Nick Lord, associate director of regional markets at Macquarie Equity Market Group, comments on opportunities for foreign banks and private equity firms in Asia.
On the attraction of Asia for foreign banks:
There aren’t really the growth prospects in emerged markets that once existed, so what is happening is that these banks are using domestic market earnings to expand overseas and seek out growth.
The Asia market offers growth; you’ve got a young population, expanding populations and a population where people are becoming increasingly wealthy. As a consequence of that, if you’re a bank, you’ve got some fantastic growth opportunities and that is what emerged market banks are looking for.
Good work: Macquarie Equity Market Group’s Nick Lord feels Standard Chartered has progressed a lot in the last four to five yearsOn foreign banks’ strategies:
What is happening is that other banks from Europe and the US are basically building up stakes, they are building up small positions and what they are really trying to do is get a little bit of experience, a bit of presence, get a feel for the market and see if that is something they would expand further in years to come.
On regulation dangers:
The most attractive markets in Asia for foreign lenders are China, India, Korea; they’re big markets, they’re markets that are growing and the biggest constraint has got to be regulatory. These countries will want to integrate more into the global financial system and I think as they do that they will open their markets. But they will do that at a time when their own domestic operators can compete.
On the entry of PE firms:
Private equity firms are coming in here for the same reason as the foreign banks are coming in. You’ve got the growth prospects there and currently they think there are very attractive prospects.
On Standard Chartered Plc.:
Standard Chartered in particular is a bank that has caught up a lot in the last four or five years. There has been a massive strategic expansion in North Asia.
On HSBC as a value opportunity:
The thing about HSBC is that there is a lot of value there. In the short term, you’ve still got some sentiment risk surrounding what is happening in the US sub prime market.
We are not out of the woods yet but what that is doing at the moment is creating a fantastic value opportunity in HSBC.