Greenwashing Risk Grows in China ESG Funds

Chinese asset managers are improving ESG awareness, but weak regulation means green claims often don’t match reality, says Greenpeace.

Greenwashing is a growing risk in the Chinese fund management sector, as marketing of ESG products runs ahead of standards and regulatory oversight, a new report by Greenpeace has found. The environmental campaign group’s study of 16 major Chinese asset managers found they had improved their awareness of climate risk…

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Sovereign Wealth Funds’ Social Focus

Ana Nacvalovaite, Research Fellow at the University of Oxford, explains how investing in employee-owned businesses can help sovereign funds create prosperity for future generations.

Sovereign wealth funds’ (SWFs) assets under management (AUM) hit an all-time high of US$11.2 trillion globally in 2023, according to the Global SWF Annual Report 2024. But they invested less, and less often, than in 2022. The challenging macro environment – including geopolitical conflicts and volatile markets – led to…

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Investors shifting to private credit as bonds lose hedging appeal, says Bobby Jain

Bobby Jain, founder and CEO of New York-based hedge fund firm Jain Global, said that hedge funds face growing competition from private credit firms for investor capital, on a panel at the UBS Singapore Family Wealth Forum on Thursday, according to reports. 

At the event, which was attended by around 300 UHNWIs with at least $30m in investable assets, the former Millennium Co-CIO noted that investors who once relied on bonds to hedge against stock market volatility are now seeking alternative, “uncorrelated” asset classes, of which private credit “has taken up a lot”. 

Jain explained that the traditional 60/40 portfolio model, which allocates 40% to bonds, is becoming less effective. Historically, bonds have rallied when markets falter, providing a hedge against equity market downturns. However, Jain added: “Now (buying bonds to hedge equities) is not obvious anymore. The equity market could go down because the bond market goes down.” 

Despite challenges in fundraising for venture capital and private equity funds, Jain described the environment for alternatives, including hedge funds and private credit, as “reasonable”, adding that many investors are still “underweight” in this area. 

Jain Global is set to launch next month with at least $5bn, having initially planned to raise $10bn. The hedge fund firm is expected to employ over 30 staff members in Asia, according to an earlier report by Bloomberg, leveraging a management model that will give local leaders key responsibilities like hiring and risk management. 

Preqin’s latest private markets outlook predicts that the private credit market will nearly double to reach $2.8tn by the end of 2028. 

Astorg adds London partner and New York MD

European private equity firm Astorg has added Chris Benson as a London-based partner for its mid-cap fund and Daniel Pang as a New York-based managing director for its flagship fund within the healthcare team. 

Benson will join in July, leading business services across Europe as well as coverage in the UK. Astorg’s mid-cap fund has previously invested in IQ-EQ, Normec, Fastmarkets, Third Bridge, Steliau and IPCOM. 

Benson was most recently a director at global private equity firm Advent International, where he worked on the acquisitions and value creation of Seedtag, Evri, Hermes Germany, Williams Lea, Tag, V.Group, Nexi, Worldpay and Towergate, according to his LinkedIn profile. 

As part of the healthcare team led by Judith Charpentier, Pang will identify and build healthcare businesses that “solve critical pain points in the B2B value chain”, according to a press statement, such as existing investments Clario and Corden Pharma. 

Pang was most recently a principal in the healthcare group at Welsh, Carson, Anderson and Stowe. He has also worked at Arsenal Capital Partners and GTCR. Pang started his career in investment banking at Merrill Lynch, as part of the global mergers and acquisitions group. 

 

Lazard pursues private credit acquisitions for asset management arm

Global financial advisory and asset management firm Lazard is exploring opportunities to acquire a private credit firm to enhance its $250bn asset management division, according to a report by Bloomberg. 

In a Bloomberg Television interview on Thursday, CEO Peter Orszag indicated that the company is “in the mix, evaluating lots of options” within private markets. Lazard is particularly interested in acquiring firms specialising in private credit, infrastructure, real estate and areas where it currently has limited presence. 

