When In Asia
For most people who work in capital markets, travel comes with the territory. That’s definitely the case here at Origin, where our team has collectively spent the past 5 weeks in Asia.
Franklin and I visited back in September 2017, and even then we noted increasing interest in our platform from the region. I returned earlier this year in June, and today, I’m happy to say, we have our first team member on the ground in Hong Kong. We’re fortunate to have Per Nordstrom join the Origin family, and he comes with a wealth of knowledge in the syndicate/MTN space, having worked at Dresdner, UBS, Standard Chartered, and SEB, across London, Singapore and Hong Kong.
To coincide with Per’s arrival, Origin’s London team has collectively spent 5 weeks out in the far east, booking in 67 meetings with issuers and dealers in locations as diverse as Doha, Seoul, Hong Kong, Sydney, Melbourne, Brisbane, and Singapore. Yes, this was a timely opportunity to pitch new prospects on the value of our offering. But it was also a chance to sit down with our existing clients, thank them for their business and get valuable feedback on how we can improve.
Rob joined for a week in Hong Kong (where we managed 17 meetings in 3 days, a personal best for me!), which was great as he was able to see first hand how the local market operates, helping to frame our vision for the product.
The overwhelming sense we got when visiting Asia is one of excitement. The market there is growing rapidly. USD denominated debt issuance in Asia ex-Japan hit $377bn, up from $80bn in 2007, and it’s projected to hit $1tn by 2020. That doesn’t even include onshore markets in Japan and crucially, China. As various economies are maturing, borrowers (FIG, corporate, and sovereign) are increasingly looking to the international markets for capital. There is a lot of heavy lifting to be done, as I’m sure you can imagine! We regularly meet issuers that are printing 300+ transactions a year, with processes that are entirely manual, and limited manpower to process everything. We see this as a huge opportunity.
The region is still characterised by fragmentation, too. It’s easy to think of Asia in the same way we think of Europe but that would be a gross simplification. Despite all the hand wringing over Brexit, Europe’s capital markets enjoy a significant amount of coordination and consolidation, with investors in one region easily investing across borders within the EU-27 and beyond. Asia is really a collection of different markets that are quite self-contained, but slowly opening up. Obviously this applies to China and Japan, but also Australia, Indonesia, and Malaysia.
Then there’s the “international” RegS USD market that binds everyone together, with activity centered in Hong Kong and Singapore. The opportunity to be the platform that binds all the local markets together is really exciting and one we intend to take.
China represents an extraordinary opportunity. The country’s onshore bond market is valued at roughly USD12tn right now, and there’s limited cross border flow with the international capital markets. Bond Connect, launched last year, aims to slowly change that. From conversations we’ve had, it’s already been a success. Initially, it was focused on helping overseas branches of Chinese institutions to invest their capital back onshore. Now, more and more international investors are using it to deploy capital. As reporting standards mature and there is more and more transparency about borrowers, we expect this to be one of those mega-trends that defines an era. So keep your eyes peeled.
On a personal level, this was an exhilarating trip, but I’m definitely glad to be home after three weeks on the road. Nothing in the region is close, so pretty much every destination is a long(ish) flight away. Spending three weeks living out of a suitcase and chopping and changing hotels gets tiring pretty fast. But I keep myself sane by going for a few runs in every destination, and it was great to explore the jungly mountain trails of HK, the cliff-side walks south of Bondi beach in Sydney and the tropical trails of Singapore. Helped me burn off some of that calorific airport food, too!
It’s interesting to see how other financial centres operate. The Aussies really do love their coffee. In Hong Kong, you’ll be offered a glass of warm water and Chinese tea at a meeting. In Singapore, given the heat and humidity, not a single person wears a jacket or a tie, except those who are obviously visiting from out of town. Literally every single building in Hong Kong has a spectacular view, as they are all clustered in one area and have a view of Victoria Harbor. It must be an incredible place to live, work and play!
Here at Origin we have high hopes for the region, and are excited to finally have a presence there. I’ll be visiting more often for sure, and as the business grows, we’ll be expanding our footprint there. Our overwhelming belief is that in the midst of protectionism and rising barriers to trade, Origin can help capital flow across borders. It’s very exciting for us to take our first step towards that goal with our expansion into the region.