IFR Asia - 08.09.2018

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CURRENCY CONUNDRUM

The CSRC did not refer to currency in its
consultation, although sources told IFR that
GDR issuances will initially be denominated
in US dollars with the possibility of
expanding to renminbi or sterling later.
It is not yet clear if UK issuers will be
allowed to sell CDRs in sterling, which
some sources believe will be more
attractive to Chinese investors than
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play. Chinese investors can already gain US
dollar exposure through Hong Kong, due to
the city’s currency peg.
For international investors accessing the
A-share market, the key is whether the
shares made available via London differ
from those available from Hong Kong.
According to research from Morgan
Stanley, investors in Hong Kong have used
on average less than 10% of the daily quota
for both the Shanghai and Shenzhen trading
links since they became operational.
Earlier this year, regulators in Hong Kong
and China quadrupled the quotas for both
Connect programmes so it is unlikely that
investors will be forced to rely on trading
through their accounts in London to avoid
hitting quota limits anytime soon.
“Combined there are just under 1,
stocks available to investors in Hong Kong
through Shanghai and Shenzhen, while
there are around 3,500 A-shares overall,”
said Aberdeen’s Chui.
“One selling point for London would be
if it were to pitch itself as the gateway to
a class of A-shares that are not available
through Hong Kong.
“Given that most of these trading schemes
start with well-known, liquid stocks, there is
bound to be some degree of overlap though.”
Respondents have until September 15 to
submit their feedback to the consultation.
THOMAS BLOTT

„ CITIGROUP has

hired Julie Kerr as

Asia Pacific head of

custody and fund

services in the bank’s

prime, futures and

securities services

business.

Kerr, who joins from

Ernst & Young,

reports to David

Russell, head

of markets and

securities services

for Hong Kong, and

globally to Sanjiv

Sawhney, global head

of custody and fund

services, in her new

job.

She replaces CP

Yap, who was most

recently the Hong

Kong-based head

of custody and fund

services for APAC.

„ NOMURA has

appointed Vijay

Karwal as head of

healthcare for Asia

ex-Japan, effective

September 3.

Based in Hong Kong,

he reports to Kenji

Teshima, head of

investment banking

for AEJ, and Paolo

Cicchine, Nomura’s

global head of

healthcare IB.

Karwal joins from

DaVita, a US-

headquartered

healthcare services

provider.

Nomura has also hired

Wei Chen as managing

director in its China

investment banking

team. She joins from

VTB Capital and has

worked at Deutsche

Bank and Lehman

Brothers.

IN BRIEF

CLSA

Minority stake in Pakistani securities firm

CLSA has agreed to acquire a minority stake in

the securities arm of Pakistan’s Bank Alfalah as

the Hong Kong-based group plots an expansion

along markets linked to the Belt and Road

Initiative.

Bank Alfalah, the majority shareholder of ALFALAH

SECURITIES, agreed to sell a 24.9% stake to CLSA.

In addition, Aliuddin Ansari, the former CEO of

Pakistani conglomerate Engro Corporation, and

Atif Khan, the current CEO of Alfalah Securities,

will acquire a combined 12.6% stake.

The firm will be renamed Alfalah CLSA Securities

following the completion of the acquisition, which

is slated for November. It will offer a mixture of

equity broking, research and investment banking

services to clients in Pakistan.

Ansari will become chairman following the

acquisition.

The acquisition comes only a year after parent

company Citic Securities integrated its offshore

business under CLSA and outlined ambitious

plans to expand its footprint across Asia, a feat

that has eluded other Chinese banks so far.

In May, CLSA Chairman Tang Zhenyi told Reuters

that the firm planned to open new offices in

Pakistan, Vietnam and Dubai this year.

Jonathan Slone, CEO at CLSA, said in a

statement that the Alfalah acquisition was part

of the brokerage firm’s plan to set up an on-the-

ground presence “in all major Asian markets,

with a particular focus on markets in the Belt

and Road initiative”.

ASX

Blockchain clearing system delayed

The AUSTRALIAN SECURITIES EXCHANGE said last

Tuesday it would push back the introduction

of a blockchain-based clearing and settlement

system by around six months.

ASX made the announcement in response to

feedback from a consultation launched in April

on replacing its electronic registry system,

commonly known as CHESS.

It said it would postpone the start date for the

introduction of distributed ledger technology for

clearing and settlement to March or April 2021

from a previous target date of the fourth quarter

of 2020.

It also said that seven features of the DLT

system that it initially planned to include at

launch, such as settlement in foreign currencies,

would be released at a later date.

ASX is one of the biggest mainstream financial

markets to already announce plans to switch to

DLT.

In January 2016, it acquired a minority stake in

US blockchain developer Digital Asset Holdings,

with whom it has been working to develop the

technology to replace CHESS.

UOB

Belt & Road MoU with SPD Bank

UNITED OVERSEAS BANK has signed a memorandum

of understanding with SHANGHAI PUDONG

DEVELOPMENT BANK to collaborate on Belt and

Road-related activities.

Under the MoU, UOB and SPD Bank will work

together in areas such as investment advisory,

cross-border renminbi transactions, syndicated

loans, project and trade finance and cash

settlement.

The MoU is one of several partnerships struck

between foreign banks and their Chinese

counterparts in relation to the Belt and Road.

In April, Citigroup said it was partnering with

Bank of China and China Merchants Bank on

the initiative. Both Deutsche Bank and Standard

Chartered have similar partnerships with China

Development Bank.