Hong Kong is the place to be if you want to invest in Asia

936
3
Hong Kong is the place to be if you want to invest in Asia

- Growing geopolitical tensions and threatened initial public offerings have done little to dampen the appetite of foreign banks for Hong Kong and China.

Bill Winters was the latest executive in recent weeks to signal a sweeping Chinese government crackdown and rising geopolitical tensions between China and the U.S. won't derail his lender's focus and investment in the region.

We don't see a structural or fundamental change in terms of the business opportunities for Standard Chartered, Winters said on a call with reporters Tuesday. Hong Kong's continuing role as a conduit into the Greater Bay Area mean that 'the opportunities for us in corporate banking and wealth management will be very, very substantial.

His comments echo the minds of other firms such as Citigroup Inc. HSBC Holdings Plc and Credit Suisse Group AG who all used earnings to underline its business as usual in Greater China. That comes despite a wide-ranging crackdown by Beijing on industries from its booming education industry to technology sector last month as Xi Jinping's Communist Party tightens its grip on the world's second largest economy.

In response, the U.S. Securities and Exchange Commission has halted initial public offerings of Chinese companies.

The regulatory push is taking its toll on markets, with Hong Kong's benchmark stock index dropping 15% from a high in February. China tech giant Alibaba Group Holding Ltd. missed sales estimates in the three months ended in June for the first time in more than two years.

The global banks have long been bullish on Greater China. Hong Kong has provided growth to international banks as some of the revenue from their home countries were shaken by the pandemic, while China is viewed by firms as a lucrative area for growth in wealth management.

At Standard Chartered Asia was the second region in the strongest market, with profit up 75% to $1.01 billion, countering declines in Europe and the Americas. HSBC, which is moving several of its senior executives to Asia, said Monday that risk-weighted assets in the region increased by 6% from the start of the year.

'We're investing heavily in China and investing heavily in the Middle East region, said Bloomberg Television Chief Financial Officer Ewen Stevenson in a Bloomberg interview. Citigroup's chief financial officer, Mark Mason, said last week that China's recent moves to crack down on companies are not likely to harm the bank’s business in the Asia-Pacific region. Credit Suisse CEO Thomas Gottstein said that while recent events contribute to a less predictable short-term situation, the firm sees'very strong and robust economic development not only in Asia, but also in China, which we consider very attractive for our business models.

China's clampdown has even boosted businesses in the region. HSBC said Monday that local capital markets had been given a boost by a shift in business from the U.S. to Canada?

The bank said about a quarter of a $35 billion increase in customer lending annually through its wealth and personal banking unit linked to short-term loan in Hong Kong related to initial public offerings where clients borrow money to fund their purchase of shares in the latest listings.

'Hong Kong is the place to be if you want to take part in the Chinese capital markets, Winters said in a Bloomberg Television interview Tuesday. 'This is the hub of Chinese capital markets and I don't think there will be any change anytime soon.