Speaker 1: You're listening to Asia Centric from Bloomberg Intelligence, the podcast
Speaker 1: that pulls back the curtain non global business so you
Speaker 1: can invest better across the Pacific Rim. I'm Tom Corbett
Speaker 1: in Hong Kong.
Speaker 2: And I'm John Lee. Southeast Asia's economic rise is one
Speaker 2: of the world's most underrated success stories.
Speaker 1: The nations that call this corner of the world home
Speaker 1: have become a leading growth market, powering China, the US
Speaker 1: and much of the world with trade, manufacturing, digital know how,
Speaker 1: and a wealth of natural resources.
Speaker 2: Its progress is rual, but the most exciting part of
Speaker 2: Southeast Asia's growth story is yet to come. What lies
Speaker 2: ahead and how can invest his tap into the region's potential.
Speaker 1: Let's bring in James Chio, chief investment Officer at HSBC
Speaker 1: Private Bank.
Speaker 3: I think the potential and the economic opportunities for Southeast
Speaker 3: Asia remains extremely exciting and that's why we are seeing
Speaker 3: much more interest in Southeast Asia in the years ahead.
Speaker 2: And Rina Qualk Asia's financial credit analysts with Lumberg Intelligence.
Speaker 4: The trust in the banking system is important and no
Speaker 4: bank can actually survive a bank right now.
Speaker 1: Both joining us from Singapore, James and Rena Welcome.
Speaker 4: Hi, Tom and Joan.
Speaker 3: Good to be here, pleasure to be here, James.
Speaker 2: Why are investors getting excited about Southeast Asia right now?
Speaker 3: Well, I think Southeast Asia is on the cusp of
Speaker 3: a major transformation, and clearly, I think when you look
Speaker 3: at the market performance of Southeast Asia at least over
Speaker 3: the last one and a half years, it exhibits a
Speaker 3: lot of resilience, especially in twenty twenty two. But really
Speaker 3: I think some underlying economic currents are happening. For one,
Speaker 3: the digital economy in Southeast Asia is actually growing very
Speaker 3: very fast, and of course that's aiding and helping that
Speaker 3: whole middle class consumption story that's going to be very
Speaker 3: strong in the years ahead. But also at the same time,
Speaker 3: what we are having is also a green transformation that's
Speaker 3: happening in Southeast Asia. Many parts of the economy in
Speaker 3: Southeast Asia, it's going to become much more reliant on
Speaker 3: renewable energy as well as of course electrification of its
Speaker 3: transportation system and making its cities much smarter in terms
Speaker 3: of using electricity and energy. So I think the potential
Speaker 3: and the economic opportunities for Southeast Asia remains extremely exciting,
Speaker 3: and that's why we are seeing much more interest in
Speaker 3: Southeast Asia in the years ahead.
Speaker 2: James, you discussed the digital revolution that's going on in
Speaker 2: Southeast Asia. Can you mention some names, some companies, some
Speaker 2: countries that are really benefiting from this trend?
Speaker 3: Clearly, I think what the pandemic did was to kind
Speaker 3: of digitize a lot of our activities, whether it's e commerce,
Speaker 3: whether it's travel, whether it's how we buy goods and services.
Speaker 3: And I think that digital transformation is extremely powerful, especially
Speaker 3: for Southeast Asia, and that the size of Southeast Asia's
Speaker 3: digital economy is expected to grow in an exponential rate
Speaker 3: in the ahead. So what you could expect is, of
Speaker 3: course a change in consumption patterns, and many big digital
Speaker 3: platforms have already been present in many of the Southeast
Speaker 3: Asian markets.
Speaker 1: James, I saw one statistic that Southeast Asia has nine
Speaker 1: hundred and fifteen million active mobile connections. That's about one
Speaker 1: and a half times its population. How did Southeast Asia
Speaker 1: get from there?
Speaker 3: To hear?
Speaker 1: What is it about Southeast Asia that made it such
Speaker 1: a digital growth market?
Speaker 3: Southeast Asia sort of lead from the entire evolution of
Speaker 3: salts because many of Southeast Asian consumers or households do
Speaker 3: not have desktops or even laptops, but everyone has a mobile.
