MAS names sustainability head; Malaysia’s EPF appoints COO and CFO; GIC PE head for SEA leaves; State Super hires new exec; Hesta appoints chief growth officer, chief Debby Blakey appointed to corporate governance board; ex-BlackRock exec joins IQ-EQ in Singapore; HSBC AM builds direct real estate team; ex-Vanguard head of distribution joins LGIM; Sanne names Singapore head; and more
The A-share market boom this year has put some fund companies in the black for the first time but has also generated higher turnover and demands for higher salaries in an already tight jobs market, says Peter Alexander of Z-Ben Advisors, a consultancy in Shanghai.
As a result companies have increased lobbying activity for the introduction of share incentive schemes, which are not allowed under regulations which deem that all shareholders be treated fairly, which implies equal access to stocks.
Some fund executives are also concerned about talented people leaving China to gain experience overseas. Local firms suffer the most because their most talented people often defect to foreign-invested fund companies, which are growing assets at a faster rate. Hong Kong has been the most popular destination, where firms can offer share option schemes in lieu of big salaries to mainland talent.
Alex Wong, partner at PricewaterhouseCoopers in Shanghai, argues most such moves involves mainly low-level staff who are blocked from promotion by higher-performing fund managers. Good portfolio managers and researchers are in particular demand.
Steve Lee, CEO at Shanghai-based fund management joint venture HSBC Jintrust, says the high turnover of staff is a major reason companies are trying to push through share incentive schemes. ôA lot of managers are going to companies in Hong Kong,ö he says. ôMany of the more established fund managers in China have lost staff to overseas companies.ö
A typical story is China Asset Management in Beijing. Pearl Chen, senior manager, says the company has lost senior staff recently, including two fund managers and a vice president, but adds that the company has invested time and effort to establish a loyal research team.
Wong at PwC reckons, however, that hot fund managers in mainland companies won't be tempted to move to Hong Kong because the A-share market is so buoyant, and because many fund companies, such as ChinaAMC and China International, have enjoyed amazing performance, handily beating the local indices. That means their ability to accumulate and retain assets under management will translate into more fees and higher bonuses.
He reckons the introduction of share-incentive schemes could be counterproductive. It is blamed for diluting performance and unsettling investment teams in markets such as the United Kingdom, where annual portfolio manager turnover runs over 50%.
Industry executives note that while companies may be now pressing the government to allow stock options, there is not yet any sign that Beijing authorities are prepared to allow these or set up a pilot scheme.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
Insto roundup: GPIF staff say J-Reits more attractive than traditional assets; Hong Kong's strict Spac criteria
EISS Super hit by another scandal; China's CSRC launches consultation on disclosure requirements for new BSE securities; Hong Kong issues consultation paper on Spacs; New World Development partners with China Taiping to focus on Greater Bay Area projects; GPIF employees say Japanese Reits have grown more attractive; Taiwan's BLF invites bid for $1.7 billion mandate; and more
SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.