Donald Trump’s recent visit to China brought with it all the symbolism of the new world order. America, a country in terminal decline, stood in an overcoat in the Forbidden City and gushed failure from every pore. Trump talked up his business deals and lambasted his enemies, but abandoned his anti-China rhetoric and still came away with few real concessions.
Every financial commentator would like to claim they called the top of the market - the moment when everything went nuts; the big ask that investors swallowed whole, only to find themselves nursing the wounds of extreme market excess months later.
China’s first sovereign bond in over a decade poses an obvious question: “What was that all about?” There was a sense of deja vu about the US$2bn two-tranche Global, in that it ticked all the superlative boxes that we have come to expect from a rare sovereign issuer in Asia. But the only element that constrains rampant grandstanding around the deal is the feeling that the issuer could have filled its boots to the max.
While the world’s eyes were fixated on Beijing last week to witness Xi Jinping coronation for a second (and possibly not last) five-year term as president, China’s Ministry of Finance was putting on a spectacular show of its own in Hong Kong with the country’s first sale of US dollar-denominated bonds in 13 years.
With one bound they were free. At least, that seemed to be the judgement of stock market investors who bid up the shares of Indian public sector banks as much as 50% last week, after Narendra Modi’s government conjured an unexpected US$32bn bank recapitalisation plan. The sheer scale of the effort came as a shock: the two-year, Rs2.11trn initiative dwarfs the Rs700bn that the government had previously committed to inject (over four years) in state-owned banks.
I spoke late last week to a rather charming fellow in Hong Kong who has just joined index provider MSCI as vice president of ESG research.
What will it take for Hong Kong’s IPO underwriters to take the regulators seriously? Last week’s comments from the city’s top enforcer, who said 15 firms had failed in their duties as IPO sponsors, with some engaging in what he described as “reckless” behaviour, were met with barely a shrug from the broader ECM community.
Has globalisation bitten the dust? Signs of its demise are not hard to uncover, from the recent independence election in Catalonia, to Brexit, to the widespread unpopularity of multilateral institutions, to the surge in last month’s elections of the far-right AfD party in Germany and the imminent entry of the Freedom party in Austria.
Malaysia’s credit guarantee fund is looking to lift its profile in the local capital markets after a decline in earnings in the first half of the year.
I was in Berlin last week for the annual conference of the Principles for Responsible Investment, the United Nations-supported organisation that aims to foster the employment of environmental, social and corporate governance standards (ESG) among global investors.