Gate­way to Op­por­tu­nity

Bank of China (Hong Kong) Pri­vate Bank­ing be­lieves that the Main­land China mar­ket will con­tinue to of­fer sus­tain­able long-term re­turns for in­vestors, de­spite volatil­ity in the cur­rent mar­ket

Hong Kong Tatler - - Tatler Focus -

Given the un­cer­tainty sur­round­ing Main­land China it is un­der­stand­able why in­vestors might shy away from the mar­ket. How­ever, it is also the case that volatil­ity presents op­por­tu­ni­ties. Bank of China (Hong Kong) (BOCHK)’S man­ag­ing di­rec­tor and head of Pri­vate Bank­ing, Wendy Tsang, thinks op­por­tu­ni­ties abound for in­vestors with an ap­petite for Chi­nese mar­kets and says BOCHK has am­bi­tious ex­pan­sion plans.

“Mar­kets are wor­ried about fur­ther ren­minbi de­pre­ci­a­tion and, while we do be­lieve there will be fur­ther volatil­ity and there could be fur­ther falls in ren­minbi, at the same time we see this as a good op­por­tu­nity for in­vestors to build up their long-term ren­minbi port­fo­lio,” says Tsang.

As a clear­ing bank and mar­ket leader in ren­minbi, Tsang ex­plains that BOCHK has been mon­i­tor­ing the pol­icy changes closely. “Many re­cent gov­ern­ment poli­cies that are in­tro­duced this year have en­abled an even wider spec­trum of cross-bor­der financial ser­vices and have be­gun to open the door to China for for­eign in­vestors like never be­fore,” says Tsang.

She ex­plains fur­ther: “What we have seen this year are a cou­ple of poli­cies that have re­ally en­cour­aged an open­ing up of fund flows, both on­shore and off­shore. In the stock mar­ket we have had the Shang­hai Stock Con­nect and the Shen­zhen Con­nect is ex­pected to fol­low.”

In ad­di­tion to Stock Con­nect, an­other wel­come pol­icy im­ple­mented this year is the mu­tual fund recog­ni­tion scheme that Tsang also sees as a healthy way for Hong Kong to ce­ment it­self as one of Asia’s ma­jor financial hubs.

“In Hong Kong we have around 2,000 funds but only 300 of them are lo­cally reg­is­tered,” she says. “To be a ma­jor as­set man­age­ment cen­tre we need to en­cour­age more funds to reg­is­ter here. This mu­tual fund recog­ni­tion scheme will en­cour­age in­ter­na­tional fund houses to reg­is­ter the funds in Hong Kong to gain ac­cess to China. This will also en­hance the stan­dard of fund man­age­ment in Hong Kong and China.”

“As a China ex­pert, BOCHK is per­fectly poised to help clients take ad­van­tage of the changes in Chi­nese fis­cal pol­icy,” says Tsang. “Though Hong Kong is a ma­jor off­shore ren­minbi cen­tre and mar­ket liq­uid­ity is of­ten a con­cern for in­vestors, we see China’s new poli­cies are by no means with­out fore­thought. The on­shore bond re­pur­chas­ing agree­ment was in­tro­duced in June 2015.”

“The im­por­tance here is the way it en­hances liq­uid­ity of the off­shore ren­minbi mar­ket,” says Tsang. “By al­low­ing Hong Kong play­ers to go into the on­shore repo mar­ket, it gives us liq­uid­ity when­ever we need it. All th­ese poli­cies have been well-thought out and be­ing rolled out one by one to en­cour­age grad­ual growth of fund flows in both mar­kets. We be­lieve this will be a great op­por­tu­nity for fur­ther es­tab­lish­ment of Hong Kong to be the most im­por­tant off­shore ren­minbi cen­tre.”

“One belt, one road” is an­other ma­jor pol­icy of China that aims to bring Asean coun­tries to­gether and BOCHK also has am­bi­tious ex­pan­sion plans to cap­ture this op­por­tu­nity.

“We see great growth op­por­tu­ni­ties with the es­tab­lish­ment of the Asian In­fras­truc­ture In­vest­ment Bank in June 2015,” says Tsang. “We will start build­ing our foot­print in Asean coun­tries by col­lab­o­ra­tion with the group’s net­work there.”

Build­ing on the group’s syn­ergy is noth­ing new for BOCHK and the next move will en­able the bank to lever­age its strengths from the lo­cal mar­ket to be­come more of a re­gional bank in the Asia Pa­cific re­gion.

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