Flora Mok and myself (pictured above) were privileged to attend the Asian Financial Forum, the Asia Private Equity Forum and the 2018 Family Offices Solutions Showcase and Asia Co-Investors workshops recently in Hong Kong. The Asian Financial Forum is an annual gathering of foremost financial and business leaders.
The takeaway messages from an Australian perspective were:
- The world economy is growing, inflation and interest rates are subdued and all major economies are contributing in a “synchronised expansion”
- World growth is expected to be approx. 3.7%;
- Asia is contributing approx. 2/3 of the worlds growth with China being approx. 1/3 of the world economy;
- The new industrial revolution is underway with Big Data / Blockchain / Artificial Intelligence & Robotics and Cybersceurity technologies gaining traction;
- China is looking to grow sustainably and is investing in R&D and technology and encouraging enterprises to go international (part of the Belt and Road initiative);
- China is also building world class financial platforms eg. Shanghai and Shenzen Connect, where Chinese mainland and Hong Kong investors can invest in securities listed on the Shaghai, Shenzen and Hong Kong stock exchanges seamlessly;
- Investor confidence is high with 58% of participants saying that the global outlook for 2018 will be better (compared with 22% last year);
- Interestingly the participants ranked the “Policy directions of the US administration” as the largest global economic risk for 2018 (as a side note as I was returning to Australia the US Govt had “shut down” due to the impasse in the Senate);
- China was seen as the most attractive region for investment return in 2018 with Southeast Asia being second;
- The Telecom, media and technology (TMT) sector was seen as having the greatest growth potential with Healthcare being second;
- Respondents expected China’s real GDP growth rate to be between 6-7% in 2018 with the majority of respondents predicting growth at the higher end of the range;
- Hong Kong is the single largest direct investor into China and Hong Kong receives 50-60% of all outflows from China;
- Private markets are very buoyant with large private equity and venture capital firms having trouble deploying capital;
- Risks for deployment of funds are around management teams, creating value and valuations;
- Funds are looking for foreign markets to exit investee companies due to more favourable “share lock up” arrangements;
- Limited Partners are also driving direct investments rather that via funds as they become more sophisticated.
We were also able to meet a number of our investors and counterparties as well as meet new funds and family offices looking to deploy capital.
Please contact us to discuss further.
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