When the bears roam, it’s time for reflection | Leaders
Funding guru Tan Yueheng has been an enduring witness to Bocom Worldwide’s take-off in Hong Kong over the previous 20 years, attributing the group’s success to its prudent insurance policies in occasions of fine and dangerous. He talks to Evelyn Yu.
Tan Yueheng, chairman of Bocom Worldwide, says he’s devoted to creating the agency acknowledged as a world funding financial institution. (PARKER ZHENG / CHINA DAILY)
To banking principal Tan Yueheng, two milestones within the two-decade historical past of the enterprise he now heads have been extraordinary, not the least, promising.
It’s virtually precisely 20 years to the day when Bocom Worldwide Holdings Co — the brokerage and funding banking arm of the Chinese language mainland’s fifth-largest financial institution by belongings Financial institution of Communications — first set foot in Hong Kong as Bcom Securities Co to turn out to be one of many earliest licensed brokerages with a mainland background within the metropolis.
Bcom Securities’ “rebirth” in 2007 when it restructured itself as an funding financial institution and altered its title to Bocom Worldwide carried even better weight, recollects Tan, who’s now its chairman and government director.
“We don’t wish to be remembered as simply one other securities firm doing brokerage in Hong Kong. We wish to be acknowledged as a number one worldwide funding financial institution,” he tells China Day by day.
In a bull market, you don’t even have time for an excellent reflection of your work and construct your infrastructure. I feel we should always get busier when occasions are dangerous
Tan Yueheng, chairman of Bocom Worldwide
Having taken up a slot of managing roles in notable mainland securities homes, together with CMB Worldwide Capital Corp, Nice Wall Securities and China Retailers Finance Holdings Co, Tan joined Bocom Worldwide as a director in 2007 as the corporate kicked off its transformation from a brokerage to an funding financial institution.
Ten years down the street, in 2017, he was to bang the gong on the buying and selling flooring of the Hong Kong Inventory Alternate to herald Bocom as the primary State-backed securities home from the banking sector to go public within the metropolis.
Tan took credit score for having steered the corporate by means of monetary crises, driving them out by refraining from going with the bull with aggressive approaches when occasions had been good, sticking to the basics and reviewing its infrastructure when occasions had been dangerous.
Right now, he stakes the corporate’s future on the huge alternatives which are seen to emerge from China’s Belt and Street Initiative. He believes that Chinese language funding banks beneath huge business banks like Bocom Worldwide might finally develop into worldwide homes by unshackling the “onerousness” of “State-run” paperwork, pushing for market-oriented operations and going out in unison with the nation’s international push.
Tan, who additionally wears different hats, together with his place as incumbent chairman of the Chinese language Securities Affiliation of Hong Kong, issued a poignant reminder that neither Hong Kong nor any of his Chinese language funding financial institution friends stationed in Hong Kong might be known as a real worldwide participant.
Lengthy option to go
Hong Kong, he argues, nonetheless has an extended option to go to stay as much as its title as a world monetary heart, citing, amongst different issues, the native bourse scene, which continues to be being dominated by mainland enterprises. He additionally scoffed at the concept that the slew of measures the Hong Kong Inventory Alternate is enterprise to lure extra new economic system and tech listings is the panacea for remedying the state of affairs.
“The frenzy over the brand new economic system listings gained’t make a lot distinction in both boosting HKEX’s internationalization, or add to its uniqueness. Tech-focused Nasdaq is properly matured on this, Shenzhen’s ChiNext board has seen sizeable progress in enterprises. Hong Kong’s push for brand new economic system listings is simply to make up for misplaced classes, hardly an innovation,” says Tan.
The alternatives for the town’s funding banking sector, in truth, lie within the BRI.
“New York can’t do that, neither Beijing nor Shanghai. Hong Kong is the prime spot for BRI economies searching for listings, bond issuances or fundraising by means of funds.”
Taking the better half first, Tan thinks Hong Kong can take up a much bigger position in advising BRI international locations and areas about bond issuance.
Final yr, Bocom Worldwide took the only real lead within the Maldives’ debut sovereign bonds — a five-year, US$200-million be aware comes at a coupon fee of seven p.c every year in Could, adopted by a US$50-million faucet in November. It marked the primary time a Chinese language financial institution had taken such a lead in a global sovereign bond issuance.
Bocom can also be in talks with the governments of Mexico, Myanmar and Vietnam on comparable sovereign bond issuance. These discussions, Tan reveals, are nonetheless in a really preliminary stage, and neither the dimensions of the issuance nor the timeline might be disclosed for now.
