David Hsu is retiring from JP Morgan Asset Management after 25 years of service, which culminated in his appointment as chief executive of the Asia-Pacific business.
He will be replaced by Clive Brown, who is transferring from London to Hong Kong. Brown’s responsibilities are not actually changing; he is chairman of JP Morgan AM’s international business and COO of its global business (that is, including North America).
“He’s moving to Hong Kong because Asia is so important to the franchise, we need his seniority here,” explains a company spokeswoman. “And he knows the people and the culture here,” she adds, noting that Brown has more than a decade of experience working in the region.
Brown, who officially takes up his Hong Kong role on April 4, will continue to report to New York-based Mary Erdoes, CEO of JP Morgan Asset Management, including the wealth-management arm, the private bank and the portfolio management businesses.
Hsu will remain on the board of directors at China International Fund Management, the Chinese joint-venture company in Shanghai which he played a key role in establishing.
He is believed to have plans to remain active in the asset-management world in Hong Kong, although JP Morgan and Hsu declined to comment.
Hsu’s educational vocation was transport management, but he ended up as a young man in his 20s running the operations of one of Taiwan’s first generation fund houses, Kuanghua Investment Trust. Hsu effectively ran the company, but without the title.
That was vintage Hsu, as his industry friends and colleagues explain – hard working but incredibly modest. Hsu hates the limelight and declined to be interviewed for this story (although he did agree to speak at AsianInvestor’s 10th anniversary seminar in September 2010).
It was while working at Kuanghua in the early 1980s that he encountered Blair Pickerell, then a 20-something young gun at Jardine Fleming who had been sent to Taiwan by JF’s then chairman Alan Smith.
Smith says at the time he expected Taiwan to develop as a market for US and European capital. He didn’t think it would become a funds market in its own right because of capital controls; Taiwan had its own QFII regime back then.
But then Taiwan scrapped those controls, allowing money to flow out, and the funds industry blossomed (Taiwan remains today the biggest market in Asia for offshore funds).
“Together, Blair and David proved to be significant players, because they were so flexible,” Smith recalls.
JF was the first foreign asset manager to open doors in Taiwan, and when Pickerell wooed the de-facto head of Kuanghua to join him, it caused a stir.
But Pickerell, Hsu and two other Pickerell hires (Christina Hung, who’d go on to run the Taiwan business for JF before retiring, and Pickerell’s redoubtable PA, Rosetta Koo), went on not only to build a business, but also to change the industry.
The team was the first to place Taiwan shares to foreign investors, the first to underwrite Taiwanese convertible bonds, and the first to manage a takeover of a locally listed company by foreign shareholders.
But, most importantly, the JF team was the first to convince a commercial bank to distribute their funds. The first in the world, Pickerell says.
He and Hsu convinced the elderly executives of the Farmer’s Bank of China that the future of commercial banking included fee-based income. “We shared more hotel rooms than I care to mention,” Pickerell says, as they criss-crossed the island introducing branch managers to the basics of mutual funds.
The model worked. The first JF fund raised $50 million in 1987, a fortune, and JF then replicated it in Hong Kong with Chase Manhattan (which, in one of those strange twists of fate, would later acquire JF and then in turn be acquired by JP Morgan).
Hsu stayed with the company after Pickerell moved on and spent a lot of time developing its regional business. Although he was active in many markets such as India, his next big legacy was the Shanghai JV with Shanghai International Trust Investment Company, a project in which others such as former Taiwan COO Steven Lee and Beijing rep Adam Williams also played important roles.
JF used its experience in Taiwan – with the processes, the language, the distribution model – to help mould the mainland business. They were the first to get a securities licence in markets such as Shenzhen, and were among the first foreign private-equity players in China, although this may be a chapter Hsu would rather forget.
“When the last fish died, I knew it was time to move on,” Smith remembers, citing failed adventures in duck farms and restaurants. “I think we did about 10 deals, and each one ended in disaster.”
Pickerell adds one more anecdote that sums up a career of behind-the-scenes diligence. Hsu was not only managing JF’s Taiwan portfolios, he was also typing up client statements, in a protean form of reporting. Picture him with a trading terminal to one side, his computer on the other, and in his lap, a manual on how to type in Chinese.
“He didn’t know how to type,” Pickerell says.