A trip to Asia has more to offer than just air miles
Last year, by chance and circumstance, I relocated to Hong Kong after 11 fantastic years working in the US. It was a daunting yet exciting experience, where the streets were replete with new issues and funds being raised. This was in contrast to the fatigued capital markets in the US, which were emerging from the depths of the global financial crisis. I, like many others before me, looked to the East for new opportunities.
Today, in my role in corporate access at HSBC, I see many issuers looking to the East for opportunity and new shareholders. Numerous marketing requests come to us each week as US, European and Latin American corporates try to expand their shareholder base in Asia. An intuitive development, you might think.
In our experience, however, Asian investors look to the rest of the world for guidance overnight, but when it comes to investment opportunities, the region is quite insular, especially as it’s booming.
The traditional base for international (that is, non-Asian) fund management in Asia has been Tokyo and, historically, this has been a well-traversed and worthwhile route. What about beyond Tokyo, though? Is it worth convincing your CEO to spend a week marketing in Asia?
There is a handful of sovereign wealth funds spread out across Singapore, Beijing, Seoul and Hong Kong. These can – and do – invest internationally, and have eye-watering amounts of assets under management.
Beyond that handful, and somewhat surprisingly for some, Hong Kong and Singapore play host to very few global funds. They are, instead, centers for regional Asian investment.
Admittedly, Beijing and Shanghai are two cities where the QDII funds (funds licensed for non-Chinese investment) are growing organically, albeit at a slower pace than industrial production. Funds in Sydney and Melbourne are also becoming increasingly global, as the pension assets grow and dwarf the local equity market.
Keep in mind, if you do want to come to Asia, that there is an element of missionary work to be done. It involves some meetings with potential shareholders and others with investors trying to get a read-across to Asian companies, particularly in global sectors such as resources and technology.
It’s our view that the financial centers of Hong Kong and Singapore will grow over time into centers for global funds, as Asia’s representation in the international indices increases.
Having said that, while a trip to Asia may not yet yield immediate new shareholders, the area is nevertheless one issuers everywhere will be increasingly relying on for funding over the coming years.
Alex Lupis is director and head of corporate access for Asia-Pacific at HSBC
