The 12th Asia Financial Forum opened yesterday in Hong Kong. With 130 policymakers and financial leaders on stage during the two-day event, AFF is seen as a barometer of the year’s challenges and opportunities; sharing insights to help more than 3,000 high-level attendees make informed decisions in 2019.
Opening the event, Chief Executive Carrie Lam emphasized Hong Kong’s enduring status as an international financial center, noting it has led in IPO funds raised for six of the last ten years and looking ahead to the government’s inaugural HK$100 billion green bond issue. With reference to opportunities created by the development of the Hong Kong-Macao-Guangdong Greater Bay Area and China’s ambitious Belt & Road initiative, she set a positive tone.
Former World Bank president Robert Zoellick praised the “longer time horizon” that Asian economic policymakers have traditionally employed. This is especially valuable in the midst of a structural shift, like the region’s current transition to new innovation-driven growth models and supply chains. He urged more regulatory and infrastructure support for cross-border logistics networks in Asia, and spoke against the Trump administration’s efforts to decouple the US and China economies through protectionist tariffs. This approach is doomed to fail, he said.
Besides keynotes, AFF this year also included panel discussions to allow for in-depth explorations of key topics. While acknowledging that global risks to financial stability are mounting in 2019, speakers were generally upbeat about the industry’s potential to create a “sustainable and inclusive future.”
Senior policymakers and regulators from Dubai, France, Russia, Germany and Hong Kong discussed cross-border fintech challenges and risks arising from destabilizing trade conflicts and geopolitical uncertainties. All agreed that global collaboration was needed. Dubai’s Saeb Eigner urged regulators to work towards a global standard for green finance, while Burkhard Balz of Deutsche Bundesbank called for reforms to increase the resilience of the financial system: disintegration is creating uncertainty worldwide as trade conflicts and Brexit put multilateralism and free trade under pressure, he said.
Fintech was a common theme across day one of the Forum. While digital financial solutions, such as mobile money, e-wallets and crowdfunding platforms, have expanded access to financial services, concerns remain that many regulatory bodies are out-of-step with this changed landscape.
Soul Htite of Dianrong explained that Chinese regulators are bringing the highly complex shadow banking sector to what he calls a “soft landing.” Peer-to-peer lending industry players are being guided to either adopt higher standards and better business models or exit the industry. With clear regulation and compliance, he expects to see the sector shrink from a high of 5,000 or more companies to only a couple of hundred by the end of this year. The P2P industry has built the necessary infrastructure over the past decade and this will benefit P2P and traditional banking players.
Nisa Leung of Qiming Venture Partners was among those with a positive view of China’s medium-term business environment and Made in China 2025 ambitions, although she is cautious in the near term. While investment in Chinese AI and bio-tech firms continues to rise, uncertainty around US policies and regulations is spurring some international investors to draw back from the US. She sees more Chinese firms beefing up their R&D capabilities and Chinese expat entrepreneurs and R&D engineers looking to return home from the US to start or join innovation-driven businesses. However, she emphasized the value of co-development and Sino-US collaboration: doors should remain open, she said.
Tomorrow’s AFF will delve deeper into these topics, with more on fintech, blockchain and impact investing.