Speaker 3: So in that sense, a huge adoption of mobile of
Speaker 3: technology and apps on the mobile does create that sort
Speaker 3: of mobile connections that the Southeast Asia has. Traffic jams
Speaker 3: are issue in many cities like Jakata or even Bangkok
Speaker 3: or even a Manila, but in order for people to
Speaker 3: order their food deliveries, sometimes are delivering on the app
Speaker 3: max It faster because a lot of the deliveries are
Speaker 3: on two wheelers which actually can cut through the traffic
Speaker 3: and it's all done to the app application. So I
Speaker 3: think that whole digitization of Southeast Asia became so fast
Speaker 3: and so quick really because of the use of mobile phones.
Speaker 3: There wasn't a sort of an age where people were
Speaker 3: on laptops or desktops. It's almost everyone was on mobiles immediately.
Speaker 3: And also second the ease and convenience of using it
Speaker 3: in their daily lives, which makes the rise of the
Speaker 3: digital economy much much faster than in many parts of
Speaker 3: the world.
Speaker 2: And you mentioned ride hailing apps food delivery. Are they
Speaker 2: the most popular usages of you know, the digital mobile
Speaker 2: phones and the digital revolution that's going on.
Speaker 3: Well, I think that is kind of at the margin
Speaker 3: the first the way how people transact in their day
Speaker 3: to day activity. So what you could see is that
Speaker 3: more and more of whatever transactions that were done previously
Speaker 3: on the physical level, it's being done on a digital level.
Speaker 3: So whether it's taking a cab, whether it's ordering food,
Speaker 3: whether it's to kind of purchase big items, it's been
Speaker 3: transferred in many of activities into being done on the
Speaker 3: digital economy. So I think there is a broadening of
Speaker 3: activity slowly as digital apps or even the digital economy
Speaker 3: become much more sophisticated to deal with the changing needs
Speaker 3: of the consumers.
Speaker 1: James ch Oh, You've just talked a lot about the
Speaker 1: digital economy in Southeast Asia, but let's talk a little
Speaker 1: bit about the banking side. We've seen banking failures in
Speaker 1: the US and Europe recently, what about Asia in particular
Speaker 1: in Southeast Asia and some of the liquidity challenges, Rina Quark,
Speaker 1: what do you have to add about that?
Speaker 4: Thanks for having me, Tom. Now, we actually believe for
Speaker 4: most of their substation banks, they are unlikely to actually
Speaker 4: face the deposits like scenario that actually topple of the
Speaker 4: overseas bank that we have seen recently. Given a relatively
Speaker 4: healthy liquidity profile and make the writing interest rate. For
Speaker 4: most of the lenders in Southeast Asia, they are largely
Speaker 4: funded by stable and diversified deposits locally and a lot
Speaker 4: of these deposits are actually invested in loans, with most
Speaker 4: of the lenders loans to deposit ratio well below one
Speaker 4: hundred percent, and this actually suggests that there are sufficient
Speaker 4: liquidity to meet the loans. And of course you know
Speaker 4: that regulatory liquidity ratios are also well above the minimum hurdles.
Speaker 4: But at the end of the day, more importantly, the
Speaker 4: trust in the banking system is important, and no bank
Speaker 4: can actually survive a bank run.
Speaker 2: You know, there's been banking families in the US and Europe,
Speaker 2: including Silicon Valley Bank, First Republic recently credits WISS. It
Speaker 2: hasn't impacted Asia yet, Asian banks and the ones in
Speaker 2: particular in Southeast Asia in a stronger position.
Speaker 4: Sure, I think there are a couple of areas to
Speaker 4: focus on as we look into a rising interest reate environment.
Speaker 4: I think definitely, with all the reason turmoil that we've
Speaker 4: seen in a global banking sector, what we care asset
Speaker 4: light management is key. What we call are their mismatches
Speaker 4: between the asset and libilities and interest rate management. Now,
Speaker 4: speaking of interest rate management, we have talked about, you know,
Speaker 4: unrealized losses that we have seen in some of their
Speaker 4: overseas banks and taking that closer to home where you know,
Speaker 4: West southast Asian banks are. We believe that for most
Speaker 4: of the suvis Asian banks, the extent of unrealized losses
Speaker 4: are manageable, even as interest rate rice.
