Asia Financial Forum 2023 kicks off Year of the Rabbit

 

By Tracy Lai, MPC Strategist, FinTech Consultant, and Partner at LYSTAR GROUP

Welcome to the new year. It’s hard to believe it’s the third year since the pandemic, starting off as before with the Asia Financial Forum. Co-organized by the Hong Kong SAR government and Hong Kong Trade Development Council (HKTD), the 16th annual conference was held on-site and virtually from January 11 to 12, 2023. The conference attracted about 2,000 live and 3,000 virtual attendees from around the world and marked the first on-site event since the pandemic.

Peter Lam GBS, chairman of the Hong Kong Trade Development Council, together with John KC LEE, Hong Kong chief executive, delivered the opening speech. The forum is the first flagship financial event held in a hybrid format in 2023 as well as Hong Kong’s first major event after relaxation of pandemic restrictions. In keeping with nationwide efforts to build back the economy, the conference theme for 2023 was “Impact, Inclusion, and Innovation.”

Policymakers and CEOs from major financial institutions shared insights on various topics, such as global economics; multilateralism; and inclusivity reflected by the nation’s Regional Comprehensive Economic Partnership, designed to drive wealth and asset management; insurance, and fintech innovation. Additional agenda topics included central bank digital currency (CBDC); ESG standards; healthy equities; food securities; and carbon valuations.

The two-day hybrid format attracted a broad global audience and a separate deal-matching platform connected business leaders from the world to facilitate real-life collaborations. There was also a separate startup pitching platform for startups to present to potential investors and collaborators, that enabled participants to follow up with one-on-one meetings within a week following the conference.

The following are topics highlighted by global leaders at the conference:

ESG Research findings: PWC and HKTDC presented ESG survey data in “Financing the Corporate Transition to a Sustainable Future.” Conducted December 8 to 28, 2022, the survey had interesting findings. Hong Kong Companies are charging forward with carbon-neutral or net-zero commitments but lack the scientific approach to ensure targets are met. Only 15 percent of companies have made the commitment and aligned with a scientific-based target. Most companies view ESG as a reputation enhancer and enabler of long-term competitive advantages rather than just a compliance activity. Lack of expertise, policy incentives, and funding are major hurdles in the path to ESG implementation. Planned ESG investment declined slightly as companies became cautious during the global economic slowdown, having relied on internal cash flow to fund ESG activities. Hong Kong is the most competitive in areas of financial market maturity, international market presence, and local enthusiasm for ESG adoption.

Policy Dialogue: was conducted by Arthur Yuen, Deputy Chief Executive of Hong Kong Monetary Authority, who led a panel discussion with Otavio Damaso, Deputy Governor for Regulation, Central Bank of Brazil, Verena Ross, Chair of European Securities and Markets Authority, Mr. Dong He, Deputy Directory, Monetary and Capital Markets Department, International Monetary Fund, and Hiroto Uehara, Deputy Director-General, Bank of Japan. Panelists agreed 2022 was characterized by high inflation; unexpected geopolitical turmoil and aggressive monetary policy tightening by major central banks around the world. Nonetheless, they offered a positive outlook on the overall global economy, despite ongoing potential risks and uncertainties in terms of inflation and interest rates.

Global Economic Outlook: Victor Chu, Chairman, and CEO of First Eastern Investment Group, led a panel discussion with Valerie Baudson, Chief Executive Officer Amundi, who noted three determining factors for global outlook in 2023: central bank policy; the energy crisis and the Chinese reopening, which she indicated is important for global growth. Globally, she expects inflation to remain high at around 6 percent for 2023. For the U.S., the recession will hopefully be short in duration, topping out between Q1 and Q2, she added, with inflation decelerating and GDP shrinking by 0.5 percent. As Asia reopens, no major growth is anticipated until Q2. Economists see a challenging year ahead.

Global Marketplace Trends: Mr. Robert F. Smith, Founder, Chairman & CEO, Vista Equity Partners said, “Among all 350 million users of our software in over 70 industries, there are some observations. Deceleration of the consumption of enterprise software business software markets seems to be damped but does not seem to be moving into recession since the renewal is still there. Europe there is a much more dramatic slowdown. Asia is interesting in some places we are seeing peaks and expansions and in some other places we are seeing dampening, but it’s clear for most businesses and customers we have worked with agreed to invest in productivity tools, so on a relative basis, they are optimistic to be investing.”

•    Dr. Ridha Wirakusumah, Chief Executive officer, Indonesia Investment Authority sees positive growth for ASEAN and ongoing economic recovery in 2023 as China reopens, and people adapt to improved efficiencies and doing more with less.

•    Mr. Gu Shu, Chairman of the Board of Directors of Agricultural Bank of China, Agricultural Bank of China Limited said ABC will focus on priorities to stay confident and expand domestic demand and China will strive to accelerate economic recovery and will work toward a faster recovery in Q2, 2023.

•    Mr. Takeshi Kunibe, Chairman of the Board, Sumitomo Mitsui Financial Group, Inc.; Sumitomo Mitsui Banking Corp., shared his view that the global economy will experience a downturn this year as interest rates continue to hike in the United States and Europe. Japanese economic data suggests Japan will grow at a steadier pace than its U.S. and European neighbors to the West.

•    Mr. Mark Tucker, Group Chairman, HSBC Holdings Plc, said countries will face different economic challenges in 2023. The reopening of China will be positive for its own economic recovery and global economic growth, volatilities and challenges will continue to rise along with COVID-19 cases. The Middle East is expected to report well, with strong demand for products and services from customers in the Middle East and U.S. economies. The United Kingdom faces challenges of high inflation, the energy crisis, and the war in Ukraine, all contributing to the risk of recession. In Central Europe, the ongoing squeeze on real income increases the risk of recession and forecasts a modest recovery during the second half of the year.

Leading Trends in 2023: Dr. Jose Vinals, Group Chairman, Standard Chartered Plc, observed three major trends in 2023. We had a difficult situation which led from inflation to higher interest rates on the part of central banks. Inflation calming down and declaration of growth will most likely happen. The first part of the year will be marked by political crisis and hopefully a short recession period. In the second half of the year, interest rates will bring stabilize. The third trend contrasts advanced and emerging economies, with Asia leading global growth with China’s reopening, a significant development for Asia, ASEAN, and India.

Additional information about the Asian Financial Forum can be found at: