Banking and Finance News & Trends: Aug Week 1
Banking and Finance News & Trends: Aug Week 1
Finance Sector News
1. Market Sentiments
i. As Berkshire Exercises Caution, HSBC Sees Opportunities in Tech Market Decline
Berkshire Hathaway, led by Warren Buffett, has significantly increased its cash reserves to nearly $277 billion, lowered its stake in Apple by half and significantly reduced stock repurchases. The move reflects a cautious stance on the US economy and stock market valuations. Shortly after, the US Nasdaq 100 index dropped by 3% on Monday, down 12% from its peak in July.
The trend comes amidst concerns about the US economy and potential overhype around artificial intelligence (AI). However, HSBC sees a unique opportunity to buy profitable companies at lower valuations and explore firms beyond the top tech giants, known as the “Magnificent 7”. In particular, medium-sized tech companies are believed to be good options given their likelihood to sustain earnings growth, supported by moderate but positive economic growth.
Read the full article about HSBC’s views about tech stocks.
Read the full article about Berkshire’s investment strategy.
ii. Chinese Companies’ Global Expansion Creates New Opportunities
Chinese companies are increasingly expanding overseas due to a competitive domestic market and slower consumption at home. These expansions allow Chinese companies to diversify risks and increase profitability. The trend is seen to present major opportunities for financial institutions like Citigroup, which has observed a notable increase in cross-border activities and numerous inquiries from Chinese firms about setting up operations and accounts. Key markets of interest include the Middle East, Africa, and ASEAN.
Takeaway: However, successfully venturing abroad would require firms to overcome challenges in navigating local regulatory environments, acquiring necessary local know-how, and sourcing skilled personnel.
Read the full paid article about Chinese firms’ interest in venturing abroad.
2. Market
i. PBOC to Enhance Economic Support, Prioritise Consumer Spending
In line with the Politburo’s directives, China’s central bank, the People’s Bank of China (PBOC), plans to focus the financial sector on improving people’s livelihoods and boosting consumption to support the real economy. The bank aims to:
- Maintain reasonable liquidity.
- Balance social financing and money supply with economic growth and inflation expectations.
- Pursue a prudent monetary policy to stabilise the yuan.
- Prevent financial risks, particularly in real estate.
- Support high-quality firms in issuing panda bonds while promoting cross-border yuan financing.
The People’s Bank of China (PBOC) has also reduced its daily support for the yuan to the lowest level in a year, aligning the daily reference rate more closely with market estimates. This move comes as the yuan has recently recovered some of its losses against the US dollar, due in part to a weaker dollar and a reduction in leveraged short positions.
Takeaway: The PBOC’s pullback in support may signal the central bank’s readiness to introduce further monetary stimulus to stimulate China’s sluggish economy, potentially by allowing more flexibility in the yuan’s value.
Read the full article about PBOC’s efforts to support the economy.
Read the full article about the PBOC’s easing of support for the yuan.
ii. Hong Kong’s Reforms to Streamline Banking System
The Hong Kong Monetary Authority (HKMA) will simplify the local banking structure by reducing the current three-tier banking system to two tiers. The move will require the existing 12 deposit-taking companies (DTCs) to upgrade to restricted licensed banks within five years or exit the market. The HKMA will guide DTCs through the transition without needing them to submit new license applications, provided they meet the necessary capital requirements and other thresholds.
Takeaway: This reform is set to streamline operations, enhance flexibility, and improve efficiency in Hong Kong’s banking sector.
Read the full article about HKMA’s banking system reform.
3. Business Moves
i. India’s Largest Bank Assigns 2,000 Bankers to Attract the Affluent
State Bank of India (SBI), the nation’s largest lender, is strengthening efforts in wealth management by revamping its wealth management unit. The move seeks to capitalise on the increasing number of affluent individuals. The strategy will involve deploying approximately 2,000 relationship managers and strengthening ties with smaller companies nationwide. SBI aims to leverage its extensive product range and distribution network rather than partner with other wealth managers.
Takeaway: SBI’s move reflects the growing number of domestic and global players looking to capture a share of India’s rapidly growing financial wealth.
Read the full article about SBI’s plans for wealth management.
ii. Morgan Stanley Allows Advisors to Offer Bitcoin ETFs
Morgan Stanley is set to become the first major Wall Street bank to allow its financial advisors to offer Bitcoin exchange-traded funds (ETFs) to eligible clients. Starting Wednesday, the bank’s 15,000 advisors can offer shares of BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund. This change comes in response to client demand and an attempt to keep up with the evolving digital asset market. However, the firm will limit the investments to clients with a net worth of at least $1.5 million and an aggressive risk tolerance. The firm will also monitor their crypto holdings to prevent excessive exposure. This move follows the SEC’s approval of 11 spot Bitcoin ETFs earlier this year, which made Bitcoin investments more accessible, affordable and tradable.
