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00:00No change for the BOJ, not surprising.
00:03Does this affect the deal-making in Japan?
00:06It has been such the backbone for M&As in the APEC region.
00:09No, not really, because I think, as your co-host said,
00:14I think the economic environment in Japan remains stable.
00:20I think people are forecasting a continued activity level.
00:24I think Japanese corporates, I guess the corporate government reforms,
00:27are going to continue to drive activity in Japan,
00:30both by unwinding of cross-holdings, but also by M&A.
00:35And Japanese corporates, they're very active in the M&A market.
00:39They're looking at investing in the U.S.
00:41They're looking at investing in Southeast Asia and India.
00:43And we don't see any change for the foreseeable future,
00:46to be perfectly honest, around deal activities in Japan.
00:49So what kind of deal activity are you anticipating?
00:51If you take a look at the insurance fund, for example,
00:54I mean, they're sending billions and billions of dollars overseas.
00:57Are you capitalizing on that?
00:58I mean, how are you positioning?
00:59Yeah, absolutely.
01:00Like, look, you know, because I think, you know,
01:02like most of the large Japanese corporates will look for external growth.
01:07You know, I guess, I mean, you know,
01:08demographics in Japan are not going to change.
01:10Obviously, the rate environment is changing.
01:12But I think the big aspect for them is that they are looking at overseas market,
01:17you know, to buy growth.
01:19You know, where can they look at that?
01:20You know, obviously, the U.S. remains extremely attractive for them,
01:23you know, in our case.
01:24But, you know, Southeast Asia, very attractive.
01:26India, very attractive.
01:28So, yeah, you know, like we're trying to capitalize on that.
01:31I think we're also going to see, you know,
01:33a further cleanup of the larger companies of their domestic portfolio,
01:37really trying to position themselves, you know,
01:40for the next decade, you know, of growth
01:42and the new rate environment that especially the insurers are facing.
01:46How about in terms of the appetite for large-scale deals?
01:49Are you seeing that?
01:51Is that being impacted, perhaps, by the war in Iran?
01:53Yeah, look, I think, you know, I guess it would be, you know,
01:57an illusion to say that the war in Iran is not a consideration factor.
02:01But, you know, I guess large-scale M&A takes a long period of time.
02:04You know, I guess.
02:05And, you know, I guess so we haven't seen that corporates are,
02:09you know, have stopped looking at transformational deals.
02:12Now, would they pull the trigger right now today?
02:16Maybe they would say, like, look, let's wait another couple of weeks.
02:19Let's get more clarity around that.
02:21But we're saying we definitely don't see any slowdown in the dialogue
02:24around large-cap transformational M&A.
02:27You know, and that is actually true, you know, across the region.
02:30You know, I mean, you saw, you know, we just had out of India,
02:32I think there was Sun Pharma announced a big acquisition in, you know,
02:36in the US, you know, it is.
02:38So the activity levels are definitely there.
02:40Is there a little bit of a pause if you go and say,
02:43well, would we pull the trigger right now?
02:45Sure, in certain sectors, that's definitely the case.
02:47Are we more hesitant now than before?
02:49Sixty days into the war, surely sentiment has changed.
02:52Yeah, look, I think, you know, it's definitely the question is,
02:55I think initially when we went into this war,
02:57people thought, like, this is going to be a two-week, three-week campaign.
03:01You know, it is now, I think you earlier said, you know,
03:03it is, you know, like, you know, the US,
03:05it feels like the US is looking for an off-ramp.
03:08You know, it is having said that,
03:09I would have said, like, in March probably there was more uncertainty than now.
03:13I think now we see that especially also in the capital markets.
03:16You know, we just did a $5 billion placement for CATL last night.
03:19You know, investor appetite is there, you know,
03:21especially in the right sectors and for the right themes,
03:24which is obviously something that we're discussing here as well.
03:27And tech is at the forefront of that
03:29because investors want to deploy capital.
03:32And I think the market for now still thinks that this is an episode,
03:36you know, because it's not something that is going to impact markets for the long run.
03:39So, Peter, if I had to say that there are sectors
03:41which are pretty resilient to the volatility arising from the war in Iran,
03:46you talk about tech, energy could be the other one.
03:48Energy is an interesting one because, you know,
03:51I guess we don't see that many energy deals in Asia.
