George Chen

Chinese bankers, overconfident?

By George Chen
March 11, 2011

By George Chen
The opinions expressed are the author’s own.

Are Chinese bankers overconfident? Or perhaps global investors are too suspicious of China?

The least safe stock in China?

By George Chen
January 7, 2011
Is history going to repeat itself? I am talking about the 2008 market crash in China, which was partly triggered by a company’s mega-sized fundraising plan. The company is Ping An Insurance, whose Chinese name literally means “safe” and is China’s No.2 insurer. Ironically, Ping An may be considered one of the most “unsafe” stocks in the market given its bumpy trading track record. Yesterday, shares of Ping An slumped soon after the market opened and many investors cited market rumours about Ping An’s new plan to raise as much as 100 billion yuan (US$15 billion) as the cause of the slump. The buzz spread fast and wide in the market. By midday, a number of brokerages including CITIC Securities issued research notes to clients saying Ping An needed more money to boost its capital base and expand business, in particular after its landmark acquisition of Shenzhen Development Bank, though different brokerages had different views on the potential size of the fundraising. Some said 40 billion yuan would be enough. But still, 40 billion yuan? That’s a ton of money. Read more. In early 2008, Ping An surprisingly announced its 160 billion yuan fund-raising plan, mainly to cover its investment losses abroad and quickly gained massive criticism not only from investors but also from some regulators. In addition to the impact of global financial crisis, Ping An’s 2008 fund-raising plan, which didn’t work out in the end, became a trigger to turn China’s stock market into a bear market from bull-run. To me, it is understandable why many retail investors in China often like to brand Ping An as one of the most “irresponsible” listed companies, though the company claims it has won many corporate governance awards. Late on Thursday, Ping An Insurance (Group) of China Ltd was forced to issue a brief statement, saying it does not have any refinancing plans in the Shanghai stock market, as it shares fell to a three-month low on fundraising rumours. However, the insurer did not say if it intended to raise funds on Hong Kong’s H-share market in the statement posted on the Hong Kong stock exchange. The spokesman for Ping An declined to elaborate further. As you can tell, the buzz about Ping An’s fund-raising is not going to end anytime soon in the market. Ping An is often considered a must-have stock for portfolio reason among institutional investors at home and abroad. The rumor about Ping An’s mega-sized fund-raising plan came amid growing expectations that many other Chinese financial institutions and developers may have to raise more money in 2011, which some investors have already thought of as “a year of fund-raising”. Just few days before the end of 2010, I remember the official China Securities Journal had a front-page article to praise China’s top securities regulator Shang Fulin’s work in 2010, saying under Shang’s leadership, China has become one of the world’s biggest stock market by market value from “little known” in recent years and it also afforded the largest amount of IPO fund-raising in total in the world in the past year. Oops! The editor for the story must forget compare these facts with the other more interesting thing — China is also the worst stock market in terms of its performance among all major economies in 2010. And the reason? I will say we should partly thank those big fund-raisings. And 2011? It seems to be just another year of fund-raising in China’s stock market. One day after the buzz about Ping An’s fund-raising plan, Agricultural Bank of China, one of the country’s Big Four state lenders, also announced its 50 billion yuan bond issuance plan. Minsheng Banking Corp, a leading non-state lender, is also said to raise 3 billion yuan via private placement soon. Hurry up, fund-raisers! The earlier, the better, before you drive the investors mad. I asked my colleague Samuel Shen in Shanghai who stay in touch with China’s top fund managers closely if the new fund-raising buzz about Ping An could trigger the Shanghai index into a bear market. He replied me: “Are we already in a bull market?” He’s right. Then we concluded since 2011 is going to be “the year of rabbit”, maybe “bumpy” is the best word to describe the outlook of the market. What’s your say, my friend?

Ping_An

Journalist, or analyst?

