31 May 2011 Hong Kong, The Roles of RMB Internationalisation€¦ · Hong Kong, The Roles of RMB...
Transcript of 31 May 2011 Hong Kong, The Roles of RMB Internationalisation€¦ · Hong Kong, The Roles of RMB...
Hong Kong, The Roles of RMB Internationalisation Citi HK Financial mini-Conference
31 May 2011
Mark McCombe Chief Executive Officer Hong Kong The Hongkong and Shanghai Banking Corporation Limited
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Forward-looking statements
This presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of the Group. These forward-looking statements represent the Group’s expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Additional detailed information concerning important factors that could cause actual results to differ materially is available in our Annual Report and Accounts 2010. Past performance cannot be relied on as a guide to future performance.
This presentation contains non-GAAP financial information. Reconciliation of non-GAAP financial information to the most directly comparable measures under GAAP are provided in the ‘Reconciliations of reported and underlying profit before tax’ supplement available at www.hsbc.com.
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RMB to be the third largest international currency
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China GDPUSD 5.7tn GDP in 2010, 2nd
largest in the world 8
Rise of Greater China Significant economic benefits for Hong Kong
China is the largest exporting country
–
USD1.5tn total exports in 20103
–
Will surge to around USD2.4tn in 20204
Robust HK/China trade
–
53% exports/44% imports of HK to/from China5
China engages in active foreign asset acquisition and continued domestic infrastructure spending
Strong capital flow between China and HK
–
45% of overseas projects in China are HK related2
–
592 Mainland companies listed in HK7
Targeting full convertibility
Reserve currency?
RMB internationalisation
China has over 9mn mass affluent, growing at 13% CAGR. 825k individuals with wealth over RMB10mn4
Spending power spilled over to HK
–
In 2010,
22.7mn Mainland tourists to HK and 16.1mn to Macau 6
–
accounted for 30% of luxury retail sales1
TradePeople
CurrencyCapital
1.
Business Week. Dated April 2010.2.
World Trade Organization3.
Ministry of Commerce, PRC4.
HSBC estimates5.
Census and Statistics Department, Hong Kong SAR
6.
Tourism Commission, Hong Kong SAR; China Tourism Academy7.
HKEx
Fact Book, 20108.
CIA -
The World’s Factbook
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China is now the 2nd largest economy and largest exporting country
1.51.3 1.3
0.7
0.0
0.4
0.8
1.2
1.6
2.0
China Germany US Japan
(USDtn) Total Exports 2010 1
14.6
5.7 5.43.3
2.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
US China Japan Germany France
Gross Domestic Product 2010 2(USDtn)
Source: 1. IMF / CIA –
The World’s Factbook
2. CIA –
The World’s Factbook
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RMB could become the 3rd highest turnover currency in the world if RMB is fully convertible
RMB
0
500
1000
1500
2000
2500
3000
HSBC estimate(if RMB fully convertible)
Daily Avg Turnover (USDbn)
Note: Estimate of RMB daily average FX turnover is based on a turnover-to-trade ratio of 0.3, which is lower than 0.32 for EUR, 0.4 for YEN and 0.46 for GBP. The rise in use of RMB will offset the use of USD, EUR, YEN and GBP at a share of 40%, 30%, 20% and 10%.
Source: HSBC estimate
USD
EUR
RMB0
500
1000
1500
2000
2500
3000
3500
2010 BIS Data
Daily Avg Turnover (USDbn)
GBPYEN
USD
EUR
GBP YEN
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RMB internationalisation Rapid development
Trading Currency
Investment Currency
Reserve Currency
2004 2007 2009 2010 2011 2020
•
Personal RMB business
•
RMB bonds •
RMB trade settlement pilot scheme
•
Enlarged trade pilot scheme
•
RMB wealth management products
•
Access to Mainland’s bond market
•
Case approval of RMB FDI
•
Overseas Direct Investment in RMB
•
Fully convertible ???
