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Pimco leaves Bill Gross in the dust
<p>Here’s something interesting. Pimco, the behemoth bond house once expected to wither away and die when its founder left, actually posted better returns than Bill Gross himself.</p> <p>And it’s not just that. While Gross’s old stomping ground – the Pimco Total Return Fund – saw its assets under management shrink by at least $120 billion, guess how much made its way back to the dethroned bond king? Barely $1 billion, according to the Financial Times.</p> <p>Gross, whose weird antics of late include writing TMI investment letters, calling trades he doesn’t even do, and losing 3% – in a bond fund – in a single day, may inadvertently be helping Pimco score more clients:<br /> “By underperforming, Mr Gross may be inadvertently helping Pimco make its own case: that the investment process, trading infrastructure and intellectual firepower across the asset management group count for as much, if not more, than any one individual’s investing talent.”<br /> Interestingly, that might actually be the case. Despite all the outflows, things have actually been working well for Pimco lately. Cash has been flowing to where they want it to be – their so-called “future platforms” – and Total Return’s new team have been making good bets on volatility and the greenback.</p> <p>As for Gross, he worryingly skipped his personal musings in his latest outlook. Instead of opening with thoughts on plugged toilets, steam showers, or how a 67-year old's midsection isn't a pretty sight (I'm actually paraphrasing him here), this month we get nothing but a dry analysis of interest rates and a Phillips Curve critique. Things might not be going so well for him.<br /> Photo: Defence Images</p>
Samsung Pay sees strong S. Korea debut, so should its US rivals worry?
FinTech
<p>Within a month of launching in South Korea, Samsung Pay has clocked up 1.5 million transactions worth $30 million, and it will now take on the US market.</p> <p>It's a strong start. Data released by the company shows that since August 36% of Samsung phone owners used the service and 10% of  those did so every day. Around 60% these purchases were made using the Galaxy Note 5.</p> <p>Samsung had a home advantage by launching in South Korea first but it's still an impressive debut. How will it stack up against Apple and Android Pay when it enters the US next month?</p> <p>It is hard to compare performance. Apple Pay has enjoyed an adoption rate of 42% among iPhone 6 and iPhone 6 Plus users, according to Auriemma Consulting Group, but that's with a year-long head start. No data yet exists on Android Pay, which only started rolling out earlier this month.</p> <p>The biggest curve ball for Android and Apple is likely to be Samsung's payment technology. Both Apple and Android rely on contactless near field communication (NFC) technology - which means merchants need to have an NFC reader installed.</p> <p>Samsung Pay uses MST technology which means merchants without NFC readers can accept it. Weirdly, the Galaxy S6 can emulate the magnetic strip of a card wirelessly so - Samsung claims - it can work on over 90% of card payment machines.<br /> Photo credit: TechStage </p>
VC-backed phone giant Xiaomi launches new service
<p>Xiaomi made big waves in the smartphone industry when it introduced its first low-cost phone in 2011. Now the Chinese electronics firm plans to bring its unique brand of disruption to the laptops and telecoms space.</p> <p>This week Xiaomi launched its new telecoms service, Mi Mobile, alongside its latest Mi 4C budget smartphone. The company has been given a state license for a virtual telecoms network, which means it can lease infrastructure from one of China’s three big telecoms to offer self-branded services.  </p> <p>The fact that Xiaomi is bringing its brand to a fresh and potentially very lucrative sector should no doubt be welcome  to its venture capital backers which include IDG Capital, Morningside Group, GIC, DST Global, Hopu investments, and All-Star Investments.</p> <p>Tech in Asia reports that less than 1% of China’s mobile users subscribe to China’s virtual telecom operators. Xiaomi hopes to topple the existing but lackluster service providers by leveraging its brand and offering both pay-as-you-go and contract services.  </p> <p>And it’s not just China's virtual operators that are facing fresh competition. Xiaomi has confirmed it will be releasing a laptop. The details are sparcse at this point, but the firm is looking to launch in the second quarter of 2016.<br /> Photo: Kārlis Dambrāns</p>
People moves: Amundi bags ex-hedge fund economist; Credit Suisse names new Asia-Pac CIO
