Maybank Kim Eng, the investment banking arm of the Maybank group, is counting on Asia’s continous growth story to provide a steady stream of investment opportunities for investors in the West.
Chief executive officer Datuk John Chong says interest in Asia “has always been there”, but with the current numerous political and economic uncertainties especially in the European region, interest has picked up.
“One of the key topics for the last 12 months has been Brexit.
“I’m optimistic that Brexit will lead to the strengthening of trade and investment ties with Asean and Asia as a whole,” Chong tells selected Malaysian media.
“Opportunities will arise especially for countries like Malaysia which have maintained strong economic ties with places like the UK.
“As such, expectations are for greater free direct trade between such nations,” he adds.
Maybank Kim Eng has just wrapped up a two-day investment conference in London, where it organised the Invest Asia UK.
The conference saw the participation of more than 300 delegates from more than 23 countries.
The conference is an extension of the investment bank’s Invest Asean conferences that started in 2014.
“We did two things differently at this conference. One, we included companies not only from Asean but also from North Asia and some frontier markets. Two, we also brought our fixed income team to meet with the investors, something we had not previously done because there is now increasing appetite for fixed income investment,” Chong says.
One of the key factors that is supporting the rise of fixed income investment is increasing infrastructure building in sectors like power and ports, especially within Asean.
“Funds which are long-term investment players - people like insurance funds, pension funds - they have long-term liabilties, so they need to invest in long-term assets like these.”
The Asian region reportedly needs about US$22.6 trillion of infrastructure expenditure from 2016 to 2030 to maintain growth momentum and eradicate poverty.
“Our role is to be the intermediary between the corporates and the investors. Obviously, we have formed a lot of relationships with investors globally, so we talk to them and ask them which companies they are interested in... then we bring those companies here to meet them...”
Maybank Kim Eng, Chong adds, has tie-ups with Asian-focused companies that enable it to easily arrange such meetings.
“Even though Maybank’s focus is on Asean, we have tie-ups with a couple of firms. For example, in South Korea, we have a tie-up with Daishin Securities, in Taiwan, we have Cathay Securities and in Japan, we have Mizuho Securities. So, we take advantage of these tie-ups, which enable us to bring companies from these countries to meet with investors.
“We hope to see more flows and investments into the capital markets of emerging and frontier markets, which will benefit not only us, but generally the markets of these countries - that’s key.”
Maybank Kim Eng is expecting stronger growth for Asia this year, boosted by a cyclical recovery in trade and commodity prices.
Chong says the region is seeing a robust recovery in exports and trade-related services from the end of last year, and this is benefiting many Asian economies, especially those that are trade-dependent.
A young population and increasing urbanisation are also factors that will contribute to growing and sustainable consumer demand and long-term structural growth within Asia, he points out.
Citing data, he says Asia’s 4.4 billion population with a median age of 30, makes up about 60% of the world population and Asean also has the world’s third-largest labour force, with 60% still below the age of 35. “Asia is also home to two of the world’s largest emerging economies, India and China, with growth rates of 6%-7%. This will have substantial spillover benefits to the surrounding economies.” Chong adds.
In terms of deal flows for Maybank Kim Eng, he says the pipeline is healthy.
“We are doing a couple of bond transactions at the moment, these are mainly in Malaysia. Regionally, there are project financing deals, but definitely, there are many more transactions that will happen this year compared to last year...
“Markets have been positive, especially for Malaysia. From the equities perspective, if you look at the month of April alone, net inflow of equities was roughly about RM2.7bil and year-to-date, it’s about RM8.4bil.
“In terms of value, we are probably the fastest-growing equity market in Asean year-to-date - coming from a low-base is one thing but generally interest is there.”
Uncertainties remain one of the greatest challenges for a business like Maybank Kim Eng’s. “In Europe, for instance, with the elections going on, we are not sure yet how the (new) policies will affect us. On the upside, markets and commodity prices are improving. “We see a lot more interest in our conversations with clients, they are looking for assets to acquire, placement of funds, rights issues and the many other forms of funding...this year will be better.”
A total of 31 corporates from 12 countries including China, Korea, Taiwan, India, Malaysia, Thailand, Indonesia, the Philippines and Pakistan, covering North Asia and Asean, participated in the Invest Asia UK conference. Collectively, the corporates have a total market capitalisation of about US$500bil. Additionally, a total of 120 funds across Europe totalling US$19 trillion in assets under management also took part in the conference.