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Speaker 2: As strange as it may sound, can Southeast Asia almost
Speaker 2: be considered a safe haven?
Speaker 3: Oh? While I wouldn't go as far as to say
Speaker 3: that Southeast Asia will become a safe haven, Southeast Asia
Speaker 3: very much learned from its lessons from the past, the
Speaker 3: ninety seven ninety eight Asian financial crisis, where many banks
Speaker 3: face US problems as we're seeing now with the current
Speaker 3: banking situation in US and Europe. But because of that,
Speaker 3: many of those banks went through significant de leveraging, they
Speaker 3: went through better capital management, and of course business model
Speaker 3: had to become a much more robust especially through the cycle.
Speaker 3: Certainly from that perspective there is a sort of resilience
Speaker 3: in the banking system as a result. So these things
Speaker 3: are going very well for Southeast Asia. It is an opportunity,
Speaker 3: but clearly I wouldn't say it's a safe haven as yet,
Speaker 3: but nevertheless there will be bumps and risks down the road,
Speaker 3: just like any risk assets out there.
Speaker 1: James Chio, how much of a challenge is infrastructure investment
Speaker 1: in Southeast Asia?
Speaker 3: Would you say?
Speaker 1: And how do you see that unfolding over the next
Speaker 1: five to seven years.
Speaker 3: Well, I think infrastructure is going to be a very
Speaker 3: interesting team, and I think on various dimensions. I think
Speaker 3: one of the most important infrastructure bending that has occurred
Speaker 3: over the last few years it's really to improve on
Speaker 3: the existing roads, airports, trained connections, and I think those
Speaker 3: have been going very well, especially if you look at
Speaker 3: countries like Indonesia for example. To link up the entire country,
Speaker 3: which is an archipelago of many islands, you have to
Speaker 3: improve the ports, you have to improve the airport's train linkages,
Speaker 3: roads rails. It's a significant project, but I think on
Speaker 3: many fronts those things have improved quite a fair bit
Speaker 3: in Southeast Asia, and there is due scope for improvements
Speaker 3: in many parts of the region. But also I think
Speaker 3: there is an increasing focus on energy infrastructure in Southeast Asia,
Speaker 3: especially as the region is going to transit into much
Speaker 3: more renewable energies. And so if you think about Southeast
Speaker 3: Asia as a region, Thailand has its automotive industry, Indonesia
Speaker 3: with its nickel deposit and perhaps improved manufacturing of Lincoln batteries,
Speaker 3: And if you connect all these countries, and of course
Speaker 3: Malaysia with its manufacturing of semiconductor chips, if you can
Speaker 3: combine this region as a whole through the free trade agreement,
Speaker 3: is quite an interesting manufacturing hub all the electric vehicle ecosystem.
Speaker 3: That's going to be quite a significant in the years ahead.
Speaker 2: James, you mentioned quite a few countries there. Which countries
Speaker 2: in Southeast Asia do you think are the most appealing
Speaker 2: right now?
Speaker 3: Will? I think from a near term perspective, I think
Speaker 3: we want to look at perhaps Indonesia and Thailand, for example, because,
Speaker 3: for one, the global economy is going to be slowing
Speaker 3: down generally, and of course Indonesia has a large domestic
Speaker 3: population and a big middle class and that could buffer
Speaker 3: some of the volatility associated with slower growth. But also
Speaker 3: I think you want to play into that whole China's
Speaker 3: reopening which is ongoing, and if you look at the
Speaker 3: data as faster and expected, so as Chinese consumers buy
Speaker 3: more goods and services, particularly commodities from Indonesia as well
Speaker 3: as Thailand, whether it's agriculture produce or fossil fuel related produce,
Speaker 3: you will see Indonesia and Thailand benefiting from that China reopening.
Speaker 1: James chio Rena, We've seen some Western companies start to
Speaker 1: distance themselves a bit from China. Some are a little
Speaker 1: uneasy with a shift in tone there since the pandemic
Speaker 1: Apple is already decoupling, maybe shifting some manufacturing the India
Speaker 1: and Elswhere can Southeast Asia benefit from this new wariness
Speaker 1: about China or is the region's chariot hits too tightly
Speaker 1: the China Star.
