Friday 13 October 2017

This year marks 20 years since the creation of the Hong Kong Special Administrative Region.


Our Greater China CEO Paul Yang reflects on a period of rapid growth, during which the Chineseeconomy has grown to become the world's second biggest and Hong Kong no longer operates as theonly "window" into China.

China's ongoing transformation has been remarkable, but so has Hong Kong's ability to "tag along".Over the past two decades, China has transformed from being the world's factory, attracting hugeforeign direct investment and dominating the manufacturing sector, into an increasinglysophisticated financial market, with Hong Kong remaining the jewel in the crown. From initial publicofferings to debt capital markets, roadshows no longer need to stop in Europe and the US as capitalhas started to be raised right here in Shanghai, Beijing, Shenzhen and, more than ever, Hong Kong. 
  
Post joining the World Trade Organisation, China convinced the world that its banking system wasnot bankrupt but investable. Even with Petrochina and China Life's blockbuster offshore listings inNew York, we saw that jumbo "China Inc" IPOs were also very at home in Hong Kong.  This wascertainly the case for China's big banks and many foreign bank investors tried – and somesucceeded – to gain strategic footholds pre-IPO. The majority of these foreign banks madesubstantial capital gains from doing so. Ironically and in the midst of the great financial crisis thatstarted with the subprime, some large US banks relied on these capital gains to save them fromwhat could have been much worse.

BNP Paribas took a strategic stake in the Bank of Nanjing back in 2005. We were impressed by thebank's management and trusted that we could contribute to Bank of Nanjing's ongoing developmentalongside Chinese reforms. We remain a strategic investor today, having developed many projectstogether.

We have accompanied our global clients in the hunt for Chinese partners during the period of one-way inbound M&A over the last decade. But we have also helped top Chinese clients to securestrategic mining and resources assets in Latin America, and more recently higher technology targets,or healthcare providers, in Europe, our home base.  With a strong and diversified banking model,we've been able to accompany our clients and provide financing, as well as risk hedging, on top ofM&A advice.

Perhaps most exciting, however, have been changes in the fixed income, currencies andcommodities space in line with the internationalization of China's currency.  As China has committedto reform and allowing more and more market influence in rates and currencies, markets haveevolved from being a largely one-way bet. As volatility increases so does our clients' needs to hedgetheir risk. The Chinese market learns very fast and that creates tough competition, but it is also ablessing because as China's companies become more sophisticated, we've been able to demonstrateour value by closely accompanying our clients through periods of rapid change.

We have been in HK for 60 years and we have lived through many up and downs. Our client franchise is broad and solid, dealing at times with the first, second and third generations of entrepreneurs. We are committed to the region and learning from our experiences. We feel very at home here and our clients know they can count on us, during good time and bad times.

It's a privilege to have won Asia Risk's RMB House of the Year and the Best Bank in Hong Kong inAsiamoney's inaugural Corporate Client Choice Survey in such a special year. We look forward tocontinuing to serve our clients throughout many more milestone years to come.



Paul Yang – CEO of BNP Paribas Greater China
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