00:00Break down the numbers for us. Just how heavily reliant are they on Asia and specifically when
00:04it comes to Hong Kong and China? Yeah, we just take HSBC as an example. Well, it has about
00:121.6 trillion U.S. dollars of wealth balance at the end of last year. In fact, two-thirds of
00:19them
00:19comes from Asia, and I'm sure more than half of them should be generated from Hong Kong,
00:25given Hong Kong its largest wealth hub. And if we take a look at the new money flowing
00:32into the wealth balance, it reached 86 billion U.S. dollars last year. And I reckon maybe
00:40the portion from this region or even Hong Kong could be 60-70% at least, based on their announcement
00:48or the disclosure. For standard chart that we see very, very similar trends, they have
00:53450 billion U.S. dollars of wealth balance or the AUM under their wealth management business.
01:01And they generate 50 billion U.S. dollars new money, new inflow to the group. And I think
01:0950% plus could be coming from Asia and Hong Kong China.
01:15Francis, so given that both banks saw wealth revenue surging by over 20% last year, will
01:21this new scrutiny put a sudden break on that momentum?
01:26Yeah, that would be a twofold question, I reckon. In fact, if we look at the wealthies, as far
01:35as I know or how the industry has understood, much of the wealthies coming from transactions,
01:43new purchases of products, in fact, the existing client pool contribute almost most of those
01:49fees, at the very least in the 2025 and first quarter. And you're talking about the new accounts.
01:57Yes, in long term, it helps the accumulation of wealth balance or deposit balance for the
02:04banks. But if you talk about a really, really near term or mid term impact, we are talking
02:11about the 1.6 trillion of wealth balance for HSBC as a group. They have already got a huge
02:18base to have the circulation of new products to the existing clients. I do expect a tiny bit
02:25of a slowdown for their wealth income. But I don't think it may be significant. And you
02:30can take reference to how the investors are doing this.
02:34Stephen, for the insurance read through, I mean, we saw what happened with the stock of
02:38AIA, Prudential. I mean, these are insurance companies that rely on a lot of mainland investors
02:43to come here to Hong Kong to buy insurance products. What impact do you see?
02:48Yeah, I think it's, I mean, clearly it's naive to say that there's zero impact to these companies.
02:52But I think we need to put things into perspective, right? So a few points I want to point out.
02:57Number one is, it's, it's, it's not that we have not seen that before, right?
03:02Way back in 10 years ago, 10 odd years ago, we already have this clamp down on union pay,
03:07white swiping cards, and we have this 50,000 US dollars limit. So that's point number one.
03:13Point number two, I think it's, it's very important is that the insurance products are very different
03:19from these sort of investment vehicles that, you know, the private wealth management
03:23or the trading accounts that we're talking about. These are really sort of life insurance,
03:28health insurance protection. It's not for speculation, right?
03:31So I think regulators will need to have that mindset in terms of what they're barring,
03:37you know, people. So I don't think it's very clear that they're not barring people
03:40from buying insurance policies. What these sort of narrative have created is eventually,
03:47a little bit of a choke point in terms of the capital flow, because you still need money
03:51to purchase these policies, right? So, but I think the broader question is, you know,
03:56we can throw some numbers out here, right? Say, let's say 20% of the MCV business impact
04:02to AIA Prudential and whatnot. Now, that is only that part of the segment, right?
04:08But AIA Prudential and the other life insurance companies operate regionally.
04:13So if money doesn't come to Hong Kong, it will go somewhere else.
04:16So to Singapore, is it? It may go to Singapore, right?
04:19And these guys also have mainland China business onshore. So if people are not buying in Hong Kong,
04:24where do they buy, right? So that's another point. So last but not the least, I think,
04:30you know, I don't want to sound too optimistic, but these money that are banned from Futu and Tiger, right?
04:36These are sizable money. If they're not doing, you know, stock investments, what is the next sort of packing order?
04:44I think people can sort of figure it out, you know, by themselves in terms of, but I can give
04:49you the size and scope, right?
04:51These amount, I think, I think there's a big number of being thrown out, say, 40 billion US dollars.
04:56Yeah. Okay. If you put that into perspective of the Hong Kong new premiums, that's already like 80% of
05:03that.
05:03Of course, not all of that, right? But a fraction of it may come down.
05:08So I think in totality, there will be some sort of knee jerk reaction in terms of investor sentiment.
05:15But I think we really need to, you know, go with what's actually really happening.
05:20So the capital flow, it is a concern, I have to say.
05:22But a lot of the high net worth money are already outside of China, based on my understanding.
05:28Yeah. Francis, I mean, we talked about the knee jerk reaction.
05:31We're continuing that for another day across some of these banking stocks.
05:34HSBC, AIA are falling once again.
05:37How do you think investors are reading this? Do you think it's mostly priced in or is there more pain
05:42ahead?
05:44Well, I think yesterday in the London trading session, HSBC instead of chartered stocks, they have been down 5%
05:51to 6%.
05:52So what you're seeing now, at the very least, we see the share losses, they narrow.
05:58I suspect more and more investors, they might come to a conclusion, as I explained earlier.
06:06Much of the wealth fees, the incremental growth could be coming from existing, for fully existing client pool.
06:12Although in long term, more should be welcomed from new accounts opening for mainland investors or mainland depositors.
06:21But in short term or even mid term, we have accumulated a mass of wealth balance for these banks to
06:32continue growing their wealth business.
06:35I think my point would be very similar to Stephen's and we should not be too pessimistic, at least from
06:42the wealth management business point of view.
06:45I'll see the line for the rest of the world.
Comments