Speaker 3: Your take, well, I think that whole trend of deglobalization,
Speaker 3: and of course it is something that many big multinational
Speaker 3: or big global companies are making. That decision. Southeast Asia
Speaker 3: clearly is a destination alongside India as well, and of
Speaker 3: course it has to be taken into account the entire
Speaker 3: kind of criterias. Of course, certain countries have lower labor
Speaker 3: costs and a labor market that's very competitive for a
Speaker 3: multinational company, of course, they want to look at where
Speaker 3: to make production lines, perhaps more resilient southeas Asia is
Speaker 3: a destination, but also don't forget that Southeast Asia it
Speaker 3: has also a large population to be consumers, so six
Speaker 3: hundred and eighty million people as consumers for smartphones, for
Speaker 3: electronic goods, for electric vehicles, So that also means that
Speaker 3: it's nearer to the customers. So I think in a way,
Speaker 3: I would say the demand for these groups are going
Speaker 3: to be very important, and I think that's why it's
Speaker 3: a key destination to look at for many of global
Speaker 3: companies looking to set up shop in the region.
Speaker 1: Rina Quank with Bloomberg Intelligence, any thoughts, Yeah, And I may.
Speaker 4: Just add to what James has mentioned. We have actually
Speaker 4: seen for some of the lenders in this region, they've
Speaker 4: actually tapped on what we call the Arsian cross border
Speaker 4: trade flots and this actually helped the banks as we
Speaker 4: you know, some of the countries actually face rising macro
Speaker 4: heat wins that could actually tampen some of the don't
Speaker 4: growth outlook that we see for some of the major
Speaker 4: banks here. And as simple banks continue to tap on
Speaker 4: the don't growth that you know, a major macro heat wins,
Speaker 4: the daversification that we see in this broader region could
Speaker 4: help the banks boster earning to momentum. As you know,
Speaker 4: we see of the macro heatments this year.
Speaker 2: Earlier this year, China's population was overtaken by India. A
Speaker 2: lot of Northeast Asian countries like China, Japan, Korea facing
Speaker 2: a demographic headwind with an aging population. How is Southeast
Speaker 2: Asia placed in this regard.
Speaker 3: It has a younger population, and of course that will
Speaker 3: be a tailwind for many parts of Southeast Asia in
Speaker 3: the next decade or so. And that's why if you
Speaker 3: think about how economics and growth is, it is primarily
Speaker 3: about population increasing labor force participation as well as productivity growth.
Speaker 3: And I think on that count in terms of growth
Speaker 3: of population, you're going to see quite a fair bit
Speaker 3: from Southeast Asia, where there's Indonesia, where there's Philippines, et cetera.
Speaker 3: So I think that's why that whole demographic division is
Speaker 3: a very powerful story, one of rising population as well
Speaker 3: as rising income for Southeast Asia.
Speaker 2: Rina there's a lot of financial pundits talking about commercial
Speaker 2: real estate loans. Some are saying that this is going
Speaker 2: to be the next shoe to drop. Is this a
Speaker 2: risk for Southeast Asia and in particular Singapore.
Speaker 4: I think that's a very good question joined as we
Speaker 4: look into what could be the possible trigger points of
Speaker 4: stress globally. I think Simple Banks commercial realistate notes could
Speaker 4: face very measurable credit losses despite the rising micro heat
Speaker 4: with and of course their annulated interest rate risk, as
Speaker 4: most of their exposures are actually two good polity companies
Speaker 4: relatively low the FAULD risk. Now, most of the Simple
Speaker 4: Banks commercial reistic exposures are in Singapore, where we do
Speaker 4: believe that SEP veristic sector could remain resilient this year
Speaker 4: given the fundamentals that are supporting the office and retail segments.
Speaker 2: And relating to this question, Singapore just raised stamp duty
Speaker 2: for foreigners buying real estate from thirty percent to sixty percent.
Speaker 2: That's by far the biggest in the world. Just how
Speaker 2: hot is the property market.
Speaker 4: Over there for the real estate sector has always been
Speaker 4: I think one of the hottest market in Nasure and
Speaker 4: I think if you see for the past many years,
Speaker 4: how housing loans has always been a dominant loan book
Speaker 4: or say path of the loan book for Simpole banks.