<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>
People Moves: HSBC names new APAC chief; RBC loses fixed income boss
<p>HSBC names new Asia-Pac chief. Paul Skelton, a long-time HSBC man, has been named by the firm as its new Regional Head of Commercial Banking, Asia-Pacific. Here’s what Simon Cooper, HSBC’s Global Head of Commercial Banking, had to say:<br /> “Paul brings with him a wealth of experience from both MENA as well as from his time within Asia-Pacific. He will focus on capturing the region’s emerging wealth by connecting corporates to opportunities across the world, with a renewed focus on China’s Pearl River Delta as well as the rising Asean.”<br /> Skelton was previously Regional Head of Commercial Banking for HSBC Middle East and North Africa, a post he held after spending 13 years in HSBC’s corporate and investment banking business in the Asia-Pacific region. He will report to the aforementioned Simon Cooper, as well as to Peter Wong, the firm’s Deputy Chairman. Global Trade Review</p> <p>BAML appoints Greater China equities head. Xia Yang, a 10-year veteran investment banking veteran, has been appointed Head of Greater China equities by Bank of America Merrill Lynch.</p> <p>Yang joins BAML from the Swiss giant UBS, where he was most recently Head of Equities for UBS China and chairman of UBS Futures China. He spent almost a decade at the firm, working at its Tokyo office from 2005 to 2007 and at its Hong Kong office from 2007 to 2012 before relocating to Shanghai. He will report to Olivier Thiriet, Head of Asia-Pacific equities for the American firm. Finance Asia</p> <p>RBC loses fixed income boss. Frédéric Lainé, an old hand in Hong Kong’s fixed income trading scene, has reportedly left RBC Capital Markets sometime this month.</p> <p>Lainé, who has over 20 years of rates and currency experience under his belt, was the Canadian firm’s Head of Fixed Income and Currencies for Asia the past four years. Prior to joining RBC, he was Asia ex-Japan chief of Credit Agricole’s Financial Institutions Group, and served the French firm as its Asia ex-Japan fixed income trading head from 2004 to 2010. Before that, he spent 12 years at Credit Lyonnais, with his most recent post there being Head of Interest Rate Derivatives, Asia ex-Japan. Global Capital</p> <p>For Asset Management moves, click here.<br /> Photo: Wendy</p>
Asia's bulging unicorn birth rate is close on US heels
<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>
China’s President Xi and his reform agenda – really
<p>&nbsp;</p> <p>Thanks to misguided stories about President Xi’s reforms, America risks losing the opportunity to participate appropriately in China’s massive economic rebalancing and reform drive.</p> <p>In their Animal Spirits, George A Akerlof and Robert J. Shiller, two Nobel Prize winners, show how human psychology drives the economy and why it matters for global capitalism. In particular, they show how stories move markets and are themselves a real part of how the economy functions.</p> <p>The same goes for other economies, including China. What “we” in America know about China is filtered through aggregate stories by Washington’s political pundits, policy wonks, economic analysts, and news oracles. Some stories reflect realities; others don’t. Still others are misguided and flawed, while the rest have self-serving agendas.</p> <p>As President Xi Jinping is in his first official state visit in the U.S., he remains an enigma to most Americans – not in spite of these stories, but because of them.</p> <p>Stories about Xi’s secret agenda</p> <p>After his first year in power, leading media, such as Bloomberg, reported that “Xi amassing most power since Deng raises reform risk.” After two years, the Chinese president was portrayed in the West as “Xi who must be obeyed” as The Economist put it in its cover story, calling him the most powerful Chinese ruler certainly since Deng, and possibly since Mao.</p> <p>What united these stories, which quickly spread across the world via lesser-tier media channels, was their common denominator: Xi had acquired too much power.</p> <p>More recently, Washington’s stories would like us to believe that the problem with President Xi is not that he has too much power, but that he is increasingly powerless.</p> <p>The new conventional wisdom came about after Chinese equity market volatility, which the Financial Times thought showed that “Xi’s imperial presidency has its weaknesses.” That wisdom was quickly seconded by the Wall Street Journal, which reported that crises put dents in Xi’s armor as “Chinese president is looking more vulnerable than at any time since taking office in 2012, insiders say.”</p> <p>Despite the demise of the Cold War, the West’s old imperial inclination to see the world through the glasses of good (“we”) and evil (“they”) permeates the Xi biographies. From Foreign Affairs and Foreign Policy to the Atlantic and the New Yorker, the story starts with an “insider” anecdote, a political recollection or recent event that presumably serves as an intro to the Xi narrative. In reality, it is a Potemkin bridge because of its basic point: If you serve in a Communist Party, you are “Born Red,” as Evan Osnos entitled his Xi story in the New Yorker – not one of “us” but “them,” and thus neither credible nor trustworthy.</p> <p>Xi’s policy stance d</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>