Orszag emphasised: “We’re going to be very cautious as we go through this, both on the pricing — to make sure it’s in shareholders’ interest to do some of these acquisitions — but also on culture. 

“Because you can get something at the right price and, if there’s not a good cultural fit, it still doesn’t work.” 

Orszag, who took over the 175-year-old investment bank late last year, aims to double revenue by 2030, targeting equal growth in both the advisory and asset-management units. 

Similarly, JPMorgan Chase & Co has also been on the lookout for a private credit firm to strengthen its asset management business. Earlier this year, JPMorgan held talks to acquire Chicago-based Monroe Capital, though the negotiations did not lead to a deal. 

Last year, the Abu Dhabi wealth fund ADQ initiated preliminary talks to acquire Lazard, though discussions quickly fell apart over concerns about maintaining Lazard’s independence. 

Investment Week reveals winners of Fund Manager of the Year Awards 2024

A flagship event for the investment industry for nearly three decades, the Investment Week Fund Manager of the Year Awards honour fund managers who have demonstrated consistently strong performance for investors.  This year’s awards ceremony at the JW Marriott Grosvenor House Hotel was hosted by comedian Tom Allen. We also raised money on the night for CASCAID in support of The Rainbow Trust, which supports families who have a child with a life-threatening or terminal illness.   Choosing the winners Our awards shortlists were constructed using data provided by our partner, Morningst…

UK retail sales rebound in May on warmer weather

According to the Office for National Statistics, retail sales volumes increased by 2.9% in May, up from 1.8% recorded a month before (revised from 2.3%). Over the year to May, sales rose by 1.3%, however, they remained 0.5% below their pre-COVID levels in February 2020. The largest monthly increase came from non-store sales – comprising mostly online retailers, but also stalls and markets – which rose by 5.9%, mostly on the back of strong clothing and other non-food sales. Textile, clothing and footwear retailers came second, registering a 5.4% increase from the previous month, follow…

China has spent at least $230 billion to build its EV industry, new study finds

China spent $230.8 billion over more than a decade to develop its electric car industry, according to the Center for Strategic and International Studies. The scale of government support represents 18.8% of total electric car sales between 2009 and 2023, said Scott Kennedy, trustee chair in Chinese Business and Economics at CSIS. “There are some exceptions, but in general Western automakers and governments have dilly dallied and not been aggressive enough,” he said. Workers assemble a Wuling Hongguang Mini EV, an all-electric microcar manufactured by SAIC-GM-Wuling, at a plant of the joint automaker in Qingdao in east Chinas Shandong province Tuesday, Nov. 30, 2021. Future Publishing | Future Publishing | Getty Images

BEIJING — China spent $230.8 billion over more than a decade to develop its electric car industry, according to analysis published Thursday by the U.S.-based Center for Strategic and International Studies.

The scale of government support represents 18.8% of total electric car sales between 2009 and 2023, said Scott Kennedy, trustee chair in Chinese Business and Economics at CSIS. He noted the ratio of such spending to EV sales has declined from more than 40% in the years prior to 2017, to just above 11% in 2023.

The findings come as the EU plans to impose tariffs on imports of Chinese electric cars over the use of subsidies in their production.

Last month, the U.S. announced it was raising duties on imports of Chinese electric vehicles to 100%.

There are some exceptions, but in general Western automakers and governments have dilly dallied and not been aggressive enough. Scott Kennedy trustee chair in Chinese business and economics, CSIS

Kennedy pointed out that Beijing’s support for electric cars has included non-monetary policies that favored domestic automakers over foreign ones. But he also noted that the U.S. has not created conditions that are as attractive as China’s for developing its own electric car industry.

“There are some exceptions, but in general Western automakers and governments have dilly dallied and not been aggressive enough,” he said. Kennedy had laid out seven policy initiatives in a report four years ago about potential trade tensions from Chinese electric cars.