Speaker 4: And the next question we may have is that were
Speaker 4: that actually civilly dampened the housing loans growth that we
Speaker 4: see for the simple banks. Now, just to take a
Speaker 4: step back, firstly, this reason matches. They're impacting more of
Speaker 4: the foreigners, so for most of the housing loans and
Speaker 4: the Simpboard banks loan book that mostly for the first
Speaker 4: time buyers. So that being said, the impact could be
Speaker 4: more manageable. But of course with the rising interest rates
Speaker 4: and of course some of the new measures that kick
Speaker 4: in recently, it might actually dampened the growth a little
Speaker 4: and moderate, but it's unlikely to collapse.
Speaker 1: James Geo, you sound like a Southeast Asia ball am
Speaker 1: I right.
Speaker 3: Well, that's right. I mean from a long term perspective, definitely,
Speaker 3: because of all these criterias, and I've coined the term
Speaker 3: Southeast Asian tigers TEA for technology, I for the rising
Speaker 3: income of the middle class, G for green transformation, E
Speaker 3: for energy, infrastructure and our our sets. So if you
Speaker 3: remember Southeast Asia tigers, I think you have many reasons
Speaker 3: to kind of be bullish for Southeast Asia for the
Speaker 3: next decade.
Speaker 1: That's very clever. Now, at the risk of putting you
Speaker 1: on the spot, as investors, we like to look up
Speaker 1: and down. Where would the landmines lurk? In other words,
Speaker 1: what could go wrong? What are the investment risks in
Speaker 1: Southeast Asia and where might they be hiding.
Speaker 3: Yeah, well, I think for one, southeas Asia is not
Speaker 3: a meal to the global economy, that's very clear. And
Speaker 3: also southeas Asia is not a meal to global risk sentiment.
Speaker 3: So if you do get a pullback or a shop
Speaker 3: decline in global risk appetite, Southeast Asia can face the
Speaker 3: them pullbacks because of that. So that's kind of a
Speaker 3: near term risk. But in terms of the fundamental growth story,
Speaker 3: I think it's very much intact and it takes quite
Speaker 3: a big shock to kind of de risk it. I think,
Speaker 3: to manage and mitigate the effects of climate change from
Speaker 3: many parts of Southeast Asia, I think it's going to
Speaker 3: be both at risk as well as an opportunity. So
Speaker 3: there are big of course facing Southeast Asia, and I
Speaker 3: think these are the things that kind of one should
Speaker 3: watch out for, both for the near term as well
Speaker 3: as the longer term.
Speaker 2: James, for investors focused on ESG, how attractive is Southeast Asia, Well,
Speaker 2: I think.
Speaker 3: That there are a few ways investors could think about it.
Speaker 3: Of course, you first and foremost want to look at
Speaker 3: companies within Southeast Asia that does well on these three
Speaker 3: dimensions ESMNG and clearly I think companies that usually are
Speaker 3: the best managed or high quality companies usually have good
Speaker 3: scores on that front. But also I think another way
Speaker 3: to think about that is also the thing of it
Speaker 3: as a tematic opportunity. So whether it's the energy transition
Speaker 3: within Southeast Asia, I think that's an opportunity, whether it's
Speaker 3: companies or even corporations that are pushing ahead in the
Speaker 3: electrification of Southeast Asia's transportation system, and so I think
Speaker 3: there are many interesting kind of thematics that's going on
Speaker 3: in Southeast Asia, and I think many times investors fils
Speaker 3: who realize that these teams are actually moving in the
Speaker 3: right direction and there's quite a lot of kind of
Speaker 3: opportunities out there for this region.
Speaker 1: Our guests are James Chio, Chief Investment officer at HSBC
Speaker 1: Private Bank and Rina Quark Asia financials credit analysts with
Speaker 1: Bloomberg Intelligence. James, you just spoke at link about ESG, Environmental,
Speaker 1: Social and governance. There's been a perception that ESG has
Speaker 1: been slowly gained traction in this part of the world
Speaker 1: as opposed to the West, perhaps the UK, Europe, the
Speaker 1: United States. Is that a fair assessment and if so,
Speaker 1: why do you think that's the case?
