HSBC sees China-driven opportunities
UAE EXPECTED TO PLAY A PIVOTAL ROLE IN TRADE AND INVESTMENT FLOWS THROUGH BRI
HSBC, with its presence across nine markets in the region, is set to play a huge role in investment flows into the Middle East, North Africa and Turkey (Menat), a senior bank official said
HSBC, with its presence across nine markets in the region, is set to play a huge role in investment flows into the Middle East, North Africa and Turkey (Menat), a senior bank official said.
The investments will come through Beijing’s Belt and Road Initiative (BRI), Helen Wong, HSBC’s chief executive for Greater China, told Gulf News in a recent interview.
The bank is best positioned to support BRI’s need to have strong footprints in Belt and Road markets, and also a universal banking model to offer products across the value chain, from the biggest conglomerates to retail investors; this is where an international bank with substantial Chinese presence fits in.
“On this initiative, we have a principle that we want to be involved in countries where we have a presence. We would like to deal with clients we already know. A lot of investments coming from China are from our existing clients. This makes the assessment of the projects easier and faster,” Wong said.
Laying local links
BRI involves massive investments, initially spanning 65 countries that contribute to 63 per cent of the world’s population and 29 per cent of global GDP.
The project’s purpose is to link up countries in trade that involves movement of people, money and material across borders. Total infrastructure investments are estimated at more than $8 trillion (Dh29 trillion).
HSBC’s involvement in BRIrelated projects ranges from an advisory role to funding projects that have participation of international contractors and local players. In these projects, a lot of work is done with the involvement of the bank’s local teams in the respective countries.
“If it is a project in the UAE, we will work very closely with the local team. So, both in China and the UAE, we have clarity on who we are dealing with. I think that presents a lot of opportunities for HSBC as a bank,” Wong said.
HSBC’s association with many of these projects is not going to be limited to project financing. There are other components such as foreign exchange services and handling cross-border payments. “Many Chinese companies who want to set up a presence in Belt and Road markets are our customers in China. Since we have a strong presence in China and know the local business environment well, we are in a great position to serve them very effectively,” Wong said.
UAE in BRI
BRI is expected to result in manifold trade growth between China and Menat region. Last year, UAE-China trade volumes grew by about 15 per cent and the amount of trade was in excess of $33 billion.
“Trade growth from BRI is not going to be purely between China and UAE. It will include a lot of trade transiting through the UAE to the wider Middle East, Africa, Europe and beyond. The UAE is a hub that has strong links to other markets in this part of the world. HSBC is fundamentally a trade bank and we want to help develop trade between the Menat region and China,” Wong said.
China signed a number of MoUs with the UAE during the recent visit of President Xi Jinping to the UAE.
BRI in the region involves 13 countries and the cooperation between China and the Arab region would focus on energy, core infrastructure trade and investment.
As the Middle East adjusts to a lower oil price environment, governments in the region are speeding up both structural and fiscal reforms, opening up domestic markets for foreign investment across infrastructure, trade, investment, services and supply-chain.