By George Chen
December 21, 2010
We all know how hot the job market is these days in the Chinese financial industry, and with almost every hirer facing the question of where to find enough smart people to fill  those openings, some banks are trawling an alternative talent pool — financial journalists. In fact, the media industry has been a talent source for fund houses and investment banks for some time, but mostly for public relations- or marketing-related roles. Talk to a spokesperson for a big bank such as Citigroup or Morgan Stanley, and you shouldn’t be surprised to learn she or he once worked for a leading media organisation before moving to the so-called “dark side”. More recently, some banks are starting to realise that journalist can handle more than PR. What about  as economists or analysts to study monetary policy and capital markets for big global banks in China? The head of China research at a British bank recently sent an email to his friends advising that the bank was looking for a China economist and researcher to join his fast-expanding team in Shanghai or Beijing. Besides a basic financial and economics-related educational background, the notice highlighted one condition that the ideal candidate would meet. “We are looking for candidates with either a decent advanced (i.e. post-graduate) degree in economics and/or with a strong background in journalism/industry research in China. We view a journalist’s eye for a story and ability to work out how particular policies work in practice in China as strengths,” the hirer said in the note, which was widely distributed among financial journalists in China this week. Separately, at almost the same time, the China research team leader at a big European investment bank also published a new job notice for China stock analysts, and asked his colleagues to spread the word, especially among their financial media friends. Among the requirements, the hirer pointed out that the applicant should demonstrate excellent writing skills, especially for analytical articles. As far as I know, not too many journalists have MBAs, which are often considered an entry ticket for a career in investment banking or asset management. For roles such as economist at a big bank, a PhD used to be a basic requirement, but in a developing market such as China, do people really want to make things a bit easier? Given China’s immature market environment, the right information and fast access to key economic data are becoming more important for economists and analysts, whose reputations rely on the credibility of their forecasts and a sensitivity to market trends (ahead of their competitors). Such work often relies on an extensive network of contacts in different industries and ministries across the vast nation. Meanwhile, in China’s capital markets, rumours are often proved to be true. For example, about two weeks ahead of the release of official data early this month, the stock market in Shanghai was already full of talk and speculation that inflation November would reach a new high of 5.1 percent. Guess who is usually among the first to hear these rumours? Good financial journalists with strong ties with government sources. Some industry watchers have observed that economists in China are becoming more like newsbreaking, investigative journalists. Remember Beijing’s surprise announcement of a 4 trillion yuan (about 586 billion U.S. dollars at that time) stimulus package in late 2008 to help maintain economic expansion amid the global financial crisis? To some clients of a big U.S. bank, the announcement may not have been very surprising as they had learned of the plan from the bank’s economist, who had tapped well-placed sources in Beijing for intelligence. Perhaps  a good China economist can someday teach at Columbia Journalism School when he feels he earns enough money? By the same token, a financial journalist could also teach MBA students how to develop a source network in China.

Art HK 09By George Chen
The opinions expressed are the author’s own.

The season of hiring in China

By George Chen
November 29, 2010

HSBC/ HSBC/The season of hiring in China By George Chen The opinions expressed are the author’s own. As we enter the last few weeks of 2010, we’re gladdened to hear news of increased hiring in Asia, in particular in China – suggesting a promising business outlook for the coming year. Otherwise, why bother hiring? On November 24, Barclays Wealth, a unit of British banking giant Barclays, outlined an ambitious expansion plan to double the number of private bankers in Asia and quadruple its assets under management in the region over the next four years. In addition, Barclays is going to set up a booking centre in Hong Kong to get even closer to its top-end China clients. This is not Barclays’ first attempt to grab talent from rivals this year. Its aggressive hiring plan has already raised tensions with Morgan Stanley in the equities, foreign exchange trading and investment banking arenas. Just few months ago, Barclays successfully lobbied a number of China-focused M&A bankers in Asia to defect from Morgan Stanley. Such moves, especially for a group of people rather than one or two in few months, caused quite a buzz in Hong Kong’s financial community at the time. This time, Barclays wants to snag more private banking and asset management professionals. Who should be watching out? In Asia, smaller banks such as Standard Chartered and DBS Group are furiously expanding, with more wealth likely to be generated in the region powered by the economies of China, India and Indonesia. Even market leader HSBC is trying hard to expand its private banking team to further consolidate its position in Asia. Have you seen the hiring ads posted all over Hong Kong? These banks are usually believed to offer less competitive compensation than rivals such as Barclays and Goldman Sachs, which are known for more generous payrolls, but also for longer working hours and higher pressure in the office. No wonder HSBC just few weeks ago decided to give senior staff in Asia a huge incentive boost, raising salaries by as much as double. At the end of the day it’s up to you, Mr. or Ms. Talent — what do you really want? More money? Or a more comfortable working environment? Remember the old saying: you cannot have your cake and eat it. And how can we forget Citibank, once the world’s largest financial services provider? The U.S. banking giant is now apparently paying more attentions to the fast growing rich Chinese customers and bigger Chinese corporate. The bank wants to double personnel in China to 10,000 over three years, according to a report by Japan’s business daily Nikkei on November 25. When the news about Citibank’s hiring plan in China came out, Chinese netizens showed some doubts about it. They asked online if Citibank can afford competitive compensations in China like what they offer Citi staff in the West. To work for a foreign bank in China is no longer something a young graduate may be really proud of. In terms of payroll, you should not be surprised to see a junior clerk at Bank of China in Shanghai earns roughly 5,000 yuan (750 U.S. dollar) per month, even more than what his peer can get at Standard Chartered in the country’s financial hub. On the other hand, it’s certainly a good thing to see the financial world recovering. Nobody wants to see another year of market panic in 2011. However, let’s hope the pace of expansion is a reasonable one. You get more staff and you focus on better service quality better, right? Oops! To be honest, I haven’t received a call from my HSBC account manager for almost a year, and I only learned from the online banking system that my account manager has changed twice in the past six months. Of course, I’m just one of many among its small clients in Hong Kong.

George Chen is a Reuters editor and columnBy George Chen