Top Story: Southeast Asia Lures Private Equity, but Dealmaking Challenges Grow - BCG Report
Some of the biggest names in private equity are racing to set up shop in Southeast Asia, drawn by the region's rapid economic development and abundance of natural resources, according to a new report by The Boston Consulting Group. The report, Private Equity in Southeast Asia: Increasing Success, Rising Competition, was released on December 6. A word of caution, however: a spate of dealmaking is pushing asset prices upward, the report says. As a result, the corridor for success is growing narrower, and private-equity firms can no longer rely on growth alone to generate attractive returns.
HIGHLIGHTS:
- Loosened regulations cause capital undercurrents, threatening Vietnamese economy - The East Asia financial stability conference which has just finished in Hanoi spent much time on the discussion on "shadow baking," a matter of great interest of the international finance market after the collapse of Lehman Brothers which has led to the 2008-2009 global financial crisis.
- The Secretary General of the International Organization of Securities Commissions, David Wright, delivered a speech on December 10 before the Atlantic Council in Washington DC on the future of global financial regulation. Please click the link to his remarks.
The Islamic Financial Services Board (IFSB) has announced the theme of its 10th annual summit as "The Future of the Islamic Financial Services Industry: Resilience, Stability and Inclusive Growth", to be held 14-17 May 2013 at Sasana Kijang, Kuala Lumpur, Malaysia, hosted by Bank Negara Malaysia.
Market Development
Booming Southeast Asia facing new headwinds: ADB | FT, Dec 6
Robust domestic demand, the rise of the middle class and healthy corporate balance sheets are reasons why southeast Asia is being talked up as the last man standing in an otherwise anaemic global economy.
But Thiam Hee Ng, a senior economist at the Asian Development Bank, has sounded a rare note of caution on the region. He points out four factors that should give the boosters pause.
Final India-ASEAN FTA talks likely by Dec 20 | Money Control, Dec 10
India said it is hopeful of concluding the final discussions for a free trade agreement on services and investments with ASEAN members in time for next week's summit. The Association of South East Asian Nations (ASEAN)-India Commemorative Summit is scheduled for December 20-21. "Yes, we expect that the India-ASEAN services and investments agreement will be concluded by the time we have the Summit," Additional Secretary in the Commerce Ministry Rajeev Kher said here at a Ficci function.
ADB to help in implementing Islamic finance standards | BERNAMA, Dec 11
The Asian Development Bank (ADB) will help grow access to Islamic finance in Afghanistan, Bangladesh, Indonesia, and Pakistan with a US$750,000 technical assistance (TA) grant to help implement prudential standards developed by the Islamic Finances Services Board (IFSB). Sani Ismail, Financial Sector Economist at ADB said: "Islamic finance can provide access to the unbanked and promote financial stability through the development of an alternative asset class. "This can help diversify the financial sector in developing Asia," he said in a statement.
Market Regulation
RI continues to anticipate global economic turmoil | Tempo Interactive, Dec 6
Indonesia will continue to conduct anticipatory efforts to reduce tension caused by global economic turmoil, which has yet to subside. Finance Minister Agus Martowardojo said the efforts would be conducted through coordination and communication with the Coordinating Forum for Financial Systems Stability (FKSSK).
VN PM orders restructuring of securities market and insurance enterprises | Tuoi Tre News, Dec 9
Prime Minister Nguyen Tan Dung signed the Decision 1826/QD-TTg approving the Project on restructuring the securities market and insurance enterprises. The objective of the project is to improve the role and position of the securities market and insurance enterprises in order to effectively support the monetary policy during the process of restructuring credit organizations.
Private Equity
Private equity looks to Vietnam and RI | The Indian Express, Dec 10
Higher prices for companies in North America and political and regulatory risks in China are leading private equity investors to consider the emerging markets of southeast Asia, a survey has found. Private equity firms that raised money from pension funds, insurers and endowments on the promise of delivering superior returns, have unearthed few deals in China and have competed fiercely for the businesses they can find, pushing up prices. The trend to higher prices is echoed in private equity's largest market, the United States, where the supply of cheap financing from lenders has given buyout firms the firepower to pay more for companies.
Asset Management
SG is most desired home for mobile rich | SFGate, Dec 11
Singapore topped Hong Kong as the most desired place in Asia for so-called mobile millionaires to reside, with quality of life cited as the main attraction, a RBC Wealth Management survey showed. Almost a third of the millionaires in Asia who live, work or spend more than half their time outside their countries of origin prefer Singapore, while 24 percent pick Hong Kong, the second most popular in the region, RBC and The Economist Intelligence Unit said in a joint research report yesterday.
Banking
Asian banks fill credit gap left by Europe lenders | MarketWatch, Dec 9
Asian banks have stepped up their regional lending, filling the funding gap left behind as European banks curbed their international activities in response to Europe's debt woes and the global financial crisis. Data from the Bank for International Settlements show that Japanese banks, as of the second quarter of this year, had increased their foreign claims on emerging Asia Pacific by around $100 billion since just before the collapse of Lehman Brothers in mid-2008.
SWIFT to set up office in M'sia next year | BERNAMA, Dec 11
The Society for Worldwide Interbank Financial Telecommunications (SWIFT), with more than 10,000 financial institutions and corporations in 212 countries, is expanding its presence in Asia Pacific by setting up its corporate service centre in Malaysia February next year. SWIFT is a member-owned cooperative that enables its members to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies.
RI financial firms struggle to attract the best workers | Jakarta Globe, Dec 9
Finding the right workers in the financial industry, though - particularly at a global institution like Citigroup - becomes a challenge. The solution for the bank, Bird says, is to provide training for employees to help them develop their careers. "It's always a challenge," Bird said in an interview in Jakarta. "We do invest in training a lot. When you have a strong brand, you attract good people. When you train them well, you attract other people to try and hire them. We know that's the way things go."
BI SME loan requirement may hurt foreign banks | Jakarta Post, Dec 7
Bank Indonesia's (BI) new regulation obliging banks to channel at least 20 percent of their lending portfolios to small and medium enterprises (SMEs) may hurt foreign banks, most of which do not have a strong footing in such credit segments, analysts warn. Fauzi Ichsan, an economist with the UK-based Standard Chartered, said that the policy would affect foreign banks operating in the country as many of them currently disbursed less than 10 percent of their loan values to SMEs.