HSBC forecast
Source: HSBC
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HK the launch pad for China companies “Going Out”
0
20
40
60
2006 2007 2008 2009 2010
2010 Non-financial ODI: USD59bn
USDbn
0
100
200
300
USA France Japan Germany China
USDbn
China is now the 5th largest ODI origin 2
China’s ODI continues to grow 1China is no longer only a FDI destination. It is now the 5th largest ODI origin 2
HK is PRC’s
largest ODI destination1
56% of new company accounts opened in Hong Kong are customers from China 3
Growth in SOE/POEs
using the liquidity in the Hong Kong system
HKD AD ratio: 78.1% 4
Non-bank China exposure: 12~13% HK banks’ assets 4
1. 2009 Statistical bulletin of China’s outward foreign direct investment2. National Bureau of Statistics of China3. HSBC figure4. HKMA statistics
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RMB Trade Settlement to reach USD 2 tn by 2015 Full liberalisation
by 2020
1. HSBC in-house estimates2. HSBC Trade Confidence Index –
MAY 2011
2010 | 2011 | 2015| 2020|
57% of Hong Kong traders would use RMB for trade settlement in the coming 6 months. 2
RMB is expected to be the third most popular currency for trade settlement. 2
More than USD 2 trillion or half of China’s total trade flows with emerging markets will be settled in RMB by 2013 to 2015 1
RMB to become a fully liberalised currency by 2020.1
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HK’s RMB deposits to reach RMB 800bn by end 2011 Or 11% of Hong Kong’s deposits
Source: CEIC,
HSBC
0
200
400
600
800
1,000
1,200
Dec07 Dec08 Dec09 Dec10 Dec11e
RMB bn
Weak
Strong
Base1Q2011 end: RMB 451bnor 5% of total HK deposits base
RMB800bn to RMB1.2tn by end of 2011
RMB deposit pool
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Expanding leadership in Hong Kong
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HSBC position
Continue to invest
to maintain leadership1
Key actions
Build new leadership segments1
Sustained leadership through the economic cycle
1 HSBC excluding Hang Seng Bank, 2 mReferral data
Leading player with # 1 market shares
■
# 1 in life insurance new business 18.1%
and Mandatory Provident Fund 24.8% market share
■
Building ECM capability. “Best Equity House”
2010 by Finance Asia
■
Top advertising spend (15% of industry) with # 1 in Brand Health
■
USD1.4bn IT and delivery channel spend over past three years
Ability to generate profits through the economic downturn
Continue advances and deposits growth
Hong Kong PBTUSDbn, Reported
2008 2009 CAGR (08-10)USDbn, Reported
2010
Deposits 251 275 9%297
A/D ratio 40% 36% 47%100 99Advances 19%141
5.0 5.75.5
2008 2009 2010
HSBC only1 Hong Kong
Deposits (Dec 10) 25% 34%
Mortgages 2
(Dec 10) 19% 34%
HKD Bonds (Dec 10) 34% 34%
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Premier Total new
accounts 2010
■
More use of direct channel■
Tend to use one bank only
■
Higher take up of wealth management products
■
Bigger transaction valueHigher Value
Lower cost
Business Total new
accounts 2010
Chinese diaspora: a major source of new customers1
Chinese diaspora key behaviours
1 Companies Registry, HKSAR / HSBC in-house figures, all excluding Hang Seng Bank2 FY 20103 HSBC excluding Hang Seng Bank
Ideally positioned to capture cross-border opportunities
23%
77%56%
44%
Chinese diaspora
Others
Key actions3
Leveraging on cross-border connectivity to capture commercial clients
Strengthening sales force to capture retail clients
■
35% of new locally incorporated companies in HK bank with HSBC
■
Commercial Banking referrals –
HK to mainland: +25%; –
mainland to HK: +70%
■
Recruited 1,500 frontline staff (70% Mandarin speaking)
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112% YoY
growth in new Chinese diaspora Premier accounts2
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Premier referrals–
HK to mainland: +332%; –
Mainland to HK: +150%
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HSBC - The leading international RMB Bank
Hong Kong RMB deposits vs. RMB trade settlement1
CNH Bond new issuance forecast3
RMBbn, cumulative
1 HKMA; 2 HSBC in-house figures (exclude Hang Seng Bank) 3 Bloomberg
0
20
40
60
80
2007 2008 2009 2010 2011f 2012f 2013fGross issuance Net issuance Redemption
Key actions
Leveraging on first mover advantage
Capitalising on international connectivity to further increase market share2
■
Joint-Listing Agent on HK’s first RMB IPO
■
First RMB structured deposits. Launched RMB insurance, RMB Bond Fund
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Pioneered Offshore RMB (CNH) Bond Index
■
HK’s RMB deposits estimated to rise threefold in 2011
■
RMB bond issuance: #1 Rank YTD 2011. Issuance includes World Bank, Unilever, etc.
