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Saturday, 20 June 2015

Maybank’s Mekong dreams

Political uncertainty and slower growth in Thailand did not deter Maybank Investment Bank Bhd from organising, for the first time, the Invest Asean conference in Bangkok.

Earlier conferences were held in Singapore and Vietnam with upcoming conferences in Philippines, Malaysia and Indonesia as the region’s fourth-largest banking group’s investment-banking arm sought business in an increasingly challenging environment.

Hosted by the investment bank’s Bangkok-listed brokerage arm, Maybank Kim Eng Securities (T) pcl, the one-day conference held earlier this week aims to attract investors to Thailand and also convince them of the opportunities in the region, especially of the Greater Mekong subregion.

But convincing investors will be tough given that all investors hate uncertainty, and that is clearly what they see in Thailand, over a year after the May coup that brought General Prayuth Chan-ocha and a coterie of military officers to power.

A senior journalist attending the conference tells StarBizweek that despite the calm on the surface, time is running out for the former army chief, who denied rumours of a counter-coup on Tuesday. The journalist says that supporters of former prime minister Thaksin Shinawatra will still give Prayuth a run for the money should elections be called now.

“They say the election will be held next year,” he shrugs, in a gesture that speaks volumes of his confidence that a proper democratic process will be followed through as promised by the ruling junta, known as the National Council for Peace and Order.

He points out that the pro-Thaksin faction will lay low for now as they do not want to jeopardise the ongoing process surrounding the new constitution, the draft of which was completed in April. The draft constitution will be forwarded to a committee for consideration this August. Analysts also believe that after a respectable first quarter, Thailand faces challenges ahead, of which the unresolved political issues loom large.

Maybank Investment’s chief executive officer (CEO) John Chong admits that the political uncertainties in Thailand, South-East Asia’s second largest economy, is an issue that investors have brought up. “There are questions, its an issue that is in the back of their minds,” he adds.

However, Chong says there are still opportunities in Thailand. Despite the political and market uncertainties, Maybank Kim Eng Thailand completed two major transactions this year - it was the sole bookrunner for mall operator Platinum Group pcl’s US$159mil initial public offering (IPO) and the co-lead manager for Global Power Synergy plc’s US$301mil IPO.

He says the Greater Mekong subregion is another investing proposition. Thailand is the largest and most developed economy of the subregion, an area that includes China’s Yunnan province together with Myanmar, Laos, Cambodia and Vietnam.

And it is not just about foreign investors’ interest in the country but also Thai companies who are interested in investing in the region. There have been several notable cross-border deals involving Thai companies in recent years, including that of Thai Beverage pcl’s US$11.2bil acquisition of Singapore-listed Fraser and Neave Ltd in January 2013 and the Charoen Pokphand group’s US$9.4bil acquisition of a 15.6% stake in a Chinese insurer from HSBC Holdings plc in late 2012.

Chong says that while Malayan Banking Bhd does not have a full-fledged bank in Thailand, its commercial and investment-banking operations are present in Asean and beyond. “The key factor is providing the value-add to clients, we can facilitate deals in the region or sell our products to them from other Asean markets,” he says.

Nevertheless, Thailand remains an important part of Maybank Investment’s broking operations. Maybank Kim Eng Thailand is the largest stockbroker in the kingdom, with between 8% and 9% market share, with the closest competitor having a 5% share. One-third of its 3,100 employees are located in Thailand, which also contributes 25% to Maybank Kim Eng’s overall income.

Despite the headwinds that Thailand is facing - slower economic growth, a drop in private consumption due to high household debt and fall in commodity prices, exports decline and slower public spending on infrastructure - both Chong and his Maybank Kim Eng Thailand co-CEO Montree Sornpaisarn say the pipeline for investment banking remains healthy. “It all depends on clients and market environment,” Chong says.

Sornpaisarn says the brokerage, in which retail equities make up four-fifths of the business, has a long-term view of Thailand.

“We look at opportunities and fundamentals, the markets will always be volatile,” he says at a media briefing.

Both say at times like these, client relationships play a huge role.

This may be the reason why Sornpaisarn and Chong say that while their long-term views on Thailand remain positive, Maybank Kim Eng’s diversified market (it is in six of 10 Asean markets and have offices in Hong Kong, New York and London) and product offerings allow Thai clients to diversify their risks and access to opportunities outside of the country.

Chong says there are also plans to increase the number of branches in Thailand, which stands at 56, besides rolling out more products. But for him, the opportunities also lay in the Greater Mekong subregion, of which Thailand is the gateway. Chong says the subregion is one of the most compelling and largely untapped investment destination with a combined gross domestic product of almost US$1 trillion and a population of 330 million.

“We’re asking the firms to be Asean multinationals,” Chong says, adding that the one-day conference is to let them know of the opportunities in the subregion. He argues that the Greater Mekong subregion will also reap the benefits of the Asean Economic Community (AEC), which will significantly lower costs while raising volumes of trade, investment, capital and labour flows.

Tags / Keywords: Maybank Investment , Maybank Kim Eng , John Chong , Thailand , Greater Mekong , Asean

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