I labeled “second-level thinking.” This is a crucial subject that has to be unders</p>
Odey: We are already in a deflationary downdraft amidst currency wars
Hedge Funds
<p>It's been a rough year for Odey Asset Management's OEI Mac fund. Year-to-date the fund is down 15.8%, although, after a strong August, the fund has managed to regain some composure. according to a September 23rd letter to investors reviewed by ValueWalk.</p> <p>Odey Asset Management founder Crispin Odey’s flagship hedge fund slumped 19.3% during 'Bloody April' after it was caught out when the Australian dollar strengthened against the US dollar.</p> <p>During August, the OEI Mac fund's USD share class gained 6.8%. The performance is even more impressive when compared to the MSCI Daily TR Net Europe USD return of -6.9% and an MSCI Daily TR Net Europe GBP return of -5.3%. Over the past twelve months, the OEI Mac fund has gained 8.7%, a relative outperformance against the MSCI Daily TR Net Europe index of 16.9%.</p> <p>Odey OEI MAC Fund performance</p> <p>Odey's short book and active currency positions were the largest contributors to the fund's performance during the month. Active currencies made a positive contribution of +1.3% to performance; this was attributable to the short AUD/USD position. All other active currency positions made negative contributions.</p> <p>Odey OEI MAC Fund currency exposure</p> <p>Odey: Equity performance<br /> Moving away from currencies onto equities, Odey's short book made a sizeable positive contribution of +12.7% during August after accounting for currency hedging. Positions that contributed most to this performance, before currency hedging were Las Vegas Sands Corp. (NYSE:LVS) (+157bps), Sands China (+99bps) and Swatch (+84bps). A negative performance from Kellogg (-10bps), Antofagasta (-9bps) and Netflix, Inc. (NASDAQ:NFLX) (-9bps) detracted from performance.</p> <p>On the long side, the equity book made a negative contribution for the month of 6.7%. Positive contributions before hedging came from Pendragon (+44bps), Circassia<br /> Pharmaceuticals (+7bps) and TUI (+6bps). However, negative contributions far outweighed these gains. Holdings in Sky, LM Ericsson Telefon, and Barclays PLC (NYSE:BCS) (LON:BARC) detracted -142bps, -45bps and -39bps from overall performance respectively.</p> <p>Government bonds held by the fund returned -0.4%.</p> <p>Odey: Cloudy outlook<br /> Crispin Odey's uses his Manager's Report within the Odey OEI MAC Fund monthly newsletter to warn of further pain ahead for financial markets.</p> <p>The developed world averted a recession in 2008 by cutting rates to 0%, then embarking on QE. We all hoped we would get healing, then growth, then inflation, then rising rates. But we have experienced the distortions of QE without generating enough growth or inflation. Now central banks have ended up with the safe assets and driven pensions and savers into everything else. We haven’t achieved inflation, so we haven’t worked through our debt and the solution may ha</p>
11 European unicorns hit $1B valuation
Venture Capital
<p>The U.S. may be the unicorn kingdom, but Europeans are creating their own tech unicorns too.</p> <p>In the last 12 months, Europe has birthed 11 new startups with valuations of $1 billion or more, reports Business Insider. Most of the list comes from London or Germany, and three are finance related. Here they are:</p> <p> Farfetch-$1 billion- London-based fashion startup. Serves as a storefront for more than 300 global boutiques.<br /> Funding Circle- $1 billion- London-based peer-to-peer lending platform.<br /> TransferWire- $1 billion- London-based, with a background from Estonia, peer-to-peer money transfer service.<br /> Auto1 Group- $1 billion- German-founded car sale startup.<br /> Shazam- $1 billion- Music identification app with ambitions to move beyond just songs.<br /> Home24- $1.03 billion- Online German furniture store.<br /> Ayden- $1.5 billion- Netherlands' payments company.<br /> BlaBlaCar- $1.6 billion- European car sharing service.<br /> HelloFresh- $2.9 billion- German-based food delivery startup.<br /> Delivery Hero- $3.1 billion- German-based platform that allows apps and local websites to partner with local restaurants in other countries.<br /> Global Fashion Group- $3.1 billion- A compilation of fashion startups in emerging markets.</p> <p>Photo: Steven Depolo</p>
Ratan Tata: An archangel of Indian VC
Venture Capital
