Oscar Wong Sai-hung concedes he made his biggest investment mistake when as a young fund manager in the early 1980s he bet that Hong Kong would not be returned to China. After buying up Hong Kong stocks in the belief they would climb higher, Wong was stunned when then British prime minister Margaret Thatcher entered negotiations with Beijing over the future of the colony. The Hang Seng slumped, providing a hard lesson for Wong who was still finding his feet as a fund manager. 'This was the most painful lesson in my life but it also helped me to know I had to leave the market at the right time,' Wong said. Wong has since become one of Hong Kong's leading fund managers and is now chief executive of ICBC (Asia) Investment Management. He has certainly seen some changes in his chosen industry, including several market crises. When he first joined the fund industry in Hong Kong in 1977, the mainland had no stock market, no brokers and no fund houses. A year after the death of Mao Zedong, the country was still a year away from the start of its long economic reform programme and capitalism was still a foreign word. 'Nobody could imagine China would have a stock market, it was still closed to the outside world,' Wong said. It was seven years before the birth of his company's giant parent, Industrial and Commercial Bank of China, split from the People's Bank of China in 1984. Three decades later, China is the world's third-biggest economy, with a thriving stock and property market. And Wong is the boss of ICBC's ambitious new fund house that aims to help mainlanders invest overseas. ICBC, the largest bank worldwide in terms of market capitalisation, has 200 million depositors, more than the total population of Russia. It stepped into overseas asset management business last year when its 72.04 per cent held Hong Kong listed subsidiary ICBC (Asia) took over Worldsec Asset Management in Hong Kong and rebadged it with the ICBC name. Wong said the acquisition marked the first expansion into the thriving asset management business in the city. 'As a major mainland bank, it is a natural development for ICBC to step into the asset management industry as part of its strategy to become a leading international financial institution,' Wong said. The fund house has had a busy start, launching five new funds in Hong Kong last year. One focus this year will be the qualified domestic institutional investor scheme, under which Chinese banks such as ICBC can raise and invest money from mainland investors in overseas markets including Hong Kong. 'We want ICBC Investment Management to be a good middle man to help overseas and Hong Kong investors to invest in the stocks that will benefit from the growth of China,' he said. 'We also want to act as a middle man to help mainland investors invest overseas.' Wong was among the first Hongkongers to join the fledgling sector. After graduating in marketing from Hong Kong Polytechnic University in 1977 he joined LGT Asset Management as a fund manager. He stayed at LGT for 21 years until it was taken over by Invesco. He then became chief operating officer of Prudential Portfolio Managers Asia before becoming boss of BOCI-Prudential in 2001, a key player in the Mandatory Provident Fund. He joined the ICBC fund house last year. In his early career, he saw the boom and bust of the Japanese market, the flood of overseas fund houses to Hong Kong in the 1980s as well as the introduction of the MPF in 2000. He also has experienced many market crises - in 1987, 1998, 2000 and 2003. 'Every time there is a crisis, the fund manager needs to hold the hands of their clients and to explain to them what has happened,' Wong said. 'As long as customers do not lose their confidence, you can help them earn their money back when the market bounces back.' Wong is married and has two sons. Both work in the US. Why did ICBC want to become involved in asset management? ICBC may the largest bank in China but it only has a relatively short history of 25 years. It is a young bank and wants to try everything new. It also needs to follow its customers as many have expanded overseas. The asset management business in Hong Kong is part of the bank's overseas expansion strategy. It also is a natural move for ICBC to diversify into different types of financial services beyond traditional banking. As many mainlanders become wealthy and many mainland firms earn a profit, these customers all need asset management services. Did it launch at a bad time given we are still suffering from the global financial crisis? It is hard to say when the best time to launch a fund company is. When the mainland government introduced the QDII scheme in 2007 allowing mainlanders to invest overseas, the financial crisis hit and many investors suffered a loss. The fact these investors suffered a loss in their first overseas investment is a good thing as it made them more conservative. They would have a more reasonable expectation about their investment return and this is a healthy development. What are the major business opportunities and challenges ahead? QDII will be the major business opportunity. ICBC, with over 15,000 branches in China, will be a big sales channel for QDII products. On the challenges side, the biggest challenge is the expectation of investors. We had a big bounce last year as markets worldwide recovered from the very bad year in 2008. It would be hard to achieve the same strong growth again. What are your business models and strategies? We serve all type of clients - retail investors, corporates and government bodies. We have retail funds in Hong Kong to sell to the public and funds to serve Hong Kong corporates. We would also act as an investment adviser for mainland companies and our parent. Will you expand to other overseas markets? We will focus on Hong Kong and China. That is enough for us already. We need to first establish a strong business here before we would go to other markets. How can a new player compete when there are over 2,000 retail funds in the city? We have a strong mainland parent. ICBC has 360,000 staff and a nationwide network. Many chief executives of other banks started their career at ICBC. Its management strength is strong and it can help our fund company to expand here. With the support of our parent, we are a China expert and this is our big selling point. You studied marketing but became a fund manager. Why? The concept of marketing applies to many industries including the fund management sector. Some fund managers have a very successful investment track record but they may still lose clients because they do not know how to communicate with them. With my training in marketing I learnt the importance of communication with customers. A successful fund manager does not only need to know how to invest but also how to listen to the concerns of their customers and to seek ways to solve those concerns. What were your best and worst investment decisions? The best decision was to join the fund industry. The fund houses have a lot of young talent but I have seen many people aged over 70 who are still working in the industry. That is because investing forces them to analyse news around the world and keeps them going. Working in the fund industry is like reading a book - every day is a new chapter. For example, when I first started in 1977, one would never think China would be open and developed like it is now. My worst mistake was when I switched from investing in the Japanese market to investing in Hong Kong stocks in 1982. [In the lead-up to the handover], I thought China may not want to take Hong Kong back and as a result, I purchased a lot of Hong Kong stocks when the Hang Seng Index stood at 1,100 at the beginning of 1982. The market went up to 1,400 in three months but then British prime minister Margaret Thatcher slipped into China during a visit to kick off the negotiations between China and Britain over the future of Hong Kong. The market went down 50 per cent in five months and I remember clearly the Hang Seng Index bottomed at 676.2. This was the most painful lesson in my life. But it also helped me to know I had to leave the market at the right time. This helped me escape the 1987 market crash and I was the best performing fund manager in that year. What did you do when your clients lost money? I explained to them clearly what had happened. In the 1987 market crash, I flew to London to meet and explain to clients the latest market update. It is not a big problem to perform badly as long as you can explain why. It is however very bad if something goes wrong and your customers cannot contact you. How do you split time between business and family? My wife is a full time housewife who does not like anything to do with finance. This is good as I can completely switch off when I arrive home. I also like sport and I play badminton and golf.