03:56I mean, I think China is actually pretty resilient, you know,
03:59because you look at it and go, you know,
04:00I guess people look at China being quite isolated from that, you know,
04:04I guess, and therefore, you know, I guess, you know,
04:06China tech remains something, you know,
04:09I guess that people are very, very interested in.
04:11I think Japan, again, you know,
04:13because I think the activity in Japan,
04:15despite, you know, like Japan is quite exposed to Middle Eastern oil,
04:18you know, the activity will not stop in Japan either.
04:23I think Southeast Asia, I think India, there's some concerns,
04:26you know, at the moment where probably that, you know,
04:28like the market is a little bit slower.
04:30But generally speaking, yeah, you know,
04:31because we think, you know, people still want to buy Asia growth.
04:34They still want to think, look at Asia and say, you know,
04:38you have the ability to invest in growth,
04:40which is geopolitically not, you know,
04:44like that a factor to what is going on in the world right now.
04:46I hear Japan, Japan, Japan.
04:48And when we spoke with Brian Monaghan not too long ago,
04:52he talked about how, you know, he's open to hiring in Japan.
04:55Sure.
04:55What kind of hiring are you doing in Japan?
04:57Any numbers you can share with us?
04:58No, listen, you know, I guess, I think, you know,
05:00because I think Bernie mentioned before,
05:02because I think overall, you know, I guess, you know,
05:05I don't expect our headcount to grow.
05:08You know, we're obviously looking at the efficiency gains
05:11that we can get from AI,
05:12although, you know, because I think that's still the early stages.
05:14Now, on a regional basis, I will always reshape the portfolio.
05:19And clearly, you know, with the deal activity going in Japan,
05:22are we adding in investment banking, corporate banking,
05:25you know, I guess, you know, in Japan,
05:26are we also adding on the market side?
05:28Absolutely.
05:29But that will be balanced with other areas in or other, you know,
05:33areas and countries in Asia where we maybe see a little bit less activity, right?
05:37Talent is always key, top talent, especially.
05:39It is a tightening labor market.
05:43How are you looking at talent in a market like Japan?
05:45We are very fortunate that we've been in Japan for a very, very long period of time.
05:50You know, I guess we have an incredibly strong brand, you know,
05:53and franchises in Japan.
05:55So for us, you know, I guess we have an enormous amount of homegrown talent,
05:59which we're investing in.
06:00We continue to hire, obviously, juniors.
06:03And selectively, we will add.
06:04But, you know, I guess, you know, Bank of America and Japan
06:06is seen as, you know, like one of the premier franchises.
06:10So, you know, I guess for us, it's actually, you know,
06:13relatively easy to attract talent.
06:15Attracting talent is one.
06:16Retaining talent is another.
06:18It's even more important.
06:19If you take a look at the Hong Kong market in particular,
06:21we're seeing senior bankers going, you know, for P.E. roles.
06:25Is that concerning to you?
06:27No, it's not.
06:27I think that's part of the normal cycle.
06:30In my case, I actually, you know, I guess I always look at it and say,
06:33if I lose a banker to a competitor, then that upsets me.
06:37If I lose a banker to P.E. or a corporate, I gain a client.
06:41You know, I guess so from that perspective, you know,
06:43I guess I think this is part of the normal cycle.
06:46And I guess we have younger bankers coming up.
06:47I guess, look, you know, this isn't a very, very interesting environment
06:51where I think, you know, some people say, like, look,
06:53for the next 10 years, do I still want to be in banking?
06:56Do I want to be in P.E.?
06:57Do I want to be, you know, in A.I.?
06:59You know, I guess I think this is exciting.
07:01And I see this as part of the normal cycle.
07:03We talk about deals, especially in the tech space.
07:06I mean, countries obviously are getting more nationalistic.
07:09We just saw how China is coming down on a transaction with man is.
07:13Is that impacting the way you look at transactions to do with the likes of China,
07:17to do with the likes of the U.S., where there's so much tension happening?
07:20Yeah, look, I mean, this has been a trend that has been going on, you know, for a while.
07:26You know, I guess, I mean, I guess five years ago, you know, I guess in 2019, 2020,
07:31you know, we would do a lot of IPOs of Chinese companies in the U.S.
07:35You know, I guess that market has pretty much dried up.