Speaker 3: Well, I think people are recognizing the importance of that,
Speaker 3: whether it's from companies, whether it's from governments, or even
Speaker 3: from households and consumers or even general investors. And it's
Speaker 3: clear that there is no other way to in fact
Speaker 3: solve the whole climate change issue and SVIs it's a
Speaker 3: big part of this whole equation. So we have many
Speaker 3: governments in Southeast Asia coming out kind of net zero pledges.
Speaker 3: Many companies within Southeast Asia have also came out with
Speaker 3: their net zero plans as well. And also consumers generally
Speaker 3: now are becoming much more aware of how they consume
Speaker 3: and what they look out for when they buy certain products.
Speaker 3: And I can say that also for general investors as well,
Speaker 3: demanding more of companies when it comes to ESG standards
Speaker 3: and disclosures. So I think we have a sort of
Speaker 3: alignment of stars in that sense, and things are moving
Speaker 3: in the right direction. While it might not be as
Speaker 3: quick as most people hope for, but at least I
Speaker 3: think the direction is moving in the right way.
Speaker 2: James, if you're pullish on Southeast Asia as an investor,
Speaker 2: how would you play this thing?
Speaker 3: I think in the near term, some of the equity
Speaker 3: markets within Southeast Asia, such as Indonesia, Thailand looks interesting,
Speaker 3: and you want to pick the companies that could benefit
Speaker 3: from China's reopening, for example. So of course there are
Speaker 3: a few ways to play where there's to buy some
Speaker 3: of the consumer companies within these markets, some of the
Speaker 3: commodity players, or even to look at some of the
Speaker 3: well managed banks that could benefit from the whole recovery
Speaker 3: of the region. Over the longer term, you want to
Speaker 3: look for some of the longer term dynamics, whether it's technology,
Speaker 3: whether it's middle class, rising income, middle class, green transformation, energy, infrastructure,
Speaker 3: or the trade they are set the tigers that I've
Speaker 3: talked about, there are many companies that are geared towards
Speaker 3: growing that whole Asian Southeast Asian tigers stories. The longer term,
Speaker 3: I think those companies that well positioned on these big
Speaker 3: structural trends I think can do very well in the years.
Speaker 2: A hit and RAINA.
Speaker 4: What about your space here, I think in my space,
Speaker 4: I think probably one of their most recent Kinney wash
Speaker 4: upon as the AP wants. You know, are we still
Speaker 4: comfortable with the AP wants issued by most of the
Speaker 4: self Is Asian banks? I think in this rising issues
Speaker 4: spreate environment, one of the key rists to watch is
Speaker 4: what we call the potential non chor risk for the
Speaker 4: AP ones that are issue for most of the self
Speaker 4: is Asian banks. And on that front, we believe that
Speaker 4: for most of the dollar eighty ones. Now, firstly, let
Speaker 4: me just take a step back to you know, to
Speaker 4: talk about what AT wants. Now, this eighty one, this
Speaker 4: tree letter was it is a form of hybrid debt
Speaker 4: that comes to wards the bank's regulatory capital. Right. Eighty
Speaker 4: ones are actually subordinated in the bank's capital structure.
Speaker 1: Like contingent convertibles, right rina or more like a cross
Speaker 1: between a stock and a bond.
Speaker 4: Yeah, So they are like a hybrid debt that comes
Speaker 4: towards the bank's regulatory capital right, and as mentioned earlier,
Speaker 4: it's subordinated in the bank's capital structure, making it a
Speaker 4: more riskier kind of that product as compared to the
Speaker 4: rest of the banks ponds.
Speaker 1: So they're hot when times are good, but its holders
Speaker 1: are at the head of the line of sacrificial lands,
Speaker 1: if you will, when the walls start crumbling, because at
Speaker 1: ones are often the first domino to fall. Do I
Speaker 1: have that right?
Speaker 4: So directly, if we look into the bank's capital structure,
Speaker 4: eighty one's definitely are formed below what we call the
Speaker 4: benks capital structure, and they only have ranked above what
Speaker 4: we call the common equity, so they are definitely among
Speaker 4: the riskier kind of step instruments. And that being said,
Speaker 4: and that explains why it's higher youth and of course
Speaker 4: lower ratings.
Speaker 2: Yeah, I think equities was traditionally the first line to fall,
Speaker 2: but the Swiss regulator had a few comments to say
Speaker 2: about that Rena quad.