■
RMB trade services in 45 markets on all 6 continents, settlement volume reaches RMB45bn FY2010
RMBbn
RMB bn
0.1
58
Sep-09
1.963
Dec-09
6.071
Mar-10
2990
Jun-10
107149
Sep-10
315371
Dec-10Total RMB trade settlement value HK RMB deposits
Mar-11
451
681
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Product capability•
First-mover
•
Provider of Choice
HSBC is playing a leading role in developing offshore RMB business
Distribution channel
•
Convenience•
Replicating overseas
Global platform
•
Connectivity•
Building
Awareness
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HSBC leading in Offshore RMB bond issuance1
1. Bloomberg Standard League Table. As of YTD end April 20112. HSBC in-house records
Pricing Amount Coupon SyntheticDate Issuer Moody's S&P Format Tenor (RMB mn) (%) (Y / N)
31-Mar-11 Towngas A1 A+ Sr. Unsec. 5yr 1,000 1.400 N29-Mar-11 China Wind Power - - Sr. Unsec. 3yr 750 6.375 N25-Mar-11 Unilever NV A1 A+ Sr. Unsec. 3yr 300 1.150 N24-Mar-11 Bank of Communications A3 BBB+ Cert. of Depo. 3yr 1,100 1.350 N21-Mar-11 OCBC Aa1 A+ Cert. of Depo. 3yr 200 1.100 N15-Mar-11 Orix Corp - A- Sr. Unsec. 3yr 400 2.000 N14-Mar-11 TPV - - Sr. Unsec. 3yr 500 4.250 N10-Mar-11 Morgan Stanley A2 A Sr. Unsec. 5yr 400 Step Up Y9-Mar-11 UBS AG Jersey Branch Aa3 A+ Sr. Unsec. 5yr 50 0.750 Y8-Mar-11 Powerlong Real Estate B1* B+ * Sr. Unsec. 3yr 750 11.500 Y1-Mar-11 Barclays Bank PLC HK Aa3 - Cert. of Depo. 1yr 250 1.150 N
28-Feb-11 Bank of Communications A3 BBB+ Cert. of Depo. 2yr 1,000 1.000 N21-Feb-11 Road King Infratructure Ba3 * BB- * Sr. Unsec. 3yr 1,300 6.000 N20-Feb-11 ICBC (Asia) A2 A- Cert. of Depo. 2yr 3,000 1.150 N18-Feb-11 LDK Solar Co Ltd - - Sr. Unsec. 3yr 1,200 10.000 Y15-Feb-11 UBS AG Jersey Branch Aa3 A+ Sr. Unsec. 5yr 100 0.750 Y16-Feb-11 Svenska Aa2 AA- Sr. Unsec. 2yr 170 1.400 N14-Feb-11 BECL Investment HLDG - - Sr. Unsec. 3yr 1,150 4.750 N28-Jan-11 ICBC (Macau) A3 - Cert. of Depo. 1yr 1,000 1.450 N28-Jan-11 ICBC (Macau) A3 - Cert. of Depo. 2yr 1,000 1.550 N27-Jan-11 YFY Cayman - - Sr. Unsec. 3yr 300 3.100 N25-Jan-11 IFC Aaa AAA Sr. Unsec. 5yr 150 1.800 N25-Jan-11 PCD Store - - Sr. Unsec. 3yr 750 5.250 N25-Jan-11 HSBC Bank Plc Aa2 AA Sr. Unsec. 5yr 36 0.500 Y25-Jan-11 Morgan Stanley A2 A Sr. Unsec. 5yr 400 Step Up Y19-Jan-11 Shui On Land - - Sr. Unsec. 4yr 3,500 7.625 Y13-Jan-11 Evergrande B2 BB- Sr. Unsec. 3yr 5,500 7.500 Y13-Jan-11 Evergrande B2 BB- Sr. Unsec. 5yr 3,700 9.250 Y11-Jan-11 Sinochem Hong Kong Baa1 BBB+ Sr. Unsec. 3yr 3,500 1.800 N7-Jan-11 China SCE Property Holdings B2 B Sr. Unsec. 5yr 2,000 10.500 Y4-Jan-11 World Bank Aaa AAA Sr. Unsec. 2yr 500 0.950 N3-Jan-11 Bank of Communications A3 BBB+ Cert. of Depo. 2yr 500 1.400 N