<p>This week Ratan Tata was listed by LiveMint as one of the “archangels of Indian e-commerce”, a title earned by his long list of investments in the space - but his investment activity goes far beyond that.</p> <p>If you don’t know Ratan Tata, you know his surname.  The 77 year old is chairman Emeritus of Tata Sons - the holding company for Indian mega-conglomerate Tata Group - and one of the leading lights of India’s business community.  He is also a prolific and enthusiastic angel investor.</p> <p>In short, Ratan loves India’s VC scene, and startups love to be associated with him, and his name. His  list of investments also shows he has a knack for picking winners:</p> <p> Altaeros Energies - Wind energy<br /> Snapdeal - E-commerce<br /> Bluestone - E-commerce<br /> Urban Ladder - E-commerce<br /> Swasth India - Healthcare<br /> CarDekho - E-commerce<br /> Grameen Capital - Finance<br /> Paytm - Fintech<br /> Ola Cabs - Ride sharing<br /> Ampere - Electric vehicles<br /> Kaaryah - E-commerce<br /> Infinite Analytics - Marketing analytics<br /> Holachef - Food delivery<br /> Xiaomi Mi - Electronics</p> <p>He is also an advisor to three India-focused VC funds: Jungle Ventures, Kalaari Capital, and IDG Ventures India. He only joined IDG this month, and  now the fund is hoping to to use some of that Tata magic to help raise $200 million for its  next fund.</p> <p>Photo: American Center Mumbai</p>
Asian food delivery startups are gobbling each other up
Venture Capital
<p>Food delivery start-up Foodpanda has just made its ninth acquisition, picking up Singapore-Dine for an undisclosed sum. This is the latest in a string of mergers in this space</p> <p>According to the Straits Times the purchase adds Singapore eateries Tony Roma's, Subway, 4Fingers and California Pizza Kitchen to its list of about 500 restaurants.</p> <p>Food delivery platforms have been gaining popularity in Asia for some time, offering both convenience for consumers and cost savings for restaurants who want to avoid the painful overheads associated with food delivery.</p> <p>With nine acquisitions under its belt, Rocket Internet-backed Food Panda is certainly becoming an apex predator in the space. In Asia it now covers all of Southeast Asia, South Asia, Hong Kong and Taiwan.</p> <p>But its not the only one gobbling up competition in the region.</p> <p>Over the past 18-months we have seen Singapore's Food Runner swallow down Philippine start-up City Delivery and Hong Kong's Koziness Concepts - previously iDelivery - buy Dial-a-Dinner and Soho Delivery.</p> <p>Its not just food delivery sites angling for a top spot in the space, either. In India ride sharing app Ola has launched Ola Cafe while Zomato - the fast growing restaurant discovery site that recently bought US rival Urbanspoon - is expanding into food delivery too.</p> <p>Dubbed by TechCrunch as an "Uber for Food", India-based  Zomato has eight acquisitions to its name and it could soon show FoodPanda that its not the only big fish in sea.</p> <p>&nbsp;</p>
Emerging markets: will they crash or not?
Hedge Funds
<p>Passport Capital’s John Burbank is by no means a lightweight. He cut his teeth working under Julian Robertson at Tiger, his fund always performs in the top percentile, and the man actually looks like he can tear you apart with his bare hands.</p> <p>He recently had an interview with the FT where he said “we are on the precipice of a liquidation in emerging markets,” alluding to the deteriorating fortunes of the region, and adding that “this feels the way that the fourth quarter of 1997 felt.”</p> <p>And he’s not the only one. Burbank here sits with the majority view that emerging markets are currently on track for an epic blow up. The Brazilian real has been shorted to a whisker off its all-time low, the Malaysian ringgit is currently hovering near its Asia Crisis levels (though oil did contribute to this), emerging market ETFs have seen nothing but outflows, and the asset classes’ bonds have been treated like plague-ridden, leperous, venom-spitting bears.</p> <p>His fellow fund manager Mark Dow however, would like to differ.</p> <p>While in no way an emerging market bull, Dow outlined a few months back five reasons why the current situation won't translate into an epic crash (or recessions and an accompanying contagion, for that matter), namely:</p> <p> Most EM’s now have flexible currencies and larger reserves – two things sorely lacking when their most harrowing crises occurred.<br /> No more Original Sin – Original Sin, the label used for the currency mismatch when a sovereign borrows in dollars but collects in local currency, has practically been eradicated.<br /> Deeper local markets – most EM’s now have enough asset managers, pensions, etc. to absorb any tourist selloffs.<br /> Short dollars – in issuing debt, EM’s are now essentially short the greenback, but sans the short dollar gamma positions they had during the previous crises, making things more manageable for them.<br /> We’ve already seen a lot of outflows</p> <p>While current price action is definitely against him, Dow’s argument is actually quite compelling. The Bank of International Settlements does say that EM corporates are hoarding dollars but still, it doesn’t really negate what he’s saying either.</p> <p>Something has the Fed spooked from raising rates though, and everyone seems to be pointing their fingers at the emerging markets. What do you think?</p> <p>Are you on Burbank’s side? Or Dow’s?<br /> Photo: Wiki</p>
Hao Capital hedge fund gains 97.8% YTD
Hedge Funds
