Tokyo set to knock Hong Kong off top spot
HONG Kong is set to lose its place as the regional centre for loan syndication, according to Japanese merchant banker Shin, Suzuki and Associates.
Hideyuki Suzuki, president and chief executive of Shin, Suzuki said: ''Hong Kong's role as a window to China business will continue and it will have a financing function in connection with that. But, in the future, Tokyo will dominate the market in Asia with Hong Kong and Singapore as satellites.'' During the 1980s, Tokyo, Singapore and Hong Kong had very different roles on the region's capital market stage.
Tokyo provided the centre for access to the newest financial engineering products from the United States and Europe, while Singapore was always the money market providing overseas Chinese from the surrounding countries with a safe place to put their savings.
But Hong Kong collected the money from places such as Singapore, using it in syndications to lend to borrowers around Asia and further afield.
But this is changing, according to Mr Suzuki. He sees Singapore's traditional role changing as overseas Chinese feel less threatened and find they can easily invest in their local market.
''As a result of this, while Singapore is still an intermediary, it is now searching for a new role and a new identity,'' he said.
For Hong Kong, its position is being undercut by other changes in the market. Public sector borrowing, which was so dominant in the 1980s, has dried up as structural changes in the economies of countries like Korea, Thailand and Malaysia means borrowing is mostly done by the private sector.
The growth in Asian exports and the resulting liquidity due to capital inflow, has seen the proliferation of emerging companies and the eclipsing of the importance of the larger conglomerates, once so powerful due to political clout and concessionary financing.
The changes, Mr Suzuki said, are breathtaking, and he believes it means an increase in quality companies.
''Given the new market, for marketing purposes and for security, it is increasingly like local, not offshore financing. We can not just sit around in Hong Kong arranging the loans. We have to be represented in the individual countries, both for our marketing operations, and to be familiar with the operations of the new borrowers,'' he said.
Shin, Suzuki and Associates provides financial advice, loan syndication and organises private equity placement for this emerging customer base. Mr Suzuki said there is an education process involved, both for the banks and for the clients. He explained: ''For the big banks, many of these borrowers are unknown, and that education process takes time. In addition, many of the borrowers are relatively unsophisticated as far as the capital markets are concerned. We seek to guide them from being emerging companies, through their growth, until they become established companies in both the region and globally.'' Mr Suzuki does not see his operation as a niche player. He said: ''We have more flexibility than the big banks, but we do not see ourselves as choosing a small corner of the room to play in. It is not a matter of avoiding confrontation or competition with the big banks. As a banker, one must remain centre stage.
''Due to our structure, however, we are better placed to help these emerging companies. They are companies which are not yet fully acknowledged by the major banks, but they are increasingly in the main stream of the Asian economies and playing the role of locomotive of those economies.'' As for where Mr Suzuki will base himself as the changes in the industry develop. He has no doubts: ''I will keep an office here as we do in Korea, but I must be in Japan. I must sit close to the money.''