Takeaway: Morgan Stanley’s decision signals a cautious move towards mainstream cryptocurrency adoption in traditional finance.
Read the full article about Morgan Stanley’s acceptance of Bitcoin ETFs.
iii. BNP Paribas Interested in Acquiring AXA IM
BNP Paribas has entered into negotiations to acquire AXA Investment Managers (AXA IM), which has approximately €850 billion in assets under management (AUM). The acquisition, valued at €5.1 billion, is set to finalise by mid-2025 and includes a long-term partnership for managing a significant portion of AXA’s assets. The move enables the company to BNP Paribas Cardif to manage up to €160 billion of its savings and insurance assets. This acquisition aligns with BNP Paribas’ broader expansion strategy, following its recent stake acquisition in Fosun Group in Ageas and the fintech company Kantox.
Takeaway: The combined entity will oversee around €1,500 billion in assets, solidifying BNP Paribas’ position as a leading European asset manager, especially in long-term savings for insurers and pension funds. The partnership will also help the firms boost growth among institutional and retail investors by leveraging AXA IM’s expertise in private assets.
Read the full article about BNP’s interest in AXA.
4. People Moves
i. Banks: DBS, Citi, UBP, Deutsche and Nomura
DBS: DBS made two senior-level appointments:
- Tan Su Shan will take over as deputy CEO and later as CEO, succeeding Piyush Gupta upon his retirement in March 2025. Tan, the first female CEO and internally appointed leader of DBS has over 35 years of experience in consumer banking, wealth management, and institutional banking across major financial centres globally. She has been instrumental in expanding DBS’s regional private banking and integrating digital solutions. Tan will continue to focus on culture, customers, collaboration, and continuity, building on Gupta’s legacy of transformation, innovation, and growth.
- Sean Wong joins as the head of product management, managed solutions, for DBS’s private bank in Singapore. He was previously the head of investments at Endowus and the Executive Director of Morgan Stanley.
Citi: Yeo Wenxian was appointed the new head of wealth for Asia South at Citi Wealth, effective November 1. She is also set to become Citibank Singapore’s CEO, pending regulatory approval. Yeo will join the global leadership team led by Citi’s head of wealth, Andy Sieg. She will oversee the bank’s retail onshore and offshore wealth management businesses, including Citigold, Citigold Private Client and cards in Asia South and the United Arab Emirates. Yeo brings extensive experience from her 13 years at DBS, where she served as head of DBS Treasures Singapore and held several key positions.
UBP: Union Bancaire Privée (UBP) appointed Teresa Lee as the new Head of North Asia and CEO of Hong Kong. Lee succeeds Ivan Wong, a 37-year veteran who retired in May. Lee was formerly the Greater China Vice Chair at Bank of Singapore and has also served at Standard Chartered and ABN AMRO.
Deutsche Bank: Deutsche Bank Private Wealth hired two market heads to strengthen its global South and Africa segments:
- Puneesh Nayar, who is based in Singapore, comes from Julius Baer. Nayar has over 20 years of industry experience and has served at BSI Bank, Coutts, and HSBC.
- Nick Malik, based in Dubai, comes from Credit Suisse and has served at Standard Chartered Private Bank and Coutts.
Nomura: Nomura’s International Wealth Management (IWM) unit in Singapore hired 40-year private banking veteran Philip Kunz. Kunz will serve as Managing Director, Senior Advisor, and Group Head for Southeast Asia. Kunz previously led global private banking for South and Southeast Asia at HSBC and had served in senior roles at UBS, Credit Suisse, ABN AMRO, and Clariden Leu.
Read the full article about DBS’s first female CEO.
Read the full article about Citi’s CEO from DBS.
Read the full article about UBP’s North Asia head from BoS.
Read the full article about Deutsche Bank’s market heads from Julius Baer and Credit Suisse.
Read the full article about Nomura’s MD from HSBC.
ii. Financial Institutions: Prudential
Prudential: Prudential appointed Angel Ng as the new CEO for Greater China, customer, and wealth businesses. Ng, formerly a senior leader at Citi, succeeds Lilian Ng, who will retire at the end of the year but remain an advisor until June 2025. Ng has 25 years of experience in financial services and has led Citi’s Asia North and Australia cluster and Asia Global Wealth segment.
