Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a610410
Steer stays short of Standard Chartered as Buxton buys more
by Emma Dunkley on Aug 09, 2012 at 14:45
Steer, manager of the Artemis UK Growth fund , said he was short the bank before New York regulators accused Standard Chartered of around $250 billion worth of illegal dealings with Iran, although he said the position was ‘expensive’ versus others.
Stephen Yiu, assistant manager on Steer’s fund, told Wealth Manager they doubled their short position in Standard Chartered early on Tuesday morning, before the price collapsed by around 24%. The managers then closed out half of that position, keeping the other half on due to the level of uncertainty surrounding the situation.
‘We shorted this stock a while ago, based on concern over Asia,’ said Yiu. ‘Given all the other incidents we’ve witnessed, such as JP Morgan and Barclays – you have to ask how many details do they actually know? It’s quite difficult to know, so we have only taken off half the position.’In contrast, Richard Buxton, manager of the £2.7 billion Schroder UK Alpha Plus fund and head of UK equities at the firm, told Wealth Manager: ‘There was a ludicrous over-reaction. If you read Standard Chartered’s very clear statement on Tuesday morning and if you trust the management - which I do – it’s crystal clear they say there’s $14 million of transactions, not $250 billion, where ‘we put our hands up and said we screwed up.’
‘But they are not going to lose their licence.' He said HSBC admitted earlier in the year they were involved in money laundering for drug runners and that there was a fine, but no loss of licence.
Buxton added: ‘It was crystal clear there were discussions with five regulators and one has broken ranks. You only need to know the politics of the situation – because it’s a bank, because it’s in the US and because there are politics involved – you can see how [people] come out with doomsday scenarios.’
Banks have clearly been 'tarnished across the board,' said Buxton, although he highlights that shares are up this year, with Lloyds up around 22% year-to-date, RBS up 14% and Barclays up a little.
'Standard Chartered is off 3% but that’s because of this week,' he added. 'For all the loathing exhibited to this sector, it’s not going down anymore.'In order to snap up more shares of Standard Chartered after the bank’s share price plummeted on Tuesday, Buxton sold out of some of his holdings in GlaxoSmithKline.
News sponsored by:
Subscribe to Wealth Manager magazine and rack up CPD points
Citywire Wealth Manager has partnered with CISI to enrich the experience of subscribers to our magazine.
Today's top headlines
More about this:
Look up the funds
Look up the shares
- Artemis Alpha Trust PLC
- Standard Chartered PLC
- Schroders PLC
- GlaxoSmithKline PLC
- Rolls-Royce Holdings PLC
- Barclays Bank PLC NY BR Private Banking Global Ass MGMT
Look up the fund managers
More from us
- BA and Qantas merger talks grounded
- Buxton: I bought Barclays the moment Bob quit - now I'm calling for change
- Market Blog: Standard Chartered tops tepid FTSE
- Standard Chartered seeks legal advice over 'rogue' claims
Aberdeen Live supplement: Fundamentals point to ongoing flows and solid returns from EMD
After a record year for inflows and market-leading performance in 2012, emerging market debt has taken a large step towards the mainstream. Our recent debate covers the outlook for the asset class this year and where opportunities can be found.