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Look east, look digital

Movers and shakers in the financial industry have strong consensus view – “look east, look digital” – seeing technology and the rise of Mainland China as sure bets for 2021 while the world recovers from the COVID-19 pandemic.

Of delegates surveyed at the 14th Asian Financial Forum (AFF) – co-organised by the Hong Kong Special Administrative Region (HKSAR) Government and Hong Kong Trade Development Council (HKTDC) – 68% believe Mainland China will offer best investment return in 2021. Many delegates also saw accelerated technology uptake as a key driver of change in the year.

Virtual conference

The online poll to gauge participants’ views on the global economy and the impact of the COVID-19 pandemic on various sectors was part the two-day virtual AFF, run under the theme “Reshaping the World Economic Landscape”. This year’s AFF attracted more than 63,000 viewers from over 70 nations and regions. To help facilitate more concrete collaboration between global investors, project owners and start-ups, the online forum included the AFF Deal Flow Matchmaking Session, with more than 700 one-on-one matchmaking meetings arranged.

Paul Chan, Financial Secretary of the HKSAR, expressed his views on the outlook for Hong Kong on the second morning of the forum. “My optimism for Hong Kong is clear and compelling. It's built on our distinctive advantages under the ‘one country, two systems’ arrangement. I'm talking about Hong Kong's world-class financial system and the professional services prowess that supports it. To that, add the free flow of information, talent, capital and goods, in and out of Hong Kong. No less vital is our long-standing rule of law and level playing field tied to our transparent and internationally aligned regulatory system, low and simple tax regime and deep market liquidity. Put it all together, and you know why Hong Kong means business. Whatever business you're in, whatever investment interests you may have.”

Live polling at AFF sessions enhanced interactivity between speakers and participants and gauged their views on subjects such as global economic prospects, the region that offers the best investment return, and the challenges of sustainable development. When asked about the outlook for the global economy in 2021, 32% of respondents were optimistic, 47% were neutral, while 21% expressed pessimism, reflecting a generally not-so-pessimistic view on the overall economic outlook.

Meanwhile, 68% of respondents believed the mainland would offer the best investment return among economies, while the Association of Southeast Asian Nations (ASEAN) ranked second (18%) and the United States third (7%).

Year-long recovery

A survey on the impact of the pandemic on the global economy showed that 55% of respondents believed global economic activities would return to normal after one year, 28% believed it would happen within this year, while 17% of respondents said it would take more than two years to return to normal. When asked about their views on governments’ measures to stimulate economic recovery, 24% agreed that unemployment assistance was the most effective, followed by stimulus payments in the form of vouchers to boost local consumption (21%) and tax relief measures such as deferral of corporate income tax payments (21%). When asked about the biggest challenge faced by the banking industry in 2021, 32% of respondents said credit risk and quality, followed by cyber threats due to increasing digital banking interactions (26%).

Recovery in traditional businesses

Stephen A Schwarzman
Stephen A Schwarzman, Chairman, CEO and Co-Founder of Blackstone

The impact of the pandemic and evolving international geopolitical issues have created uncertainties in the global economy. The AFF hosted more than 60 dialogues and discussion sessions, inviting more than 160 distinguished finance policymakers and business leaders to examine the market situation and share insights on the strategies to address the current financial stalemate. Stephen A Schwarzman, Chairman, CEO and Co-Founder of Blackstone, who last year predicted the US economy would see a V-shaped recovery, said that as demand returns in the second half of 2021, inflation will boost interest rates.

He also said technology is revolutionising the world and has “had a massive run”, after which it may fare less well this year in terms of investment return.  “Conventional investing for value-oriented securities has really lagged because those companies are being disrupted, but I think there will be a rotation to some of the more traditional businesses as they recover.”

Innovation technology

Alexis Ohanian
Alexis Ohanian, Co-founder of Reddit and 776

Innovation and technology are fundamentally impacting financial development and were a key focus at this year’s AFF. Technology trailblazer Alexis Ohanian, Co-founder of Reddit and 776 shared his insights during keynote sessions on the second day of forum.

Mr Ohanian said: “There’s an interesting timing opportunity for start-ups in the right place at the right time. Travel is a good example. There is an opportunity right now if you’re building the right kind of travel business to seize a large part of the market quickly, because as the vaccine rollout continues, and as we start to beat COVID, there will be a huge appetite for things that fell to basically zero over the past year.”

Explaining his firm’s numeric name, Mr Ohanian said 776 BC was the date of the first Olympic Games held in Classical Greece. The footrace at the first event was won by a cook who had simply walked over from nearby village, not one of the star athletes. This epitomised the spirit of what venture capital should do – reveal hidden talent.

Matchmaking

AFF Deal Flow Matchmaking Session
The online AFF Deal Flow Matchmaking Session provided one-on-one matchmaking meetings between project owners and investors

The AFF Deal Flow Matchmaking Session ran on a virtual platform this year, helping to arrange 718 one-on-one meetings between project owners and investors and bringing together investors, project owners and start-ups, breaking the record for the number of companies involved. Investment projects covered areas including the Internet of Things, digital technology, healthtech, fintech, education, environment and energy, food and agriculture, infrastructure and real-estate services.

Showcase

This year’s AFF continued to present the Fintech Showcase, FintechHK Startup Salon, InnoVenture Salon and Global Investment Zone. More than 140 local and overseas international financial institutions, technology enterprises, start-ups and investment agencies, including Mox Bank, a start-up group from Cyberport, Hong Kong Science and Technology Parks, PAO Bank and Airwallex, came together to give online presentations on the latest trends in fintech innovation and next-generation business ideas, helping industries from different parts of the world to explore investment opportunities.

The HKTDC, 500 Startups and FWD Group also jointly presented the inaugural “AFF Accelerate”, an open-innovation challenge with eight start-up finalists devising insurance technology solutions to help the insurance industry recruit agents, engage prospects and solve payment problems.

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