Business

Monday February 6, 2012

Hong Leong Investment Bank eyes bigger market in HK and China

By YAP LENG KUEN
lengkuen@thestar.com.my


KUALA LUMPUR: Hong Leong Investment Bank (HLIB), which is in the process of merging with MIMB Investment Bank, plans to grow its regional presence especially in Hong Kong and greater China.

“When we look at the region, we look at the markets that are beneficial and complementary to us,'' said HLIB CEO Lee Jim Leng.

In terms of HLIB's foreign share trading, its biggest markets currently are Hong Kong, the United States and Singapore.

“Due to demand for market coverage, it makes sense for us to extend our products and offerings including research to these markets.

Lee: ‘Local players do have a fairly good chance in the Hong Kong and greater China markets.’

“Local players do have a fairly good chance in the Hong Kong and greater China markets,'' she said.

In its planning, HLIB has considered that by 2020, greater Asia will contribute more to the world economy while the contribution by the advanced economies is projected to drop by 10% (from 48% to 38%).

Currently, emerging Asia contributes only 28% to the world economy, and that is going to hit 39% by 2020.

The group already has footprints in China via its property and banking activities; it is setting up an asset management business in Singapore; under the broader Hong Leong group, it has investment, property, financial services as well as hospitality and leisure businesses in Asia and Britain; while under Hong Leong Industries, it has a range of manufacturing actoivities.

“The group has footprints in major cities of the world,'' Lee said. “We hope to leverage on these presences. Immediately, the key markets we are looking at in terms of our key competencies and strengths are Hong Kong, Singapore and to a certain extent, Indonesia.''

Indonesia is one of the key countries that is coming up very well; last year, the Jakarta Stock Exchange was a top performer.

“We may not operate on a full licence but as a satellite investment bank (IB) boutique kind of business,” she said.

“A lot of Indonesian deals are financed out of Singapore,'' she said. “The Indonesian bond market itself is very small. Out of the five markets, the Indonesian bond market is the smallest in the region.

“From our perspective, one doesn't need to have a full brokerage licence or set up an IB out of Jakarta (HLIB has not started any office in Jakarta yet). One just needs to offer boutique services where one can connect to the clients, hire talents and feed all the deals through international markets,'' she said.

Hong Kong, as the centre for greater China and one of the most established financial markets in the region, is very appealing to HLIB.

“Hong Leong has distributed a lot of capital market products but that is limited to onshore distribution.

“For example, if we are looking at a US dollar bond offering, we can't be looking at just Malaysia, we need at least a regional presence.

“One way is to work with a foreign house but there will be no transfer of technology in the sense that we never get to know the markets ourselves and always be 100% dependent on our partners.

“To be a really relevant regional player, we need to have a distribution that goes beyond Malaysia,'' she said.

A lot of funds from Britain and the United States already have offices in Hong Kong. “If we have an IB in Hong Kong, our access to the clients and channels will be much better,'' she said, adding that Hong Kong was an important market to HLIB which would be improving its products and services there.

“For example, if we have a huge bond distribution, clients will be asking where is our platform. Today, we have our sister companies and associates to help, but if that is not part of our own group; in terms of developing the channels, we won't feel the sponsorship as much.

“We want to look at growing that platform for HLIB,'' she said. “We need to invest in people who are strong in distribution in the region.''

Domestically, HLIB aims to boost its retail and institutional businesses. The merger plan with MIMB has been submitted to the authorities.

Once completed, HLIB will have a staff strength of 265, with 200 remisiers with an additional 90 remisiers from MIMB.

“Retail broking has held up quite well over the last few months, and HLIB will capitalise on its strength in Internet e-broking while coming up with products that will provide more stable returns,'' Lee said.

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