Read the full article about Prudential’s Greater China CEO from Citi.
Investment, PE & VC News
1. Trends
i. BlackRock Leads in the Race to Incorporate Private Assets into ETFs
Major money managers like BlackRock and Invesco are competing to integrate private markets into ETFs. However, significant technical and regulatory challenges must be overcome, as private assets are inherently illiquid, conflicting with the liquidity ETFs offer. To address this, firms are exploring various methods, such as synthetic exposure through swaps or mimicking private asset performance in liquid alternative ETFs. Despite these efforts, the liquidity mismatch and regulatory restrictions, like the SEC’s 15% cap on illiquid assets in open-ended funds, pose formidable obstacles.
Takeaway: If successful, the push could transform the investment landscape, making sophisticated private asset strategies available to a broader range of investors. This move could also inject new capital into private markets, which have recently struggled to maintain their rapid growth.
Read the full article about the interest in incorporating private assets into ETFs.
ii. Hedge Fund: Investors’ Appetite Wane, Funds Optimistic About China
According to Goldman Sachs, investor interest in high-cost multi-strategy hedge funds is declining. A survey of over 300 investors, including family offices, sovereign wealth funds, and pension schemes, revealed that:
- Only 15% are willing to pay pass-through fees, which would leave investors with an average return of 42%. This is down from over 20% last year.
- However, 85% stated that hedge fund performance met or exceeded expectations this year, up from 67% in 2023.
- More investors since 2020 plan to add hedge funds to their portfolios.
- Multi-strategy hedge funds have returned over 6% through June, although there is a notable disparity in performance among different funds.
Meanwhile, global hedge funds have:
- Increased their investment in Chinese stocks in July. Despite this, overall hedge fund allocations to Chinese yuan-denominated stocks and American depositary receipts (ADRs) remain near five-year lows.
- Showed significant interest in Japanese stocks, marking the highest inflows in nine months and reaching the highest holding levels in four years.
Other Asian markets saw mixed investment activities, with notable outflows from Taiwan and India and inflows into South Korea and Southeast Asia.
Takeaway: Despite a challenging flow picture in 2024, with multi-strategy funds experiencing net outflows, investor optimism for hedge funds has rebounded. Meanwhile, the renewed interest in Chinese stocks suggests that the recent high-profile Politburo meeting has instilled investors’ confidence in Beijing’s promise to prioritise economic growth. Overall, the global financial landscape remains volatile, affected by weak US job data and shifts in Japan’s monetary policy, which included a rare interest rate hike by the Bank of Japan.
Read the full article about investors’ interest in hedge funds.
Read the full article about hedge funds’ sentiments about the market.
2. People Moves: Temasek, Neuberger Berman and M&G
Temasek: Singaporean state investor Temasek announced the addition of three new senior leaders:
- Gabriel Lim, the current Permanent Secretary of the Ministry of Trade and Industry, joins as joint head of corporate strategy. Lim has extensive experience in economic policy and strategic development from his tenure in various government positions. His role will involve driving key corporate strategies and strengthening Temasek’s positioning with partners and stakeholders.
- Eng Aik Meng will join as the joint head of the Portfolio Development Group. Eng has over 30 years of experience in the healthcare and maritime industries and a proven track record in private equity investments. He held senior roles at TE Asia Healthcare Partners, Fortis Healthcare International, Sats, TPG Capital’s portfolio companies and American President Lines.
- Dinesh Khanna will join as the joint head of the Portfolio Development Group. Khanna, who was from Boston Consulting Group, has over 20 years of experience in global strategy consulting.
Neuberger Berman: Neuberger Berman appointed 30-year asset management veteran Madeline Ho to lead intermediary sales for Singapore and Southeast Asia. Ho has held senior roles at leading firms like SBI Digital Markets, Natixis Investment Managers, Fidelity International, and Franklin Templeton Investment. She is expected to leverage the increasing demand for multi-sector fixed-income and semi-liquid alternative products in the retail market to drive the company’s growth in Singapore.
M&G: M&G Real Estate appointed Wenning Jung as Director of Portfolio Management for the Asia Life Fund. Jung, who has over 20 years of experience and a strong track record in institutional real estate investment, will be crucial in managing the global fund of funds portfolio, driving growth, and generating new investment ideas. She previously served at Franklin Templeton and CalPERS.
Read the full article about Temasek’s three external hires.
Read the full article about Madeline Ho’s appointment.
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Image Sources:
- Business Times
- Reuters
- Investment Week