On fairness funding, Bocom has additionally been a cherry-picker of high-performing startups at house and overseas.
It invested within the Singapore-based ride-hailing and logistics service supplier Seize, with out disclosing the time and dimension of the funding.
Final yr, the corporate participated within the E-round fundraising of Mobike — a bike-sharing firm that was later acquired by Meituan Dianping, the mainland’s largest supplier of on-demand on-line companies.
Bocom’s funding has given a lift to the funding financial institution’s revenue. Bocom Worldwide has simply introduced its interim outcomes ended June 2018, registering a internet revenue of HK$235 million, up 112.eight p.c year-on-year.
Ammunition to increase
In Could this yr, Bocom took out a three-year, twin foreign money syndicated mortgage of US$5 billion with 24 main banks and monetary establishments on the mainland and in Hong Kong, Taiwan and Singapore.
The US$5-billion mortgage, on prime of its HK$1.79 billion raised in final yr’s IPO, has supplied the ammunition the corporate wants for its push into varied different companies, equivalent to margin financing, asset administration and personal fairness funding.
Tan dismissed the concept that he’s taking Bocom Worldwide on a fast-track growth path, saying the borrowing is extra geared to optimizing the group’s legal responsibility construction, addressing the maturity mismatches between its short-term funding from banks and its long-term investments on the horizon.
He says the corporate has all the time been taking a measured method in searching for progress in good and dangerous occasions. As commerce tensions roil the worldwide market, Tan admits they do have a drag on a few of Bocom’s operations, equivalent to brokerage, however that doesn’t imply that monetary homes ought to take a relaxation in occasions of upheaval.
Banks must be cautious and search methods to climate the storm, says Tan. Whereas providing loans with shares as collateral has been huge enterprise for a lot of Chinese language funding banks, he says Bocom is tightening the approval of such loans though the demand is there.
In a market downturn, he explains, ought to shares hit a stop-loss degree, the compelled liquidation or sell-off of the pledged shares wouldn’t solely damage collectors, but in addition amplify a pointy downturn available in the market.
Tan is main his crew in actively reviewing the standard of its belongings, eliminating dangerous belongings, retaining the nice ones and elevating stakes in good shares whose costs have been dragged down by the market’s volatility.
Bocom Worldwide can also be engaged on some AI initiatives that would improve its IT infrastructure to ship good consumer expertise.
“In a bull market, you don’t even have time for an excellent reflection of your work and construct your infrastructure. I feel we should always get busier when occasions are dangerous.”
Good analysis the inspiration of funding banking
For one current blockbuster IPO deal, Bocom Worldwide was lacking from the lengthy record of bookrunners that covers virtually every little thing regarding each main overseas and Chinese language funding financial institution on the town.
“Our analysis crew thought it (the IPO firm) was overvalued,” says Tan Yueheng, chairman of Bocom Worldwide, with out figuring out the corporate.
He says Bocom’s “sincere opinion” on that firm’s valuation had made it lose some floor amongst its opponents.
In monetary circles, the perceived normal view is that the analysis division of an funding financial institution usually performs second fiddle to different revenue-generating items, and in some circumstances, it’s compelled to give you an upward and biased valuation in IPO circumstances that the financial institution’s funding banking division participated in, however Tan stresses this isn’t the case with Bocom.
As somebody with a analysis background, Tan says analysis is the “coronary heart and soul” of Bocom Worldwide, and he’ll see to it that integrity in analysis work doesn’t give option to the profit-driven mentality of an funding financial institution.
The 56-year-old government acquired a bachelor’s diploma in finance from the Hunan School of Finance and Economics in 1983 on the age of 21, obtained his grasp’s diploma in economics from the Graduate College of the Folks’s Financial institution of China — an esteemed faculty based by the central financial institution — and pursued his doctorate within the graduate faculty of the Chinese language Academy of Social Sciences — the assume tank for the nation’s prime leaders.
Tan is a agency believer that good analysis is the inspiration of funding banking enterprise. Bocom’s analysis crew is instantly accountable to the chairman, and the truth that its head of analysis Hong Hao, who has a repute for giving sincere, if not outlandish views, on the Chinese language economic system beneath Tan’s watch, not directly corroborates his protection of unbiased analysis.
“On the finish of the day, you want to resolve as a monetary companies supplier — do you serve simply your consumer, or traders and the whole monetary market?”