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EMTA Forum in Hong Kong - October 23

Thursday, October 23, 2014

Sponsored by ING 

JW Marriott
Pacific Place, 88 Queensway
Salon 6 - JW Marriott Ballroom (Level 3)
Hong Kong 

12:00 noon - Registration

12:30 p.m. - Panel Discussion 

"Investing in Asia 2014-2015: Prospects and Risks"
Tim Condon (ING Bank) – Moderator
Anthony Chan (AllianceBernstein)

Michelle Barlow (Bank of America Merrill Lynch)
Johanna Chua (Citi) 
Stephen Chang (JP Morgan Asset Management)

Additional support provided by MarketAxess.

Luncheon will be served with the compliments of ING Commercial Bank. 

Attendance is complimentary for EMTA Members. The registration fee for non-members is US$695. 

Speakers at EMTA Forum in Hong Kong See Chinese Growth at 5 1/2 to 6% in Future Years

Speakers at EMTA’s 9th Annual Forum in Hong Kong focused largely on prospects for the Chinese and Indonesian economies.  The event was sponsored by ING and was held on Thursday October 23, 2014 with 125 markets participants in attendance.  Tim Condon (ING) served as the event’s moderator, as he has at 17 previous EMTA forums in Asia.

JPMorgan Asset Management’s Stephen Chang acknowledged that his firm had reduced its exposure to Indonesia following the strong momentum and market optimism earlier this year.  In Chang’s view, political issues were a concern and he viewed the debt as a trading opportunity rather than a core holding.  Johanna Chua (Citi) admitted that she had recently become more positive on Indonesia, and saw that President Jokowi might be able to achieve a majority even if opposition party members don’t all formally defect to his side.  “Not all hope is lost,” she argued.

Anthony Chan of Alliance Bernstein mused that “it takes so little for the market to turn negative on Indonesia and sell off, while it takes so much for the market to become confident in it.”  Finally, Michele Barlow (Bank of America Merrill Lynch) noted that Indonesia had been a safe haven for many EM credit investors, and that any disappointments in its economic performance could lead to volatility.

Chan characterized China as having “mediocre trends and uninspiring policy.”  He hoped that official GDP targets would be reduced to 6 ½ to 7% in 2015 in order that more could be placed on policy reform.  Chua noted that Beijing’s de-emphasis on growth targets helped manage expectations and allowed Beijing to concentrate more on job creation, and she expected the official target to be lowered to 7% in 2015.  Chua viewed recent political tensions as saber-rattling by a new regime asserting itself, and expressed optimism that tensions with Japan and Vietnam might be waning. 

“We are moderately optimistic overall,” stated Chang who believed the investment climate had improved slightly.  He suggested that the market might be overly negative in its expecting no substantial progress from the Fourth Plenum.  As for Barlow, new Chinese bankruptcy laws didn’t yet instill complete investor confidence, as there hadn’t been enough examples of judicial application of the laws.  “There is still work to be done on that,” she believed.

Longer-term, panelist estimates of Chinese growth over the next decade were mostly in the 5 ½ to 6% range.  “You have to remember that it will grow slower but at a larger base, the size of the economy has changed,” noted Chua. 

Condon concluded the panel by asking speakers to select one favored trade for 2015.  Barlow chose volatility, Chan favored Indonesian 10–year bonds and CNY, Chua would short the USD vs INR, and Chang believed in increased convergence of local rates.