00:00It seems like Iran has really dominated as the topic of discussion here at GIS.
00:05Overall, how has the conference been?
00:07What sort of the takeaways have you seen so far?
00:08Look, great conference.
00:10A lot of people here, over 5,000 attendees, all from around the world.
00:14So a diverse set of people.
00:16You know, clearly yesterday really was talking about the macroeconomic and geopolitical issues.
00:21Iran dominated, as you said.
00:23But I think people are not only looking at the conflict today,
00:25but really what the after effects will be, the second and third order effects.
00:30And so that was a lot of the discussion.
00:32A lot of discussion of energy transition, but energy resilience and security,
00:36obviously a very big issue.
00:38The change of trade flows, what will we see?
00:41Are the straight closed?
00:42Are we going to see different ways to access the oil going forward?
00:46So a lot of questions, clearly, and that is the dominant theme.
00:49But I think, importantly, people are really thinking about the future,
00:52thinking beyond the conflict.
00:54Do you get a sense from your corporate clients, and there's a lot of them here.
00:58There are a lot.
00:59I know you have a ton of them.
01:00Do you get a sense that they're more risk-off now?
01:02They're being patient?
01:03What's the sense in terms of the transactions they had in mind?
01:07Is that a nice or is that the sense of them?
01:08Well, certainly in the markets, it's risk-off.
01:10There's a one-way trade, buy dollars, buy treasuries.
01:14And so there's a wait-and-see attitude.
01:16But it's very difficult to take a risk view when it changes almost on an hourly basis.
01:21So I think that continues.
01:23I'd say in the region, surprisingly, more resilience, more of a forward view than I would have thought.
01:29Okay.
01:30And so there is some activity, certainly much less than before.
01:34But I wouldn't say it's a complete risk-off attitude and that the world has come to a complete stop.
01:39The further away from the Gulf you get, the more that sentiment prevails.
01:44And so I don't think here in Asia, I was in China two weeks ago, you don't sense anything slowing
01:51down whatsoever.
01:52I'm going to be in the U.S. next week, so I'll reserve that for next week.
01:56But I don't think there as well you're seeing too much of that risk-off attitude as well.
02:01And once the dust settles, what are you thinking in terms of deals?
02:06Do you think that it is business as usual?
02:08I think it's a little slower.
02:11And I think that will persist for a while.
02:13But I don't think people are putting pencils down.
02:16They're just waiting for a more opportune time.
02:18It is some volatility, some uncertainty.
02:21I do think 26, absent this, would have been a great year for deals.
02:26They were just lining up.
02:27I think there was a much more positive view.
02:30I think overall, people want to remain positive to the extent they can.
02:35So I don't think they're going to say, no more deals, we're out of business for the year.
02:39I think they're just waiting for the opportune time to go back.
02:42You know, the bank is coming off, particularly under your mandate, this restructuring and, of course,
02:48just different titles, different mandates.
02:50Are you happy with the current footprint in as far as when you look at the deals outlook
02:54and your complement to be able to service those clients?
02:58Yeah.
02:58What's the general takeaway?
03:00No, we are.
03:01I mean, we've essentially finalized, you know, the big restructuring phase of the transformational mandate.
03:07And that's good.
03:08We want to do it very quickly.
03:10Sure.
03:10Acts over with.
03:11So we're really much focused on the future.
03:12As you know, we did adjust our M&A and equity practices.
03:16We withdrew from Europe and the U.S.
03:19But importantly, we're very focused on Asia and the Middle East for a couple of reasons.
03:24One, that's where we have the most relevance and scale and strength.
03:27Secondly, we see a almost tectonic shift between the capital flows, much more between Asia and
03:34the Middle East than you've ever seen.
03:35So this shift of the historic, you know, New York, London to the rest of the world, it's
03:40now become a multipolar world in terms of financial marketplaces, if you will.
03:44And so we think that's the place to focus.
03:47Obviously, Hong Kong leads the pack in terms of IPO activity, which I know you've reported
03:52on quite a lot.
03:54When I was here, what, two or three weeks ago, it was 400 IPOs lined up and now apparently
03:58there are 500.
03:59So it keeps growing by about 100 every time I ask.
04:02But for our own IPO activity, we feel very good about that.
04:06We have 65 IPOs throughout the region, dominated by Hong Kong, obviously.
04:12I think, you know, more than 25 sponsor type of IPOs, which is a historic high for us.
04:18I think that continues.
04:19Yeah.
