BNP Paribas bullish on its new manager… and China

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David Grybas had a spring in his step last week. While introducing his renowned China experts to about 15 Australian institutional investors at a briefing in Sydney, the Australian chief executive of BNP Paribas Asset Management was also thinking about the firm’s recent deal to introduce, for the first time, a top-shelf Aussie equities manager to the wholesale and retail markets.

Having just ticked over the $11 billion mark for Australian-sourced assets under management in institutional mandates and funds, BNP Paribas has embarked on a new program for wholesale (financial planners) and retail (SMSF trustees) investors to access its suite of managers, including JCP Investment Partners, a 20-year-old firm, formerly known as Jardine Fleming, run by Michael Fitzsimmons. For the BNP Paribas distribution arrangement, Fitzsimmons has taken on the head portfolio management responsibility himself with the new strategy, which is a “high octane” concentrated portfolio of Australian shares.

JCP replaces, in the BNP Paribas line-up, Arnhem Investment Management, in which the global multi-affiliate manager had a 40 per cent equity holding, has decided to pull up stumps. Two of its funds, a long/short fund and a concentrated fund, have been closed. But the $115 million-odd in a benchmark agnostic portfolio, which is overseen by Equity Trustees, is being re-launched to the market under the new management of JCP. It will be called the ‘BNP Paribas Australian Equity Benchmark Insensitive Trust”. Now there’s a new term.

JCP boasts a quality board including Richard Balderstone as chair and directors Paul Laband and Chris Condon, both former fund managers, as well as members of the executive team.

Grybas said, after the China presentation last week, that JCP represented a big opportunity for BNP Paribas to give its Australian equity offering a fillip. “Australian equities are so important in that retail market,” he said. “And we wanted a high-octane concentrated product to offer. JCP is perfect to take to that market.”

Meanwhile, the China managers, Chi Lo, the firm’s senior economist, based in Hong Kong, and Carline Yu Maurer, the lead portfolio manager and head of Greater China equities, also based in Hong Kong, remain optimistic about the prospects for China, not just in the long term but also in the short-medium term.

Caroline said: “We are cautious on a two-three-month view, but much more optimistic beyond that.” The tech world is likely to become China’s world going forward. About half of China’s eight million university graduates each year have engineering or science degrees, she said.

Chi Lo said that market sentiment would be an important driver for China over the rest of the year. He predicted that growth would stabilise by the fourth quarter and he was hopeful that trade tensions would subside. “We think that there is a good chance that the RMB will start to go back up,” he said. “It was a surprise when it went up so much [ this year] and a surprise when it came down so much. But we think there is little likelihood of another crisis like 2015.”

– G.B.

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