Issuer RatingRed: Deals led by HSBCQ1 2011 offshore RMB bonds issued 2
3. Issue ratings
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HK launched the first offshore RMB equity IPO Paved way for more issues in the future
Launched on 19 April 2011, the first RMB equity IPO outside mainland China
HSBC as Joint-Lead Arranger and Receiving Bank
Expanded RMB product suite. A way to deploy RMB liquidity in HK
Upcoming RMB FDI (Foreign Direct Investments) policy will drive more RMB IPOs
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Product and Service Distribution Providing convenience; replicating overseas
•
RMB cash withdrawal now available.
•
Business Internet Banking supporting RMB transactions.
Business Internet Banking supporting RMB transaction since Jul 2010
160,000 commercial banking integrated accounts with RMB capabilities
RMB cash withdrawal available at ATMs in Hong Kong
Providing Convenience
Replicating overseas
RMB Retail Banking services offered in 9 Asia Pacific markets
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Developing global platform RMB capabilities established in over 40 markets across all 6 continents
New Zealand
JapanSouth Korea
Hong Kong
Vietnam
USA
Brunei
IndonesiaSingapore
Malaysia
Thailand
Mauritius
Australia
UK
Russia
Germany
South Africa
Argentina
Mexico Saudi ArabiaUAE
MacauPhilippines
Brazil
France
TurkeyItaly
Kazakhstan
Israel
Canada
Poland
Armenia
Czech
Uruguay
BangladeshIndia
Spain
Chile
Paraguay
Red: RMB Trade Transaction Completed Black: RMB Trade Transaction In Progress
GeorgiaSlovakia
Greece
PanamaEl Salvador
Bermuda
Switzerland
Updated: 30 April 2011
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Promoting awareness overseas
A recent RMB Roadshow in Istanbul, Turkey: 11th
May 2011
Overseas Roadshows Regional Advertisement
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Key takeaways
Opening of China is an opportunity, not a threat
HK reinforcing its position as the logical gateway into China
Rapid rise of RMB and its eventual full convertibility shifts the dynamic in HK
HSBC has the ideal international platform - product capability and distribution - to capture the opportunity
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Contact
Mr. Hugh PyeHead of Investor Relations Asia-PacificHSBC Holdings plcL38 HSBC Main Building, 1 Queen's Road Central, Hong KongPhone: 852 2822 4908Fax:
852 3418 4745Mobile: 852 6394 7466Email: [email protected]