JPMorgan's Chan on China Business Strategy

Bloomberg

Watch JPMorgan's Chan on China Business Strategy - Bloomberg on Dailymotion

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00:00Talk to us about the momentum you're seeing in your business in Greater China.

00:04Yeah, we're seeing very good momentum.

00:07We've been here for 104 years.

00:10We've always had a long-term vision,

00:12but the development in the last 12 months have definitely been encouraging.

00:16I would say that there's a part that is very consistent,

00:19and there's a part that is different.

00:22So I would say that in terms of business momentum,

00:25in the last 12 months, what we've seen very consistently

00:30is our Chinese local corporate clients going overseas and internationalizing.

00:38And that trend has not changed.

00:41And we are continuing to see that increase in foreign direct investment from China,

00:47which has amounted to $163 billion,

00:51and that represents a 10.1% increase from the previous year.

00:58Now, on the equity market side,

01:01I think everyone has seen an encouraging recovery.

01:05And year-to-date, China is one of the best-performing markets.

01:09We've seen strong aftermarket performance from IPOs.

01:14We have seen a broad-based recovery in liquidity and volumes.

01:21And so you've seen now at our Global China Summit here,

01:26there is a huge increase in the amount of interest from overseas investors in China.

01:32And we've got nearly 3,000 people here from 33 countries and markets, which is great.

01:39But in terms of growth, which is the biggest driver?

01:42Is it equities, fixed income?

01:44Is it your corporate banking, investment banking?

01:46What have you seen?

01:48You know what?

01:48Actually, I want to say it's all of them.

01:51So now we fully own four of our major legal entities here,

01:56a securities company, our corporate bank, our futures company,

02:01as well as our asset management platform.

02:04So the recovery is broad-based.

02:08And what we're seeing is really good growth in all of those markets.

02:13And that momentum is sustainable going forward.

02:17I mean, you know, huge question marks about China's economic recovery, for instance.

02:22We have that 30% tariffs, which is, you know, the baseline.

02:27Chances are they're heading higher.

02:28So, well, in the beginning of April, I think everyone was a little bit surprised,

02:38underprepared for that tariff increase and escalation in the negotiations.

02:45However, I think in the last two weeks, we've seen encouraging progress,

02:50continued engagement between China and the U.S., which we have always looked to see.

02:55Any progress is good progress.

02:58And we've seen now that the tariffs de-escalating from 145% to 30%,

03:08and, you know, the other side to 10%.

03:10So I think that, you know, prepares us well for the rest of the year.

03:16Now, I would say that the drivers are consumer sector because of government policies

03:24and trade-in subsidies.

03:27It's innovation.

03:29China has proven to be a hotbed for innovation.

03:32You mentioned DeepSeq, but it's really more than that.

03:36We've got the robotics.

03:38We've got biotechnology.

03:40We've got the EVs.

03:42And so, again, innovation is top of a lot of entrepreneurs' mind here.

03:47And so, yeah, I think we will be seeing a lot of encouraging companies' results.

03:55In terms of your onshore business, what next?

03:58What will be the priority now that all your licenses are in place?

04:02Yeah.

04:02So I would say that we're committed to continuing serving all our clients.

04:07And our clients actually include local corporates, financial institutions,

04:12but also multinational companies operating in China.

04:16And we've been with them for over 100 years.

04:19So what we've seen is the cross-border services that is required

04:25to navigate this complicated environment is definitely increasing.

04:30So out of the corporate bank, I would say all the hedging,

04:36all the cross-border payments demand, I think that's all very critical.

04:42Out of the securities firm, there's been more interest in brokerage.

04:47We've upgraded all our systems here to be the best in class.

04:52And we've seen continued interest in our advisory service.

04:56And, of course, asset management, we are the leader in innovation

05:00and a lot of the new products in the ETF market and the money market

05:05that we've been known for for many decades here.

05:10So that's continued to grow.

05:13I'm just wondering how your clients are navigating the risks.

05:17Jamie Dimon speaks a lot about how markets underpricing the risks.

05:21Is there a change, a shift in sentiment as a result of the tariffs

05:26and the trade war that we're seeing?

05:29Look, I think tariffs have an impact on every company,

05:33whether it's the supply chain disruptions

05:37and increased costs that people need to deal with,

05:41as well as just the CapEx strategy and uncertain business environment.

05:46To be honest, I think everyone has prepared themselves for some type of tariffs.

05:52But, again, the uncertainty in the economic growth

05:55is what people are ultimately worried about.

05:58But I think that presents new opportunities as well.

06:03So as we navigate the challenges,

06:05I think companies are eager to look for sectors where it is less affected,

06:10to look for opportunities in fixed income, for example, in government bonds.

06:16And increasingly, I think China is also a diversification for people's portfolio.

06:22Rita, as you talk about expansion in Greater China

06:25and the positive sides that you're seeing,

06:27how are you looking at headcount for your region?

06:31Like any well-run company,

06:33we are always looking to refine, coach

06:37and also increase our local talent here.

06:42We've been committed to doing that.

06:44And China has been really a leader

06:49in giving us a lot of excellent graduates

06:54and talent in various fields.

06:58So I would say...

06:59But in terms of hiring, is there a number?

07:01Are you planning in the next 12, 24 months,

07:03perhaps a hiring of 100, 200, perhaps?

07:07We'll let you know.

07:10But we are definitely hiring, so you would see.

07:13But we have increased our headcount quite a bit over the last few years

07:19as we got all our licenses.

07:22And so we really do see a lot of encouraging signs.

07:25And which areas in particular?

07:27Would it be wealth, for instance?

07:28So wealth is definitely a growth area.

07:32Asset management would be one.

07:36And also our corporate bank.

07:38And this is not just the corporate bank in China.

07:41We always talk about China headcount.

07:43But what we are looking at is actually the global network.

07:47As these Chinese companies go to 100 different markets,

07:51we are there for them in all the various countries.

07:54And that corridor is where the headcount is going to be.

07:58Rita, just one final question before we let you go.

08:00A lot of the growth plans and expectations are based on

08:03assumptions being made on stimulus out of China.

08:08What would you like to see?

08:10Look, I would say that stimulus is only one part.

08:14I think China does face still structural challenges

08:18and it's continuing to adjust the economic structure.

08:23The real estate market continues to be a little bit challenging,

08:28even though we're glad to see that it has stabilized somewhat

08:32compared to the last few years.

08:34So definitely policies in those areas would continue to be super important

08:41for investors to look at this market.

08:43But I would say that the economic growth is, again,

08:49fundamentally driven and not just stimulus driven.

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