00:00Let's just talk about the state of play, I guess, as we wrap up 2025.
00:04It's been another huge year for tech, and optimism around AI has continued to dominate.
00:09It doesn't look to be slowing down anytime soon either.
00:12No, absolutely, and pleasure being here and with you, with Annabel and Stephen this morning.
00:17So if you look at 2025, as you rightly pointed out, it has been a very eventful for the APAC tech ecosystem.
00:25Looking back at the past 12 months, there was a bit of a slow Q1 with a lot of volatility in the market,
00:34which was not overly conducive for the pricing or for transactions.
00:39Then we saw an acceleration in Q2 with a resurgence of deal activity.
00:45That resurgence in deal activity has actually accelerated throughout the summer and is not stopping.
00:52So although today is December 12th, what we can see is the level of activity is extremely strong throughout the year-end.
01:01Typically, we see a bit of a slowdown as this is some of the year in the market.
01:04Right now, we're seeing nothing, actually.
01:06We see professionals, issuers working very hard through the year-end,
01:12with the view as well to have the momentum to continue into first half.
01:15What sectors specifically will be the top priority and focus for 2026?
01:21I mean, data centers is a big one right now, obviously.
01:24You have SoftBank looking at acquisitions.
01:26You have also a lot of questions about valuations as well, as whether this is an overspend in AI.
01:33What's going to be the big trend in that space in Asia?
01:36Yes.
01:36I think very, very good question.
01:38So you touch upon AI evaluation and then the data center impact and then if we bring that back home to the APAC region.
01:45I think a few things.
01:47When you think about AI and AI evaluation and why there is a lot of noise around that at this moment,
01:53that's primarily from the infrastructure investments, which make a lot of headlines, mostly in the U.S.
01:59And that's where we see every week a lot of news.
02:03There was some good reporting as well by Bloomberg about some of those investments being, to some extent, a bit circular and what that could mean.
02:11Now, if you transpose to what's happening in this part of the world in AIPAC, I will say a few things.
02:18One, from a valuation standpoint, there is still a big gap.
02:22And looking at very simple statistics, P multiple of the NASDAQ is at 40, between 40 and 45, depending on the week.
02:33I would say if you come closer to here, the Hang Seng, and if you focus on the Hang Seng tech index, we're at about 25 to 26.
02:39So there's still, I would say, a big gap in terms of valuation between the U.S. and here.
02:43And the second aspect as well is the Asia tech ecosystem is much broader than just AI infrastructures and the gigafactory we have here.
02:54So to answer your question, we see a lot of activity, which is much more broad-based, as opposed to just being on the AIDC.
03:01We see that on the Internet space with a lot of deals.
03:04We did a CBO, the TCO for Alibaba, 3.2 billion dollars.
03:07We did as well a GDR for Wistron in Taiwan, which is a tech hardware company.
03:13So it's much more broad-based than, I would say, one specific stock or subsector.
03:17What do you see then around issuance in particular?
03:20We just were speaking about this at the top of the hour and how there's really expected to be sort of a corporate deluge into next year.
03:27What does it look like and what's sort of the pricing going to be as well, do you think?
03:31Yes.
03:32I mean, you are right.
03:33I would not say deluge because deluge maybe have a negative connotation, but there is a lot of activity indeed that we have seen as well in the second half of this year I was mentioning earlier.
03:44And we expect that to continue in the first half.
03:46We have, just on the UBS alone, for Hong Kong, more than double-digit companies where we have already A1 being filed or having been filed and going into pricing in the first half and in the Q1.
04:00So we have, I would say, the near term, and we expect a very strong level of activity.
04:05That's what we can see.
04:07And I think what is interesting is not only on the issuer side, but on the investor side, where there is actually significant pent-up demand to invest here in the region.
04:16So there is still a lot of untapped liquidity, which I think will go into the equity markets.
04:20So then do you see the pricing sticking relatively close to treasuries then?
04:24It's not going to be too expensive, do you expect?
04:27Yes, I think it depends on the subsectors.
04:29So right now what we see from the investor side, they are not overly concerned in the valuation on the Asia side.
04:35I think it's more specific to some U.S. infrastructure stock or the AI ecosystem.
04:41But over here, I think you have some as well, companies where the valuations are still, I would say, relatively attractive.
04:48And secondly, where actually the financial fundamentals are very strong.
04:53We have a lot of issuers.
04:54And why I think the reason we're bullish about next year on the APAC tech scene is because you have as well issuers which have a lot of very good factors, very strong technology.
05:05They have as well, they have a global reach.
05:09So we're talking about Asian companies, but they serve the global markets.
05:13And then number three, companies which have very strong financial fundamentals, which generate cash flows and growing very nicely.
05:20Well, this part of the world, as you mentioned, you know, a couple of answers ago about the tech supply chain is largely located in this part of the world.
05:28That's right.
05:29But where will then from the supply chain of parts to the end product, what are going to be those emerging technologies?
05:36Yes.
05:37Yes.
05:37So you highlighted a very good point, which is the supply chain is primarily located in this part of the world.
05:45And that's a very strength of the APAC tech ecosystem.
05:49What we have here, and China is a great example, it's not only the supply chain.
05:55Actually, we have the whole, what we call the China tech stack, which is located here, which is developing here.
06:00So you have from the hardware piece, which is, I would say, the base, the foundation, and there's a lot of investment going there in the region.
06:09Then you have the models, the large language models coming from this part of the world as well.
06:16China has a number of those being developed and competing well with others globally.
06:21And then you have the applications, which go to the end consumer.
06:24So what we see is the whole tech ecosystem actually being developed here as opposed to just one part.
06:30So that, I would say, creates as well a lot of catalysts for being a bit more immune for what could happen in other markets, especially in the Western markets.
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