04:19You know, again, having been in China, that flow of companies coming out of China, raising
04:24their equity capital here in Hong Kong to be used really to go global.
04:29That continues for a very long time.
04:31You mentioned about the fact that you had to shut down the ECM underwriting in Europe.
04:37Does that make you feel less of a need to have an equities sort of trading business?
04:43I mean, how do you look at it now?
04:44It's a different equities trading business.
04:46So we're not competing on a day-to-day basis, say, in New York with Wall Street players.
04:51We have more of an agency flow business.
04:54It's a very attractive business.
04:57We run in it with a very nice margin.
04:59So we don't have to invest in a lot of the infrastructure that others would.
05:03So it's been very, very successful.
05:05We had a banner year last year.
05:07I think we're going to have a banner year this year.
05:08We've got a great equity-driven business as well.
05:11So we've approached equities from a different perspective.
05:14One, it's a way to access, in particular for Asian investors, into the West.
05:21We've retained that.
05:22It's also the opposite direction.
05:24So our Western institutional clients, in particular, into Asia.
05:28And so we don't really have to take the big positions, run up the big cost associated with a normal
05:35equity business that you would find, in particular, in New York.
05:38And so that's why it makes us successful.
05:40Let's do what we do well.
05:41Let's not try to compete with things that we hadn't done well successfully in the past.
05:44But that's been a very successful business for us.
05:47So you guys now have a stablecoin license.
05:49We are.
05:49I think the pure, simple, in corporate client, what does it mean for me?
05:54How does that change my life?
05:56Yeah, so that's a great question.
05:58And we did a survey, and 95% of the respondents said they understand that digital finance is coming.
06:04In the next five years, it will be a major impact on their business.
06:08Less than 50%, however, could actually say what that impact would be.
06:13So I think there's a lot more education needed.
06:15So you have stablecoins, and you have tokenized deposits.
06:18And let's just keep it in the payments world.
06:20Okay.
06:21They both run off the same rails, which is a distributed ledger technology.
06:26So it is blockchain, essentially, technology.
06:29The difference being stablecoin, which we will issue in Hong Kong, as you said, David, along with another bank, will
06:36essentially is backed by collateral, often U.S. dollar collateral.
06:41That's the dominant collateral.
06:42But it runs in the same technology.
06:44So it's instantaneous settlement or atomic settlement, programmability, certainty of delivery and settlement, so things of that nature.
06:51And it's just more efficient.
06:53Tokenized deposits, on the other hand, don't use the collateralized deposits.
06:58You really are still based upon the trust and credit awareness of a bank.
07:03You, in stablecoins, don't receive interest.
07:06In tokenized deposits, you do.
07:07That's the primary difference.
07:09The effect, however, is the same in terms of the benefits.
07:12So I think most corporates today in wholesale companies, in the institutional space and corporate space, they will look at
07:19tokenized deposit as the natural evolutionary step.
07:22Because it's really taking what you would have today as a normal deposit, maybe on real-time payment rails.
07:28You're just tokenizing it by putting on a distributed ledger rail.
07:31So they may see stablecoin also, however, if they have ecosystems where they have, you know, buying and selling with
07:39many of their own suppliers who may want a stablecoin.
07:43So you can see the big suppliers, the big buyers who use a stablecoin.
07:47Retail, I think, will more naturally gravitate towards a stablecoin.
07:51Were you surprised you got the license?
07:53I'm just curious.
07:54Because you guys didn't even take part in the sandbox.
07:56So I'm just wondering, is this, you know, what was your overreaction?
07:59Well, I think we were very focused on it.
08:02You know, we are very focused on tokenizing all of our activities.
08:06So stablecoin for us is important.
08:09I'm not smart enough to know whether one's going to win out over the other.
08:12So we want to do both.
08:13I think Hong Kong allows us to learn a lot.
08:16The regulatory environment and parameters that the Hong Kong authorities have created is very helpful for us.
08:22I think, actually, they've written the best regulation globally.
08:25And so that was very good for us to be able to win that mandate.
08:29But, by the way, we do tokenized deposits out of Hong Kong, Singapore, Luxembourg, the U.K., and now the
08:36U.S.
08:37So we already have tokenized deposits.
08:39Working on stablecoin, however, has been very valuable.
08:42So we want to be able to do both, essentially.
08:44I was not surprised we won, given our importance in Hong Kong.
08:47I was not surprised we won, given our importance in Hong Kong.
08:47I was surprised we won, given our importance in Hong Kong.
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