07:37You know, I guess most of the Chinese tech companies, you look at, you know, the AI tigers,
07:42they're all expected over time to list in Hong Kong.
07:45You know, I guess investors actually don't care that much.
07:47You know, I guess they can access them where.
07:49It's like, you know, are there certain sectors that are becoming more sensitive?
07:53Absolutely.
07:53You know, I guess, you know, I guess, but geopolitics have been around for a long, long period of time.
07:58And, you know, I guess, you know, like, so.
07:59So no change.
08:00Well, no change.
08:01I think we always have to adapt.
08:02You know, I guess I think the only constant is change.
08:05You know, I guess I think the cycles are getting shorter.
08:08You know, I guess, you know, you're in the news industry.
08:10You know, I guess I think, you know, like every day you wake up and there's news flow that you
08:15have to adapt.
08:16You know, that is part of our job.
08:17But overall, activity levels remain high.
08:20And I think we, you know, like feel that we're very well positioned to capture that.
08:24Peter, how about the IPO space?
08:26Are you seeing a meaningful uptick in that?
08:28Yeah.
08:28Well, Hong Kong was like one of the largest IPO markets again last year.
08:32I think it was the largest by absolute numbers.
08:35We expect a very, very active IPO scene.
08:38And obviously, you know, you have both IPOs and then you have A2H.
08:41I think this year the U.S. will be, you know, like a very large market just because of a
08:46couple of the mega large deals.
08:49Obviously, you know, I guess there's talk about SpaceX, Antropic, OpenAI.
08:52So they will raise a lot of volume.
08:54But if you look at deal count, yeah, Hong Kong will be extremely active.
08:58I think it will be a good mix between tech, you know, like it is, but also, you know, because
09:02I think industrial tech, you know, like it is.
09:05And, you know, there will be both IPOs as well as A2H listings, which I think have been extremely successful.
09:10There's also no more scrutiny on red chips, right, in Hong Kong.
09:14I mean, is that going to impact sentiment anyway?
09:16It will affect the timeline of certain some of these deals, you know, because I think the general, I think
09:22the regulator has come out that I think, you know, red chips, especially, you know, like I think before 2023,
09:29their grandfathered after that.
09:30You know, I guess where we see some companies having to go through corporate restructuring before they can do an
09:34IPO.
09:35So, absolutely, I mean, I guess, but I think, again, for me, that it's just an ongoing trend, you know,
09:40I guess that, like, is I think both the CSRC and the NDRC, you know, have put on more scrutiny.
09:46That will continue to be the case.
09:48And, of course, India was one market that was really hot when it comes to IPO.
09:51That's taken a backseat, given the seller we're seeing.
09:54Yeah, it's taken a little bit of a breather, but I actually see this as a positive, you know, because
09:58you look at it and go, I think, you know, valuations, you know, like at some stage were very elevated.
10:03Now, the market actually hasn't come down.
10:06It's gone from, like, sideways, and the companies have grown into these valuations.
10:10So, you know, I guess so from that perspective, I think that over the next, you know, like 12 months,
10:14I think the IPO activity in India will pick up again because on a relative basis, investors very often look
10:21at it and say, like, okay, you know, what do I pay on a relative basis between, you know, growth
10:26and multiples?
10:27India went very far ahead.
10:29I think at that point in time, you look at it and say, like, well, China looks extremely attractive.
10:33Now, China has rebounded.
10:35India has some, like, flattened.
10:36I think that's the beauty for us, which, you know, a bank from America.
10:39It's flattened.
10:40That also means it's not cheap, right?
10:42Our founders.
10:43It's not cheap.
10:44But I think, you know, like, it depends.
10:46If you take a three to five year view again, I think India actually, you know, like, provides pretty good
10:52value again.
10:52Founders looking for higher valuations or not?
10:54How are they looking at valuations right now?
10:57Founders always want a high valuation, you know, I guess.
11:01But I think they've become more realistic, you know, and ultimately, as I said, you know, I guess I think,
11:06you know, like, there's still a huge amount of secular growth.
11:10India will continue to be the largest, you know, like, growing, like, largest, large, fast-growing economy for the foreseeable
11:18future.
11:19That's an attractive place to be.
11:20The valuation has to be right.
11:22I think the current valuation levels are more attractive, again, for international investors to buy.
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