00:00I have to kind of start off with your take on what's going on in the Middle East right now,
00:03given that you were born in Lebanon, you lived there for some time,
00:08you were once the head of the Middle East office there as well.
00:12From your perspective, what do you think that this impact of this war could have on the business?
00:19Yvonne, of course we're saddened and concerned with what's happening in the Middle East,
00:24and we're concerned not just with what's happened, but also with how long this will take.
00:30Our immediate priority really is to support our colleagues.
00:35We have more than 10,000 people working in the Middle East as a region,
00:40support their safety, security, and their well-being,
00:43and we've been doing that very actively over the last few weeks.
00:50But the important thing to say is we're open for business.
00:55We're here to support our customers.
00:57We've been, you know, operationally resilient throughout that period,
01:01of course following government guidance and requests, but we are open for business.
01:07We've been in this region for more than 130 years.
01:11This region has faced challenges in the past.
01:14After every challenge, this region has come out of it more resilient, stronger,
01:19and with bigger promise for the future, and this time is no different.
01:25We continue to believe in the long-term prospects and the promise that this region has,
01:31and we are here to support our clients through rough times, when there are rough times,
01:36be it those customers in the Middle East or those international customers operating in the Middle East,
01:41and we will see it through together.
01:44As someone, as Yvonne was pointing out, I'll speak up a little bit because of the background here,
01:49where I think all your clients are in town, which speaks volumes about the volume behind us.
01:55As someone who is very familiar with the region, and you've just reiterated your commitment to the Middle East,
02:00a lot of people are wondering, as a source of capital, as a wealth hub,
02:05these big cities like Dubai, for example,
02:08what the future holds for these cities as financial centers.
02:13Do people need to rethink that, or is there nothing to rethink?
02:17There has been a global trend of diversification of booking centers
02:24that's been taking place for a number of years now,
02:27specifically by our wealth management customers.
02:31So they've been using booking hubs, such as Hong Kong, of course,
02:35such as Singapore, such as the UAE, both in Dubai and Abu Dhabi,
02:40such as Switzerland, the UK, the US,
02:43and they have naturally been diversifying their wealth
02:47to be managed across multiple of these hubs,
02:50partly to be able to benefit from the expertise that each market brings,
02:54and partly as a matter of risk management.
02:57That trend continues.
03:00Insofar that this is concerning the Middle East today,
03:05frankly, we have seen very benign movements.
03:08I think the resilience of the Middle East as a long-term hub
03:12for wealth management and capital has not changed.
03:15But of course, everybody is hoping to see the end of the current conflict,
03:19and praying to see the end of the current conflict soon.
03:23You're also a global trade bank,
03:24so what do you see in terms of change, if any, of trade flows?
03:29Do you see any of that since this war erupted?
03:32And how does it differ from maybe last year when we were talking about tariffs?
03:37So trade has certainly been disrupted.
03:41Now, tariffs of 2025 have disrupted trade with the US.
03:47This time we're seeing a major disruption in trade far beyond the Middle East,
03:52but in particular towards Asia because of the Strait of Hormuz Claude.
03:57We believe there are multiple hundred, probably up to 800 ships that are still locked up in the Gulf.
04:05And, you know, of course, the passage daily, 150 ships has dropped to maybe five to ten ships at best.
04:12So that is hugely disruptive.
04:17The impact of such will be felt way beyond the Middle East,
04:21and that is one worrying factor for us,
04:24not just in price of goods, oil, refined products, LNG, NPG,
04:32but also fertilizers, metals, etc.
04:35But it's also going to be felt in the availability of such goods.
04:40And we worry that a continuation of this conflict will have that impact globally, way beyond the Middle East.
04:48Now, this being said, COVID was a bigger impact on trade flows and trade patterns.
04:54And we learned, everyone, businesses have learned how to recover from COVID.
05:01So, frankly, the moment the conflict ends, we can push on the button,
05:06and in a matter of months, we can go back to normal.
05:08And we just need to have this opportunity to push on that button.
05:13That's a very good point to bring up, that we're coming off not just one, but two dislocations in global
05:21trade.
05:22We had COVID, and we had tariffs, to almost get us used to and train us for something like this.
05:29And I wonder, have you observed anything from your clients in how they've built their supply chains
05:37and trade flows to be more resilient in this sense?
05:40Especially in the Asia-Pacific, where we are extremely exposed to literally the Strait of Hormuz
05:47and everything that flows through there.
05:50So, notwithstanding the challenges we're going to see with the Strait of Hormuz disruption,
05:56we have been seeing a growing, fast-growing trend of Asia-based Asia.
06:02We have been seeing exponential growth in trade within Asia and Asia and the Middle East as a big region.
06:10We believe that this intra-regional trade will add 1.8% to the GDP of the region
06:17on top of its natural growth rate because of this intra-regional trade is not just about trade.
06:25It's driving FDI, it's driving, therefore, investment, it's driving employment,
06:31and it's driving growth in various markets.
06:35It started with the China plus one trend where supply chain were meant to be more resilient
06:42and the diversification of suppliers was meant to bring more jurisdictions where things get manufactured.
06:50And this is where India, Vietnam, Indonesia, Thailand, Malaysia, a number of ASEAN countries
06:55have benefited from these FDI flows for manufacturing build.
07:00But it's very quickly evolved into an intra-regional pattern of trade.
07:05And in 2025, Asian shipments were at a record historic high.
07:10So that is definitely a reconfiguration of trade flows
07:15that is less trans-Pacific and more intra-regional.
07:20You've been talking to clients.
07:22What are the topics and questions that they're asking you about the situation now in the Middle East?
07:27Are they concerned about inflation?
07:28Are they concerned about stagflation?
07:30I mean, what's the sentiment like now?
07:32So it's very timely for this GIS where we have more than 5,000 clients attending
07:39from 40% of whom are from outside Hong Kong.
07:42And that's from 50 different jurisdictions.
07:45And apart from the main sessions, we have more than 7,800 meetings booked over those three days.
07:54That's one meeting starting every 14 seconds.
07:56You're not attending each one, are you?
07:58No, I'm not attending each one of them.
08:00It's impossible.
08:01I will try to get all the information at the end because that's a very rich level of information.
08:05But importantly, we've surveyed about 3,000 of our customers just before GIS during March,
08:12during the disruption in the Middle East, to assess their views.
08:17What the survey is telling us is 95% of customers now look at volatility as a feature,
08:24as a permanent feature of their operating model.
08:27But more than 90% will put more capital at risk, will put more than 90% of them will
08:40put
08:40more investments in cross-border and international opportunities, more intra-regional as opposed
08:46to international, but definitely cross-border.
08:48And more than 90% of them are still looking at growth opportunities outside their home market.
08:57And when you look at the structural growth opportunity that Asia offers, many, many of
09:03these customers are going to look at Asia.
09:05The vast majority of them are going to look at Asia as a growth opportunity, despite the
09:10realization that volatility is a permanent feature.
09:13And that's because our customers have built resilience with our support, are able to predict
09:20and prepare, and therefore are here to capture these opportunities.
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