Tue. May 24th, 2022

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Create one to get started: Nelson Peltzactivist hedge fund Trian Partners has a pole built in Unilever, which increases the pressure on the FTSE 100 company after its failed pursuit of GlaxoSmithKline‘s consumer health business.

Michael Hintze warns of China’s Covid strategy

Last week I caught up Sir Michael Hintze, founder of $ 21.6bn London-based hedge fund CQS. He believes that geopolitical events are even more likely to be felt in markets this year. One area he is particularly concerned about? Already supply chains stretched, and especially how China’s zero covid policy (ahead of the Beijing Winter Olympics next month) creates bottlenecks for materials such as copper, lithium and rare earth metals, and inhibits the energy transition.

Hintze says:

“In the UK, we are approaching herd immunity due to the Omicron variant and high vaccination rates, so that we can increasingly live with the virus. In China, where they did not do so, they had to shut down most of their economy to fight the pandemic. And it has a huge impact on the global supply chain. ”

In this environment, he thinks that individual countries should consider their own supply chain sovereignty and domestic production facilities, which drive the supply of semiconductors, chemicals and raw materials ashore.

“When it comes to supply chains, we need to think about geopolitics,” said Hintze, whose flagship fund recovered last year after a difficult 2020. “It’s about sovereignty, it’s about resilience, unfortunately it is also inflationary, because it is less efficient and it causes inequality if you are not careful. So this is a very big issue. “

What do you think is the biggest geopolitical risk for markets in 2022? Email me: harriet.agnew@ft.com

The two headwinds facing sustainable funding

Environmental, social and management funds are furious and climbed to record levels last year. But they have a more uncertain outlook in 2022, like my colleague Adrienne class reported here analysis. There are two key pressures: rising research costs and hits for the major growth stocks that have helped drive their performance.

$ Mjd bar graph indicating ESG cost increased as research budgets were cut

In Europe, research budgets at asset management houses more than halved between 2016 and 2022, according to estimates by Frost Consulting, since the companies started financing them from their own budgets instead of through investor fees under Mifid II reforms. At the same time, the cost of managing ESG strategies has increased as funds have launched and grown, and this could overshadow overall research budgets by 2024. All of this is already affecting thin margins and potentially jeopardizing sustainable strategies if a market correction takes hold.

Meanwhile, many ESG strategies have been exposed as growth or technology funds with a different name. At the end of December, the top positions in the world’s 20 largest ESG funds, which together manage some $ 340 billion in assets, were technology giants. Microsoft, Googleparent company Alphabet and appeal, According to Rumi Mahmood, Vice President of ESG Research at MSCI.

Although technology stocks were big winners during the pandemic, they have suffered a setback since the turn of the year – fueling speculation that a more sustained rotation of value strategies is in sight than the US Federal Reserve begins to extract Covid-era monetary stimulus.

David McCann, stock analyst at Numis, said:

“This year will be an important test for the ESG industry. I’m not convinced that 100 percent of people who buy sustainable funds do so for purely environmental and ethical reasons. Many are in it as ‘tourists’ because it happened to be the best performing funds. ”

Crypto clampdown collects steam

Base at the UKs Financial Conduct Authority said the fight to combat crypto advertising. The regulator’s chair Charles Randell said to a parliamentary committee in December: “While walking around London and seeing things on the sides of buses, the first thing I do is call the office and ask, ‘What can we do about this?'”

Until this week, the answer was “not much”.

Ads like the famous The moon promotions “When you see Bitcoin on the Underground, it’s time to buy” and anonymously backed up “memecoin” Floki Inu ‘s marketing flash has spread across the country and online.

Now, Chancellor Rishi Sunak has given the FCA the task of bringing crypto promotions in line with the strict rules for other high-risk investments. And he is not alone indicates a suppression, reported my colleague Joshua Oliver.

Spain lead the European repression of crypto-promotions, unwilling to wait for the icy EU regulatory process to tackle what it sees as an urgent consumer protection issue. And Singapore went even further by banning parts of crypto advertising altogether.

