I would like to conclude our online reporting for 2010 with a retrospective on a dozen of our team’s best online stories. These aren’t necessarily the ones that received the most hits, but ones that represent the major themes in the region’s asset-management industry.
Two themes stand out. First is the heavyweight role China has come to play in asset management, particularly in its ‘Greater China’ form. It’s a trend that dominates our thinking, and informs the themes I have outlined in the magazine. Second is the growing importance of alternative investments, because investors want the returns, the off-benchmark access, and the risk structures these can provide.
12. Schroders China JV suffers ETF embarrassment, by Liz Mak, January 4. We kicked off the year with an exposé that reveals the extent to which capital-market development and risk management in China are works in progress. This story was also a warning signal that the rise of exchange-traded funds in Asia still faces impediments, particularly in China, where stock-index futures are not yet widely traded.
11. Galaxy to launch first Ucits China long/short fund, by Joe Marsh, June 14. This story reflects the huge popularity of European Ucits structures among Asian distributors, and the fear of European regulation that will require Asian hedge funds to jump through more hoops to attract European investors. This product by the respected hedge fund Galaxy Asset Management is seen as a harbinger of things to come.
10. Divorce battle emerges over VinaCapital shareholdings, by Joe Marsh, December 20. I was originally going to include ‘John Shrimpton leaves Dragon Capital’ (Jame DiBiasio, January 6) about problems that led the Vietnam-based investment pioneer to have to restructure its management. But obviously matrimonial spats at another Vietnamese asset manager (the biggest one, too) is the trump card, particularly since it was an interview with AsianInvestor that brought this to light. Since last year when Indochina Capital’s shareholders voted to close down that fund, the entire industry seems to be in chaos. Vietnam’s financial services industry is rapidly headed toward banana-republic territory, which suggests Hanoi really needs to get serious about liberalisation and reform.
9. Twilight for Asian distressed prop desks? By Simon Osborne, May 18. An early look at the impact of the Volcker Rule, Paul Volcker’s idea of forcing investment banks to shed their hedge-fund and private-equity prop trading desks, combined with the failure of distressed assets in Asia to become the gold mine that many banks had expected post-crisis. This story detailed some of the banks that were pulling back from special situations well before the Volcker Rule became US law.
8. Call for clampdown on China hedge funds, by Leanne Wang, November 18. This is a technical story about reporting requirements that reveals the bigger questions about the future of asset management in China. The regulated funds industry is now seriously threatened by the grey market of private funds, locally referred to as ‘hedge funds’. Calls by industry executives to allow share options or individual ownership of mutual-fund companies have gone nowhere, and a big theme for 2011 is going to be to what extent the industry adopts best practices to see off the private funds – and to what extent the private funds institutionalise and become dominant.
7. Pimco eyes growth in active equity, Asian bonds, by Leigh Powell, September 28. This story touches on a few key themes from 2010. First is the fact that bond houses are scrambling to find products other than core US Treasuries, where yields are too low. (This is a reflection of the Federal Reserve’s deliberate policy to push investors into risk assets.) The second is the increasing desirability of investing in Asian fixed income, an asset class we featured extensively in our magazine as well. Third is the trend by fixed-income houses to blend in things such as high yield, emerging market debt and even equity to create ways for investors to access higher-return markets.
6. Arrowhead attracting equity traders to Japan, by Jame DiBiasio, January 4. The Tokyo Stock Exchange’s new trading platform, Arrowhead, went live this day. The result was a clear pattern of falling trading costs, which has attracted a range of new investors to the region, notably high-frequency traders. New technology and the investment strategies it enables will reshape equity markets across the region, as some of our other stories have shown (see Alternative trading venues will take off this year in Japan, says Instinet by Cate Rocchi; High-frequency traders to market: you need us, by Jame DiBiasio; Black-box traders need transparency, says quant veteran, by Jame DiBiasio; and Chi-X continues Asia march with Tokyo launch, by Joe Marsh).
5. Bank of Singapore unveils plans, by Joe Marsh, February 1. Private banking has been a major theme this year, particularly in our coverage of people moves. Private banks have been aggressively hiring and fund manufacturers are pinning hopes on this channel to revive their wholesale business. Among the more interesting moves was OCBC’s acquisition of ING’s regional private bank, rebranded as BoS, which then went on a massive hiring spree. This makes it a bellwether for the new business model of aggressively hiring relationship managers for Asia’s rich.
4. The “real” China headline for 2010, by Simon Osborne, February 4. In an interview with AsianInvestor, Aaron Boesky of Marco Polo Pure Asset Management said the big event of the year was going to be based on the settlement of China’s debts with commercial paper and bonds denominated in renminbi, thus internationalising the currency via the path of trade. This indeed became a dominant theme of our reporting throughout the year, as well as the subject of a conference we organised.
3. Who are Asia’s hedge fund hotties for 2010? By Simon Osborne, June 2. This piece broke the news of Benjamin Fuchs spinning off his multi-strategy prop desk from Nomura two months before it ran on Bloomberg. The story predicted how many prop-trading stars were going solo, often backed by the parent group’s capital, in the face of both regulatory pressures and new business opportunities.
2. Income Partners to launch RMB credit fund with banks, by Jame DiBiasio, November 18. This was the most high-profile product launch this year to emanate from China’s project of internationalising the RMB. Income Partners has a long history as a regional bond house and had the experience, independence and nous to approach investment banks and corporations to help jumpstart the offshore RMB bond market. Other products like this will follow. This story is just one of several from AsianInvestor that have covered the offshore RMB investment story this year, including 'Fund managers eye renminbi opportunities in Hong Kong' (by Jame DiBiasio and Joe Marsh) and 'UBS and Schroders lead charge into privately placed RMB funds' (by Leanne Wang).
1. Temasek confirms hedge fund plans, by Simon Osborne, February 9. Our alternatives editor Simon Osborne broke this story about Temasek setting up Seatown Holdings with Charles Ong as its CEO. It represents the first time a sovereign wealth fund has embarked on building its own platform for hedge funds, rather than relying on external funds of funds or direct investments. With an estimated $3 billion of seed money, Seatown should easily become the region’s biggest manager of hedge funds.