Government subsidies did not necessarily go straight into

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Partner Insight: Has the European credit cycle been extended?

Key points:

Despite lingering inflation and heightened rate volatility, credit markets remained strong in the first four months of 2024. We believe the European credit cycle has been extended due to robust corporate and consumer balance sheets and changes in private sector behaviour. This means investors can continue to benefit from investment-grade credit’s historically attractive yields. Nevertheless, we recognise potential risks to the cycle. An active, nimble and liquid approach, grounded in a thorough understanding of the cycle, should, in our view, position investors to manage risk better and take advantage of the current market and any dislocations as they arise. Volatility in government bond markets, but calmness in credit markets

So far, 2024 has kept fixed income investors busy, with a blockbuster new issuance calendar, a pivot from the Bank of Japan and heightened geopolitical tensions in the Middle East all competing for the market’s attention. Yet inflation stubbornly lingering above target — has remained the dominant theme, resulting in increased government bond yield volatility as the market has walked back expectations for central bank rate cuts throughout the remainder of the year.

Credit markets, however, paint a different picture. European credit markets have remained notably strong. Spreads have tightened, supported by robust corporate balance sheets, a resilient consumer and favourable market technicals. Yet despite tightening, European investment-grade credit continues to look appealing, providing historically high all-in yields of 3.9%, allowing investors to benefit from attractive income without the need to take excessive risks. What do investors need to know about opportunities in European credit and what could the rest of the year hold?

Understanding the cycle

Understanding the credit cycle — the recurring phases of expansion and contraction in the availability of credit — is a crucial ingredient for successfully managing European investment-grade credit portfolios. Specifically, by anticipating changes in the cycle and dynamically managing overall credit exposure, we aim to participate in the upside while preserving capital on the downside. Put simply, there are times we want to have more exposure to credit, and times we want to have less. Through our active approach to managing credit risk, we seek to insulate clients from the volatility of the credit cycle and aim to provide them with a smooth, consistent return stream of outperformance.

We seek to understand the cycle by paying close attention to the strength of corporate balance sheets, the resilience of the

European markets have been on a wild ride

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Good morning. This is Harriet Clarfelt, standing in for Mr Armstrong as he takes a much-deserved day off. Complaints to him, any other comments to me, please: harriet.clarfelt@ft.com.

I myself was on holiday just last week; something that Rob perhaps took into consideration as he sought out a well-rested colleague, fresh from sunnier climes.

Little chance on the weather front, given that I ventured back to my hometown, London. But, usefully, a brief hop across the continent to Austria and France did prompt me to take a closer look at European markets. (And dumplings, schnitzel and many other starchy food products . . .)

Which leads me on to . . . OATs

French government bonds, aka OATs (short for obligations assimilables du Trésor), have had a volatile time since President Emmanuel Macron called snap parliamentary elections two Sundays ago.

The 10-year French bond yield surged last week as the price of the instrument fell, and the spread or gap between French and German benchmark yields — seen as a barometer for the risk of holding France’s debt — rose to more than 0.8 percentage points last Friday, its widest level since 2017.

As has been well-documented by my colleagues, other French markets have also come under pressure over the past fortnight as investors digested the possibility of a far-right government with big spending plans, and the formation of a leftwing bloc that could erase Macron’s centrist alliance.

Last week marked the worst decline for the Cac 40 index since 2022, and — as I’ll discuss — European corporate borrowing premiums leapt higher.

So: 1) What do those higher premiums mean for companies with euro-denominated debt obligations? and 2) Could this bout of volatility present an opportunity for would-be investors?

My answers, in brief, are: 1) Companies tapping the European investment-grade bond market now have to pay the highest premium in several weeks to issue debt — not ideal if you’d been planning to get a big deal away any time soon.

And 2) Maybe — if you believe that any further turmoil will be shortlived beyond the two-round French political contest taking place on June 30 and July 7. Although, of course, individual credit selection is crucial — and then there’s the fact that France is far from