Speaker 1: Do you think what happened with credit Sweez's eighty ones
Speaker 1: changed perceptions of the security or did it just expose
Speaker 1: risk that was already there but investors didn't recognize it.
Speaker 4: I think definitely for an investor, as we buy into
Speaker 4: a riskier high yielding instrument. Is always key to read
Speaker 4: the bond's terms. I think all the terms and conditions
Speaker 4: are usually stated in the bond prospected, so it's definitely
Speaker 4: key for investor to, you know, read all the details closely. Now,
Speaker 4: what's next for really banks eighty one's going forward? Definitely
Speaker 4: we know that banks funding via eighty ones will be
Speaker 4: more expensive going forward as investor price and such risks
Speaker 4: as question whether the seniority of claims are still being
Speaker 4: respected by the rarest jurisdictions. Now, the next question we
Speaker 4: asked is that are eighty one still a viable funding
Speaker 4: too for the banks? Now, for most of the Southeast
Speaker 4: Asian banks, they can still tap on the eighty one
Speaker 4: market as a possible funding thought for tailman capital. If
Speaker 4: you quied, it's remain cheaper to feel their eighty one
Speaker 4: requirements for eighty one capital instead of common equity.
Speaker 1: James Chio Rina quark. I'm a US investor or, a
Speaker 1: Western investor. Maybe I don't know Southeast Asia that well,
Speaker 1: maybe I've never traveled here, but I'm looking for exposure
Speaker 1: to Southeast Asia as a growth market. Where do I look.
Speaker 3: Well, I think as an investor, you have to kind
Speaker 3: of think of Southeast Asia from a global divestication perspective.
Speaker 3: So I won't say you want to invest everything you
Speaker 3: have in Southeast Asia, but it has to be part
Speaker 3: of your portfolio from a global diveistication perspective. So I
Speaker 3: think first step, of course, is to kind of do
Speaker 3: your own research, learn about where the region's opportunities are,
Speaker 3: look at the past performance of how the region has performed,
Speaker 3: and ultimately, once you are comfortable with the growth story
Speaker 3: and opportunity, you could always allocate a percentage into the
Speaker 3: easiest way, of course, is to look at exchange traded funds,
Speaker 3: but also you could also consider mutual funds to get
Speaker 3: a divers fight holding and exposure to the region. And
Speaker 3: I think that's usually how investors get the first kind
Speaker 3: of a step into Southeast Asia.
Speaker 1: Rina quark any thoughts, Yeah, If I may.
Speaker 4: Just add, if we look into what we call the
Speaker 4: capital bonds, they are issued by most of the South
Speaker 4: as Asian Banks's key to look into what is the
Speaker 4: increment that you pick up as we move down a
Speaker 4: bank capital structure. Now, as Jase pointed out, you know
Speaker 4: Thailand placed on the reopening plan in China, so as
Speaker 4: they look into the dollar capital bonds that issue by
Speaker 4: tie banks. Here twos could offer relative value for most
Speaker 4: of the tie banks. Now, if we look into eighty one,
Speaker 4: as mentioned, there are some key to watch. What is
Speaker 4: the possibility of non chorus and of course the bank's
Speaker 4: underlying credit fundamentals, and we have to look while we
Speaker 4: look into potential relative value opportunities, we have to be
Speaker 4: cognistant of each eighty one bond structure as well as
Speaker 4: the bank fundamentals. And we have mentioned that for simple
Speaker 4: banks dollar eighty one they could be quite resilient, and
Speaker 4: I've actually seen a much lower set of as competitive
Speaker 4: globe appears amid the whole banking Tomoid Lately.
Speaker 1: James Geo, chief investment Officer at HSBC Private Bank, and
Speaker 1: Rina Quark Asia Financials credit analysts with Bloomberg Intelligence, thank
Speaker 1: you both very much for shedding some light on what's
Speaker 1: really remarkable economic growth story in Southeast Asia.
Speaker 3: Thank you, thank you for having us.
Speaker 4: Thanks Dorman, John.
Speaker 1: I'm Tom Corbett in Hong Kong.
Speaker 2: And I'm John Lee. This podcast was edited by Clara
Speaker 2: Chan and thank you for listening to the Asia Centric
Speaker 2: podcast