Ex-forex trader plays own investments safe

PUBLISHED : Sunday, 27 April, 2008, 12:00am
UPDATED : Sunday, 27 April, 2008, 12:00am

French banker takes his risks on rugby fields

You might think that a banker who has spent most of his career in trading rooms, starting with foreign exchange derivatives, would have a speculative bent when it comes to his own investments.

But not Frederic Laine. Though willing to take risks in rugby, a sport he is passionate about, he is more conservative with his own portfolio, preferring Euro deposits and government bonds.

Mr Laine, 42, arrived in Hong Kong in 1990 and, under French law, was able to fulfil his military service duties by working in the overseas office of a French company.

He fell in love with Hong Kong and continued to work at a number of French financial firms.

Mr Laine - who has a wife and two sons, Thomas, aged seven, and Nicolas, five - is now head of fixed-income markets for Asia at Calyon, Credit Agricole's investment bank subsidiary.

How do you find the investment climate in Hong Kong now, compared with when you arrived 18 years ago?

When I first arrived in 1990, China did not have an open stock market. In Hong Kong, investors mainly focused on the equity and property markets. It was only in 1992 that the Hong Kong government developed the Exchange Fund bills and bonds market, which established the debt market and interest-rate swap markets in the city. Now the Hong Kong market is one of the most developed worldwide, with all types of investment products available.

With the subprime crisis and rising commodities prices, do you think it is good or bad timing for you to have been promoted to head fixed-income markets for Asia?

In a crisis, I'd rather be in the driver's seat than be one of the passengers. The markets are volatile and customers are more cautious. But in the current context, fixed income, forex and commodities products are attractive compared with other markets. Also, Asia appears to be somewhat less affected by the current crisis, and is perceived to be an alternative growth area given the US and, eventual, European economic slowdown.

What are your plans in your new role?

Continue to pay attention to market volatility and focus on risk management in the context of a possible contagion of the crisis to Asia in one form or another. I would also like to see my firm develop further in Asia, including Hong Kong, the mainland, South Korea, Taiwan, Thailand, India, Singapore, Vietnam and the Philippines. Our firm will recruit more local talent in these markets as they continue to offer good growth potential.

A rogue trader at one of your French rivals, SocGen, caused the company huge losses in derivatives last year. You were a derivatives trader 18 years ago. What do you think about his behaviour? Did you learn any lessons from this case?

Generally, I believe each trader should be in control of his actions and operate in a properly controlled environment. Each trader should know his or her own limits, whether he or she is driving a Formula One or a second-hand car. As a trader, you must know your limits, acting in a responsible way in the controlled framework of the bank.

What is the best personal investment you have ever made?

In my personal career, my best decision was to choose to stay in Hong Kong and not to go along with my former company's decision to transfer me to Tokyo. I think Hong Kong is more challenging. It is full of energy and full of investment opportunities. Financially, I switched my savings to the Euro when it was not too far from its record low value. I got lucky on that one.

What was your worst investment decision and how did you get out of it?

One of the worst decisions I ever made was investing in a Thailand fund not long before the market collapsed in 1997. It took me quite a while to recover some of the losses. The lesson I learned from that was one should do his homework before investing. I knew very little about Thailand before this investment, so I got my fingers burned.

What is your portfolio composed of?

I am a conservative, long-term investor. I have Euro deposits and European and US government bonds. They are carrying an average annual return of 4 to 5 per cent. This is not a huge return, but they are stable, low risk and good for the medium and long term. I have no stock holdings in Hong Kong, but I have invested in Indian funds.

Does being the head of fixed income for a French investment firm affect your investment strategy?

I tend to stick to fixed-income, interest-rate and forex products that I know better. In my opinion, the dollar will bounce back and the credit crunch will eventually come to an end. The bond markets should be looking more positively for the medium term, although the inflation scare could trigger some profit-taking.

Do you think there is any difference in the investment philosophy of the French and Chinese?

In Asia, people tend to invest for capital gains, while in France investors are usually more conservative, with an eye on capital preservation.

What do you think about the recent, tense relations between China and France? Will that change your company's mainland expansion plans?

This year is the 110th anniversary of Calyon in China. As one of the oldest foreign banks in China, Calyon enjoys a long, well-established relationship with China. We have a long-term commitment here and are making an ongoing effort to contribute to the prosperity of China. For example, Calyon Fixed Income Markets Asia ex-Japan has recently supported a three-year corporate social responsibility project in Tengchong, Yunnan , through Heifer, a non-profit organisation working to improve local farmers' incomes.

French people are known for their love of food and wine, and now prices are rising for both. Do you think they are good investment products?

Not really. It is complicated to invest in food and wine products. Maybe you can invest in a vineyard as a property investment or for your love of the product. But then there are lots of operating costs, and a lot of hidden costs, too. I believe good food and wine are made to be consumed, but they are not for investment.

Do you have any investment tips to share?

Do your homework, plan well before investing, don't invest in products you don't understand and prepare for the worst-case scenario. Also, don't be surprised when the market suddenly turns around. Accept responsibility for bad decisions and be ready to act. As we say, don't get married to your investments

Do you think you are rich or poor?

I have an interesting job and interact with a team of very sharp and hard-working individuals. I have a family with two lovely sons. I am healthy and that allows me to play rugby, my favourite sport. I have an interesting life and I live in an exciting and ever-changing city. In that sense, I am rich.