00:00We're just talking about the massive IPOs, SpaceX, one of them.
00:03I'm just wondering, yeah, what's the mood in the market?
00:07I mean, the deal space has been pretty robust,
00:09and this is just a reflection of the liquidity out there.
00:14So it's interesting, Haslinda.
00:16Thanks for having me, first of all.
00:17I think it's been, this is the strongest deal-making market
00:21that we are seeing in the last three to four years.
00:24And it's across the board in Asia.
00:26We are seeing deals happen in China across private equity and private credit,
00:30and especially public markets.
00:33Hong Kong IPO markets are back.
00:35India, despite of the economic activities, still remains resilient.
00:39At least on the private markets, we see sponsors being very active,
00:43and cross-border M&A, especially from Japan into India.
00:46As well as broader region, strong investments in digital infrastructure, AI cloud,
00:52and the thematics that we are seeing play out in the U.S.
00:55across chip makers, AI infrastructure providers, as well as AI application companies,
01:01all accessing private markets now and going towards public markets.
01:06You've got to wonder whether it is sustainable,
01:09basically on the back of a different rate environment.
01:12We're not talking about higher for longer.
01:15We're looking at central banks raising rates instead of cutting them.
01:18At some point, that would impact appetite, no?
01:22So there are three things happening at the same time in macro markets,
01:27which are making us as bankers watch the space between private and public market continuum very carefully.
01:35Number one, the West Asian energy crisis.
01:40Despite of the markets plowing through, in the boardrooms, we are very carefully watching that
01:46because the economic impact on large parts of Asia is real.
01:51And as the crisis continues to go on for longer, the implications will be wider economically,
01:57especially in ASEAN and India.
01:59Second is the CapEx cycle, as you rightly mentioned.
02:04It's really sort of booming across the region.
02:08I think it's less to do with rates.
02:10It's more to do with productivity that is being gained through AI
02:14and does it result into genuine earnings uplift for companies.
02:19And as long as we keep seeing that, I think the momentum will continue
02:22because the demand side remains very strong on back of it.
02:26It's less interest rate driven.
02:28It's more cyclical in nature.
02:30It's a step function.
02:31As I like to say, AI is a general purpose technology, like fire or electricity.
02:37What are the risks, though, to this robust deal-making environment?
02:43If it's not a higher rate environment, then what is?
02:46I think if there is no economic outcome of the investment cycle that we are seeing that is visible,
02:53that's sort of when people will start questioning the return on investment of these investments.
03:00So as long as we keep seeing the economic returns being real,
03:05and in boardrooms and in conversations with CXOs and the heads of investment committees
03:10at private equity and private credit funds and infrastructure funds,
03:14so far the outlook is that the returns are looking visible and real.
03:19The demand is real.
03:21And it's backed by some of the largest corporations in the world,
03:23whether they be from the U.S. or from China or from the rest of Asia.
03:28So I think as long as we see that, we do feel that this will continue.
03:32Is there a marker where I start getting worried?
03:36I would say another three more months of energy crisis
03:40and potentially a disturbance around sort of tariff,
03:44and I know there is news out there this morning.
03:46I think those two things we should sort of keep an eye on.
03:49You're pretty optimistic when it comes to India.
03:52I'm just wondering that with the massive amount of deals out there,
03:57can it all be absorbed by the market?
04:00So India is interesting because what we are seeing in the last 12 to 18 months
04:05is a consistent, it's a divergence of trend, right?
04:09And I would break it down between the international investors
04:13in the public markets and domestic investors
04:15and international investors in private markets and domestic investors.
04:20If you look at public markets, international investors have shied away
04:23because they have not made the returns that they were expecting in India,
04:27particularly in light of the FX depreciation.
04:31But the domestic investors and the savings continue to plow through
04:34and is holding the market up, as we all know.
04:37Interestingly enough, the private equity investors
04:41and private credit investors consistently are investing
04:45and global corporations are consistently investing.
04:49So it's a very interesting dynamic.
04:50I think if you're looking at short term, 6, 12, 24 months,
04:55there could be bumpy ride ahead.
04:57But if you look at medium to long term, it's a structurally bullish market.
05:01Right. So there's no risk of liquidity getting stretched.
05:04There is a risk if foreign investors don't come back for a long period of time
05:09and domestic investors start pulling back.
05:11Right now, we are not seeing any signs of domestic investor pulling back.
05:14And we think if foreign investors are the right valuation point
05:17and earnings growth will come back to the market.
05:20It is about the right valuation point.
05:22When you take a look at the stock market right now,
05:24despite the sell-off we have seen, India remains expensive.
05:27It is hard to see foreign investors coming back.
05:31What would it take?
05:33So if you look at India, in a way, you have to look at China from 10, 15 years ago.
05:38China was consistently deemed as expensive.
05:40And foreigners, we used to come in and out of China market.
05:43And we were always proven wrong because the growth got better of us.
05:47So if you look at it on a growth-adjusted basis, it would work.
05:52But if there is a slowdown in growth, then I think there will be a pullback in the market.
05:57So it's all underpinned by the assumption that India continues to grow strongly.
06:02You're also quite upbeat when it comes to the deal-making in Southeast Asia.
06:07What's driving that, really?
06:09It's really interesting.
06:10There are three trends that are happening at the same time.
06:13Number one, digital infrastructure build.
06:16If you really look at the entire Asian landscape, outside of China,
06:20the largest amount of digital infrastructure build is actually happening in Southeast Asia.
06:24In Johor, of course, it's so visible, Singapore.
06:27But actually beyond these two locations, we are seeing that happen in Thailand, in Malaysia, in Cyberjaya,
06:33beyond Johor, as well as now increasingly in Indonesia.
06:37So if you have this large build-out of GPU clouds as well as data centers, that's a big tailwind
06:45to deal-making.
06:46Secondly, we are also seeing a revival of the transition theme, but in a different way.
06:52More EV, more metals coming out of Indonesia, as well as sort of Vietnam, where we are seeing a third
07:00trend that is really important,
07:02which is the manufacturing and the China plus one transition.
07:06We see Singapore and Vietnam being a huge beneficiary of that, and Malaysia as well.
07:12I'm curious about Indonesia.
07:13I mean, can investors look past the waverings in policies, a currency which is currently at the weakest level in
07:22its history?
07:23I mean, aren't there enough red flags for investors to actually pull back from a market like Indonesia?
07:30So what we are seeing is investors who have stayed put in Indonesia for a long time,
07:35and large global multinational corporates who have remained in that country continue to stay invested.
07:41New investors coming in aggressively and buying assets,
07:45I think it will require a little bit of stability in the market for that to play out.
07:50We are hopeful that the policy-making environment will become more stable in the next year,
07:54and then we see how it goes.
07:56It's interesting, though.
07:57The current energy crisis is a structural positive tailwind for Indonesia.
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