Been talking about the fallout in Asian currencies on the back of that very very
strong dollar. How are you looking at it and the impact
on Asian economies in particular with inflation sky rocketing given where
their currencies are right now. Thank you very much Linda for having me.
Yes it's a very unpredictable environment.
And all of our clients are kind of thinking about the combination of
factors that they're facing. It could be the geopolitical tensions
the movements in effects the inflation the increased and competing environment
and so on and so forth. And therefore what I've picked up in
some conversations I've had with with clients while participating in the forum
from Hong Kong here this morning as well.
Is that. Having sufficient liquidity and a well
diversified mix of funding sources is now critical and could be even as
critical and strategic as the next time in a deal that you could be considering.
But yes we're definitely living in a very unpredictable environment
and one that we haven't seen in quite some time.
I'm pretty environment unpredictable environment including that in China.
When we spoke to you about a year ago you said that you're looking at the next
25 years in China not the next quarter. Since then we've had the Chinese
government taking issue with banker pay. We also have the likes of Credit Suisse
reassessing putting a brake on expansion plants in China.
What's your own assessment and what's your strategy in China now.
And so is this the strategy in China has actually not changed for us.
And it was the current strategy was born from decisions that were made actually
few years back. There are wars that we and we would like
to have an important presence onshore because it's the second largest economy
in the world. And for us a bank that is and has a
global footprint in over 100 markets it makes sense to have a large presence in
the second largest economy in the world. So we have been fortunate that we have
been granted 100 percent ownership and control of ethanol.
But the future no option entity and of the security company we have at the bank
local incorporated bank. Now for 15 years.
And therefore we are waiting to reach 100 percent of our asset management
company and which we hope will happen in there in the near future once we will
have DAX. I think we would have strengthened
further our what onshore platform. And again that that presence is there to
have an international following clients coming into China.
Multinational corporations who are there any taps are serving and onshore clients
who are. For instance looking at doing something
on offshore and with cross-border components and so on and so forth.
And you might have seen that recently. We got approval to acquire 10 percent of
China Merchant Bank Wealth Management Company which again it's a further
statement of our commitment to China again and competing in China.
Given that it is the second largest economy in the world.
Philip what if your strategy in China is intact.
Are you. Are you hiring.
What's your headcount plan. Are you also looking at capitalizing the
opportunities left behind by the likes of Credit Suisse which is pulling back.
So I'm not going to comment on what some of our colleagues from other banks are
doing being and but in terms of headcount we have the right headcount
and we will hire if necessary and unnecessary in general.
To me the strategy is as I said is completing the last piece of the jigsaw
and then work on the platform to offer it to the clients.
So we are war. We are well prepared for that.
It's Richard. I'll go.
Give us a sense. You know with Covid lockdowns a slowing
economy where you're seeing opportunities in particular right now
and you know it's it's an operating climate a landscape which is ever
evolving with new headwinds emerging where there were none.
It's a bit like whack a mole. Yes.
So definitely am. In that sense clearly in the banking and
in the pure banking environment you will have seen that it has been a
normalization of the Yemeni market to let's call it pre Covid-19 levels.
Deals are becoming somewhat more complex and and with cross-border companies
which is kind of a little bit of our sweet spot in terms of equity capital
markets definitely you will have seen that there have been a few IPOs yours
and a few for lawns on TV but there is some energy companies something in
consumer. Very early on.
So there is a little bit of a resurgence of the overall in equity private
placement which is a way to sustain company long before the go to go public.
In general the growth story in my opinion of China and in Asia in general
because our ambition spans there the whole region has not changed and the
need for capital from companies in the region and has not changed and therefore
it will come back. And but as I said right now
strategically and they're having a diversified mix of funding sources is
becoming critical on their DCM market. And you will have seen that there is
activity on their high yield grade space.
And on the on the ESG agenda I would say.
But overall that's been a notable slow down because in a rising rate scenario
clearly investors and issuers are both reassessing their needs and their
priorities. In the end it will take some time before
things normalize. Overall clearly we also tend to offer to
our clients solutions not only in Iraq in bank not so markets payments security
services asset management and private banking.
So we have a full array of products that we're trying to everything clients into
really. David I wanted to pick up then on your
point and DCM and certainly at raising rates we haven't dealt with this in what
15 years. There was a window about a few weeks
back where we thought rates were either stabilizing or falling and we had a rush
of deals coming through in the debt markets to raise some money.
I'm just curious whether or not you're seeing that from your clients right now.
Is there still a scramble to raise cash or has that window now past a very short
term question of course to reign now. I think it seems to me that the window
is is not there with most of the central banks going out
possibly with 75 basis points during the month of September.
I think most of the investors and issuers are rarely stick around waiting
to see what's happening. Maybe maybe maybe there could be a
little bit of a window in the ECM market.
But the flurry of activity we saw in DCM and some deals being printed before this
summer now it's harder. Philip I was just wondering.
Question of course it is still about geopolitics U.S.
China tensions. How are you assessing the risks of China
in de-listing from the US. Look at first of all the news that we
received around 10 days ago of their agreement on the delisting was overall
welcomed by all parties involved. And in general you have clients across
the globe that want to access the U.S. capital markets and we support them in
doing so through our efforts in the specific case of the delisting.
Our view is it is a little bit too early to call from for how things will develop
from here. On one side you have the PCAOB wants to
complete the inspection and therefore only after that we will be able really
to assess and how things will deploy and whether Chinese companies will go back
to least in the US or whether there will be other these things and so on and so
forth.