Reaching the top - The Asset Triple A Country Awards 2018 - North Asia
Overcoming market volatility - how the best advisers in North Asia address China’s economic slowdown and its trade war with the US to achieve success and recognition
As China wrestles with slower economic growth and its trade war with the US, the rest of Asia also struggles with the volatile and challenging market environment, with these confidence-sapping conditions compounded by inflated interest rates.
Once again, China demonstrated that it is a major battleground for business among banks, especially for international banks, a situation clearly noted by the board of editors at The Asset during the evaluation process for The Triple A Country Awards 2018. After all, China accounts for the lion's share of transactions in both the equity and debt capital markets in Asia, ex-Japan and Australia.
China's dominance in capital market activity is exemplified in the Asian G3 bond market, with the reduced fund raising by Chinese issuers this year putting a brake on the record issuance volumes witnessed during the past two years. The total G3 bond volume amounted to US$240.34 billion as at November 15 2018, according to Refinitiv figures, down 16% from US$286.11 billion in the same period a year ago.
This volume was pulled down largely by the decline in issuance out of China, which plummeted from US$139.25 billion to US$109.87 billion during the same period. The drop was more pronounced in the high-yield bond market – a space dominated by Chinese property companies – as their issuance plunged by 43.6% to US$19.01 billion, from US$33.70 billion in 2017.
Amid a backdrop of rising interest rates, many issuers decided to stay on the sidelines rather than paying a higher new issue premium to gain access to the market. Others looked at alternative funding avenues such as the private placement market or the loan syndication market to meet their financing requirements.
The IPO market in Asia told a different story. Here, the volume of activity in Asia, ex-Japan and Australia, exhibited a slight increase to US$76.11 billion as at November 30 2018, from US$75.79 billion a year earlier. The Refinitiv figures show that China has been driving this segment with a market share of 77.4% or US$58.89 billion worth of IPOs, up from 58.2% or US$44.09 billion in 2017.
It wasn't all good news for investors, as several of the prominent IPO transactions are trading below their offer prices, such as the much-anticipated Xiaomi Corporation. The Chinese "new economy" company, which boasts a share structure with weighted voting rights, raised US$5.4 billion in a Hong Kong IPO with an offer price of HK$17 per share. The company commenced trading on July 9, 2018 and was quoted at HK$13.64 at the market close on December 7.
Overall in North Asia, Citi was voted the Best Bank in the Global category in three markets – China, Korea and Taiwan. Citi is the only US financial institution that operates a consumer banking business in China, and has made strong progress across corporate and investment banking in this market.
In Korea, the bank has implemented a new consumer banking transformation strategy and has built the best-in-class wealth management centres and enhanced digital-centric customer services. Citi Taiwan, on the other hand, maintains its leadership in this highly-competitive market by providing innovative products and services to institutional and retail banking clients.
HSBC, meanwhile, won the Best Bank in the Global category in Hong Kong, where it is considered a market leader with a full spectrum of products and services. It has a leading market share across major products, including customer accounts, mortgages, loans and advances to customers, trade financing and debt capital markets transactions. Apart from Best Bank, HSBC was also chosen as Best Bond Adviser – Global, and Best Loan Adviser in Hong Kong.
Among the other foreign banks, Credit Suisse was a big winner in Korea, scooping four awards: Best Corporate and Institutional Bank – Global, Best Equity Adviser, Best M&A Adviser, and Best Brokerage. The Swiss bank distinguished itself in this market by executing in April this year the first ever undocumented convertible bond offering for LG Chemical, amounting to US$608.2 million equivalent – making the issuance process easier for selected issuers.
UBS was chosen as Best M&A Adviser in China and in Hong Kong, having led market-defining transactions this year, riding on the China outbound theme and in corporate restructuring. In Hong Kong, the bank acted as the financial adviser to Link Asset Management in relation to its disposal of a property portfolio of 17 assets to a consortium led by Gaw Capital Partners for a total consideration of HK$23 billion (US$2.95 billion).
In Taiwan, Yuanta Securities stood out, winning awards in three categories – Best Corporate and Institutional Bank – Domestic, Best Equity Adviser and Best Bond Adviser for New Taiwan (NT) dollar. E. Sun Bank, on the other hand, retained the same two awards won last year: Best Bank – Domestic, and Best Bond Adviser for NT dollar. CTBC Bank achieved the same feat, once again winning the Best Debt Adviser and Best Loan Adviser, achievements secured last year.
In China, Bank of Communications regained the Best Bank honours in the Domestic category, having previously won this award in 2016, on the back of actively responding to the changing market and political environment, plus accelerating reforms and innovation to achieve stable financial results. The Best Bond Adviser awards are shared by ICBC in the domestic category and Bank of China in the Global category.
In terms of deals, the environmental, social and governance (ESG) theme resonated during the award period. A number of green, social and sustainability bond offerings won across different markets.
In Korea, for instance, the US$600 million issue by Korea Hydro & Nuclear Power Company won the Best Green Bond award, while the US$500 million floating rate notes by Industrial Bank of Korea was chosen as the Best Social Bond. The Best Sustainability Bond award went to Korea East West Power Company for its US$500 million fixed rate notes – the first sustainability bond by a government-sponsored enterprise both in Korea and in Asia, ex-Japan.
In Hong Kong, two green-related transactions joined the winners' circle: the US$500 million green bond by Swire Properties, and the HK$350 million green loan for Leo Paper Group, representing the first green loan for a Hong Kong private company.
In China, the first green bond under Bond Connect by the Agricultural Development Bank of China, amounting to 3 billion yuan (US$436 million) also received the recognition as the Best Green Bond during the review period.
For the complete list of winning banks/advisers, please click here.
For the complete list of winning deals, please click here.
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11 Dec 2018