Financial markets currently present high levels of uncertainty on all fronts, with a wide range of political, economic and financial events increasing the challenges associated with creating and executing a successful investment strategy. In times like this, investors need guidance on how to avoid pitfalls and find the opportunities.
❝ We are witnessing rapid changes in APAC, in everything from monetary policy to regional and global politics, with so much in between. ❞
The BNP Paribas Global Markets APAC Conference 2023 did just that. Held on 14 September in Hong Kong, this agenda-setting event assembled an exceptional line-up of experts from the worlds of finance, policy, and beyond.
“We are witnessing rapid changes in APAC, in everything from monetary policy to regional and global politics, with so much in between,” said Olivier Osty, Head of Global Markets, BNP Paribas. “The expertise of the people on stage has provided ideas for the future, which will help our clients navigate the challenging environment.”
Understanding geopolitics
The post-pandemic world is awash with complex geopolitical issues that have the potential to quickly transform the economic situation. The war in Ukraine is a case in point, as the unexpected conflict strengthened energy markets, threatened the supply of agricultural commodities, and isolated Russia from the global financial system. The Global Markets APAC Conference addressed this key topic, along with many others, with input from a renowned US Marine Corps leader.
❝ The speakers provided candid insights into the future sharing a wealth of knowledge and their deep understanding of the complexities of a tumultuous world. ❞
“The speakers provided candid insights into the future sharing a wealth of knowledge and their deep understanding of the complexities of a tumultuous world,” said Maria Witchell, Head of Strategic Equity, APAC, Legal, BNP Paribas.
❝ We covered everything from the greatest points of tension to the areas where cooperation is still possible – covering everything from export controls on technology to the existential threat of climate change. ❞
Another geopolitical topic that is a key source of concern for investors is the ongoing tensions between China and the US, the world’s two largest economies. The trade war that started in 2018 with the US introducing tariffs on Chinese goods, and tensions have broadened to include the restrictions on the export of certain technologies to China, while results of the US presidential in 2024 adds another level of uncertainty to US-China relations.
“We covered everything from the greatest points of tension to the areas where cooperation is still possible – covering everything from export controls on technology to the existential threat of climate change,” said Jacqueline Rong, Chief China Economist, BNP Paribas.
Opportunities in an inflationary world
Inflation remains the focal economic indicator across the world. Although it looks as though consumer price rises in the US have peaked, the rate of inflation is still above target. As a result, the entire financial community is looking to the US Federal Reserve to forecast the direction of monetary policy. In Japan, by contrast, policymakers are hoping that the current inflationary trend is a long-term phenomenon.
❝ Monetary policy is the topic of the moment. There is a need for central bankers to conduct monetary policy with humility in light of heightened uncertainty. And until there is conclusive evidence of labour market weakening, policy rates could stay higher for longer.❞
To make sense of the international monetary policy landscape, the Global Markets APAC Conference brought in several of the most famous central bankers of the last decade.
“Monetary policy is the topic of the moment. There is a need for central bankers to conduct monetary policy with humility in light of heightened uncertainty. And until there is conclusive evidence of labour market weakening, policy rates could stay higher for longer,” said Luigi Speranza, Global Head of Markets 360 and Chief Economist, BNP Paribas.
In terms of the investment opportunities, Japan was a hot topic, as the country may have finally overcome the deflation that has weighed down its economy for decades – potentially putting it on track to report modest, but respectable, economic growth over the medium term. The outlook is supported by strong corporate income, a buoyant job market, and rising fixed asset investment.
❝ With the Japanese economy now at a turning point, an optimistic case can be made that the the sun will keep rising over Japan. ❞
“With the Japanese economy now at a turning point, an optimistic case can be made that the the sun will keep rising over Japan,” said Mana Nakazora, Chief Credit Strategist, Chief ESG Strategist, Vice Chairman Global Markets, BNP Paribas Japan.
The other Asian market that was the subject of an in-depth discussion was the event’s host city, Hong Kong, which is making significant strides to deepen its connections with China’s onshore markets.
❝ Hong Kong has a bright future, with its role as a connector to China’s onshore markets, the strong IPO pipeline, and a broadening range of products, all set to cement the city’s status as a major international financial centre. ❞
In 2022 for example, the flagship Stock Connect programme was expanded to include exchange traded funds, and in 2023, the newly launched Swap Connect allows international investors trade onshore interest rate swaps. Other major initiatives include the launch of the HKD-RMB Dual Counter Model, as well as the potential eligibility for international companies with a primary listing in Hong Kong to be included in Southbound trading, which provides access to onshore China’s enormous retail investor base.
“Hong Kong has a bright future, with its role as a connector to China’s onshore markets, the strong IPO pipeline, and a broadening range of products, all set to cement the city’s status as a major international financial centre,” said Hugo Leung, CEO, BNP Paribas, Hong Kong Branch.
A landmark financial event
Overall, the BNP Paribas Global Markets APAC Conference 2023 was a lively, interactive and instructive day that left attendees better prepared for the future.
❝ By covering the monetary policy landscape, the path forward for China and the US, global security concerns, with deep dives into Japan and Hong Kong, our Global Markets APAC Conference provided attendees with the information they need to successfully trade Asia, and beyond. ❞
“By covering the monetary policy landscape, the path forward for China and the US, global security concerns, with deep dives into Japan and Hong Kong, our Global Markets APAC Conference provided attendees with the information they need to successfully trade Asia, and beyond,” said Brian McCappin, Deputy Head of Global Markets, APAC and Head of Institutional Clients Group APAC, BNP Paribas.