Daily Scan: Japan ends higher on BOJ hopes, rest of Asia dips on choppy trade
<p>Updated throughout the day</p> <p>September 25</p> <p>Good evening. The Japanese Nikkei 225 index ended on a upswing of nearly 2%, riding on a wave of optimism triggered by hopes that the Bank of Japan (BOJ) will step up easing at its October policy meeting. Prime minister Shinzo Abe met with BOJ governor Haruhiko Kuroda today following disappointing inflation data released early in the morning, the consumer-price index  fell for the first time in two years.</p> <p>The rest of Asia was largely down following a choppy day of trade, thanks to lingering growth anxiety. China markets closed lower: the Shanghai Composite Index is down 1.6%, while the Shenzhen Index finished down #.4%. Hong Kong's Hang Seng index rebounded before closing to finish up 0.4% but was still down for the week by 3.4%</p> <p>Here’s what else you need to know:</p> <p>Abe announces goal to boost Japan’s economy by 20%.Speaking at a news conference, Japanese Prime Minister Shinzo Abe announced his goal to expand his nation’s economy from around $4.05 trillion to $5 trillion. The Nikkei and the Topix sure loved it, but how he plans to do it is totally up to speculation. Wall Street Journal (paywall)</p> <p>PBOC: long term yuan depreciation “unlikely.” Sheng Songcheng, the head of statistics at People’s Bank of China, said in a speech that a long-term drop in the yuan’s value will be unlikely due to several factors including the nation’s higher domestic interest rates and fairly strong economic growth. MarketWatch</p> <p>Yellen receives medical attention. After struggling to finish the last few lines on her speech on inflation, Federal Reserve Chair Janet Yellen was seen by the medical staff at UMass Amherst for possible dehydration. She’s feeling much better now though, and appears ready to let rates rock. Reuters</p> <p>JP Morgan still knows how to make money. Its metals storage and commodity businesses may have posted a loss last year but that doesn’t mean JP Morgan doesn’t know how to make money out of it. Filings show that just before it sold loss-making commodities unit, Jamie Dimon’s port in the storm managed to grab a one-time $150 million dividend. Reuters</p> <p>Macau casino losses pile up.Much like some of its clientele, Macau’s casinos are losing money at a fast clip. After posting a 36.5% year-on-year revenue dive, the casino sector’s daily run rate slipped 19% from the week before and 18% from the quarter’s average, prompting people to withdraw their deposits from various junkets. SCMP (paywall)</p> <p>Cushing drawdowns spike oil prices. Oil prices climbed as much as 1% today after energy intel firm Genscape estimated a 625,000 barrel drawdown out of the Cushing, the mammoth delivery hub of the U.S. oil industry. The estimate came after a 462,000 barrel stockpile drop reported by the EIA, compounding supply worries. Reuters</p> <p>August home sales rise. The revision of new single-family home sales in the U.S. shows a 5.7% rise last month. Reuter</p>
Prosper Marketplace acquires BillGuard
FinTech
<p>Prosper Marketplace is strengthening its competitive stance through an acquisition of financial security startup BillGuard.</p> <p>Prosper Marketplace, an online loan market, is hoping the addition of BillGuard will help them edge out their competitors, reports the New York Times. Lending Club, OnDeck, and other online lenders have seen their stocks drop sharply this year. Prosper has also struck up deals with companies like American HealthCare Lending, which helps finance elective surgeries.</p> <p>The BillGuard deal, valued at about $30 million, is mostly in cash, with some stock as retention incentives for BillGuard staff. BillGuard services will add fraud monitoring and financial management to Prosper.<br /> "It really takes us from being a one-dimensional marketplace to potentially a multiproduct company providing more value," says Stephan Vermut, executive chairman at Prosper Marketplace.<br /> Photo: Simon Cunningham</p>