We FT Money columnist Merryn Somerset Webb have some thoughts on this:

“I can not imagine what a crypto ad would be like all this – beforehand about no return, no obvious fundamental value and no accepted valuation method, for example – and still be compelling. Something to look forward to.”

And she also has a word for investors who are quick to spot with crypto losses. Go check it out what are your own portfolios – especially long-term assets in technology and ESG that seem vulnerable as interest rates rise.

Chart of the week

Line chart rebased to 100 showing Berkshire Hathaway catching up with Ark's flagship innovation fund

Want to see a sharp example of the rotation between growth and value investment styles? Look no further than the Sage of Omaha and the “Queen of the Bull Market”. Cathie Woodsay flagship Ark Invest fund is on the threshold of catch up by Warren Buffettsay Berkshire Hathaway in the performance table, after a shift in fortune between the two prominent investors. This year has been particularly difficult for often unprofitable technology growth stocks favored by Wood, and strong for the more stable stocks that are Buffett’s hallmark. The power of the shift has raised eyebrows over markets.

11 indispensable asset management stories this week

Our condolences to the friends and family of Here Paul Myners, who died at the age of 73. Here is John Plendersay obituary of Miners, the opposite of a conventional City grandee. And in this moving reminder, retail veteran Lord Stuart Rose shares his memories of “a very big man in a fairly mediocre world”. He recounts the period in 2004 when he joined Miners at M&S and they repulsed a hostile bid from Philip Groen.

Brookfield Asset Management, the Canadian investment group best known for its real estate, infrastructure and private equity investments, is expanding its hedge fund business to Europe. It’s opening a office in london and began hiring for its multi-strategy division, one of the most profitable – and competitive – corners of the industry, dominated by the Citadel and Millennium Management.

BlackRocksay Larry Fink reject accusations of “waking up” in his annual letter to CEOs, following attacks by U.S. conservatives. Stakeholder capitalism is just good business, says the head of the world’s largest asset manager.

Terry Smith is also on the wake of war with new attacks on Unilevermanagement. They responded to poor performance at the global consumer goods company with “meaningless platitudes”, says the Fundmaker founder.

Oil prices have rose higher in 2022 as buyers eye patching production and an unstable geopolitical landscape. Can we reach $ 100 a barrel this year?

Investors are on a shopping spree for bargaining firms in unloved corners of Europe’s stock market, as central banks’ plans to relax their powerful stimulus programs dampen the allure of glamorous technology companies.

The late-night witchcraft, when ghouls and witches are most powerful, also produces some ghostly movements in stock markets. Robin Wigglesworth investigation the strange case of shares at night.

Black stone‘s purchase of $ 6 billion Home Partners is the private equity group’s bravest bet on property since the negative crisis. Its rent-to-buy model offers the promise of home ownership to more Americans, but does the company sell false hope?

“Asset management has changed more over the past dozen years than in the past three decades,” he said. T Rowe Price head Bill Stromberg. Here is his view how to manage teams who are tired of the pandemic and the pace of change. (A tip: you can not just raise their wages.)

Central banks’ hawks and pigeons play chicken on how aggressively to fight inflation, writes market editor Katie Martin in a column on what to expect from the key economic decisions of 2022.

A succession of private equity firms raised piles of cash by going public. But another group of executives raised capital more discreetly – by selling record amounts of debt.

And finally

Albrecht Dürer says 'Christ under the Doctors'

‘Christ under the Doctors’ (1506) by Albrecht Dürer © WIktor Szymanowicz / NurPhoto via Reuters

To the National Gallery, and the first major British exhibition of German Renaissance artist Albrecht Dürer in almost 20 years. The exhibition follows Dürer’s travels across Europe, charts his travels to the Alps, Italy, Venice and the Netherlands, and explores how they sparked an exchange of ideas with Dutch and Italian Renaissance artists.

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