<p>With all the steep losses and fund closures since Black Monday, the words “hedge fund” and “China” don’t exactly paint a pretty picture when you piece the two together. Hao Capital’s hedge fund however, seems to be a little different.</p> <p>According to Reuters, Hao Capital posted an amazing 97.8% return for the year – a stellar performance by any measure and made even better by the fact that most China-centric funds are currently nursing losses.</p> <p>Run by Zhang Hao, an electronics engineer and ex-Prime Capital Management analyst, the fund made most of its gains by betting on appliance companies such as Haier Electronics Group and Gree Electric Appliances as well as by taking big bets against solar energy stocks. Another secret to its success? Zhang's reluctance in joining the A-share herd:<br /> “In May, the fund manager told investors he sidestepped some of the frenzied buying in Chinese A shares because he was worried about the emotional nature of individual investors who made up more than three-quarters of that trading volume.</p> <p>‘From a cultural perspective, these investors are less prone to logical thinking, and prefer stories of a company to its market value calculation,’ the manager wrote.”<br /> It wasn’t all rainbows and butterflies though. Zhang apparently took a nasty hit last month when his longs fell over 17%, thankfully however his shorts gained 7.63% at the same time and trimmed his losses down to 9.5%.</p> <p>Despite that blip, his fund is currently up 132.5% since its August 2014 inception, and has more than tripled its AUM to $212 million in the process.<br /> Photo: Dorli Photography</p>
Balancing risks and opportunities in the multi-speed world
Asset Management
<p>SUMMARY</p> <p> At the Cyclical Forum in September, PIMCO investment professionals from around the world gathered in Newport Beach to discuss and debate the state of the global economy and markets and identify the trends that we believe will have important investment implications over the next 12 months.<br /> While our baseline view for global economic prospects over the near term remains broadly unchanged since our previous Cyclical Forum in March, we see significant and in some cases widening divergences among the world’s major economies. Also, we see the balance of risks to the global economy tilted somewhat to the downside, in part because of diminishing returns of unconventional monetary policy and also the market volatility stemming from developments in China.<br /> Our cyclical outlook has key implications for investors. In broad terms, we see global fixed income markets as anchored by our New Neutral secular framework for interest rates. Our cyclical views inform portfolio strategies across regions and asset classes.</p> <p>The past several months have investors and policymakers reassessing global economic prospects amid elevated concerns over emerging market growth models and policy effectiveness. In the midst of these global uncertainties, PIMCO investment professionals gathered recently for our September Cyclical Forum.At our previous Cyclical Forum in March 2015, we concluded (as detailed in our post-forum essay) that the global economy was “Riding a Wave of Accommodation – Carefully.” Since then, while the “wave” of global monetary accommodation has if anything expanded in scale and in scope – and may well deepen further over our cyclical horizon – to date it has been insufficient to stave off a decline in commodity and equity prices or to discourage renewed fears of disinflation amid concerns that China will not be able to navigate the New Normal trajectory for growth and global financial integration they have set for themselves.Although the turbulence in global markets that followed the bursting of the Chinese equity bubble in June and the fallout from the devaluation of the Chinese yuan in August was the major financial event that has occurred since our March forum, our goal at the September forum – as at every forum – was to look ahead from initial conditions so as to formulate a baseline view for the global economy as well as to identify and assess the balance of risks to that baseline view. Our forum discussions benefited enormously from the active participation of and valuable contributions from PIMCO senior advisors Ben Bernanke, Mike Spence and Gene Sperling. Drawing on superb presentations from our Americas, European, and Asia-Pacific portfolio committees, as well as from our emerging market (EM) team, and following a very robust and wide-ranging internal discussion, we coalesced on a baseline view thatglobal economic prospects over the next 12 months remain broadly unchanged from where we saw them in March and are consistent with global GDP growth in the range of 2.5% to 3% and global inflation of 2% to 2.5%.</p> <p>While this is our baseline cyclical view, the averages it represents mask significant and in some cases widening divergences among the world’s major economies. As we shall discuss further below, our baseline view for GDP growth in the U.S., eurozone, U.K. and Japan over the next year is actually consistent with a modest increasein the pace of growth for this group of countries versus the past year. On the other side of the ledger, we concluded that prospects for growth in China are clearly deteriorating, though we note the market consensus view is converging toward PIMCO’s more bearish forec</p>