There is definite proof that sustainability-focused funds are outperforming their conventional counterparts. But some experts believe the traditional explanations for this are wrong.
There are two areas of development HSBC Investments is working with group affiliates. First is operations. In general, the Asia business is more manual than, say, in Germany, which Apenbrink ran before transferring to Hong Kong six months ago (to replace the departed Blair Pickerell, who now runs Asia-Pacific for Morgan Stanley Investment Management).
This was tolerable because labour costs in Asia were low. But that is no longer the case. Worse, turnover has accelerated in line with the Asian growth story, which has attracted new competitors or seen established firms also grow their businesses. HSBC, with its long history in the region, has suffered. In markets such as Singapore, says Apenbrick, ôThe first place others look for experienced people to hire is from HSBC.ö Third, volumes have risen dramatically, including those of exotic products.
This is prompting the firm to work with HSBC Fund Services and HSBC Securities Services to undergo a strategic review of operations, from front-office trading to back-office clearance and settlement. This will lead to an effort to introduce straight-through processing, although at this stage Apenbrick declined to get into details or say whether the new direction will include much outsourcing.
Another area where HSBC Investments is working with group units is in China. The firm sees emerging markets in general, and China in particular, as its biggest business opportunities. It has a funds joint venture in Shanghai, HSBC Jintrust (with partner Shanxi Trust), and is also keen to launch a QDII product and grow its quota for QFII money. But it is also working with HSBC Bank in China to create structured products for the local market.
HSBC Investments manages $222.8 billion worldwide, of which $60.3 billion is sourced from Asia-Pacific, as of September 2007, according to AsianInvestor research.
At the same time, the firm senses it needs to streamline its brand as an asset-management firm. Stuart Gulliver, the London-based head of group corporate, investment banking and markets business û which also includes investment management û has recently said there will be re-branding this year, to avoid confusion amongst HSBC InvestmentsÆ parts.
Currently HSBC Investments is the client-facing and business-development entity for manufacturing units such as Halbis Partners, Sinopia Asset Management and HSBC Multi-manager. Apenbrick explains the re-branding will see everything likely placed under the heading of HSBC Global Asset Management, which will emphasize four areas of specialisation: the active-management strategies of Halbis Partners, the structured-products division of Sinopia, multi-manager solutions and liquidity products.
Meanwhile in Asia Pacific, the firm has a strategy for growing its business. On the product front, it wants to emphasize its emerging-markets capabilities, both traditional and alternative. The Singapore office of Halbis already manages an India long/short fund, the first Asia-oriented hedge fund, and Apenbrick says the firm wants to introduce more Asia-focused strategies. It is also considering thematic products that have a strong emerging-market focus, such as infrastructure.
It also plans to introduce to Asian clients some of HalbisÆ New York- or London-managed emerging-market funds covering other regions such as Latin America and Eastern Europe. The firm would like a China long/short product but Apenbrick says it would take at least a year before this becomes a reality. In the meantime however the firm is looking to introduce both QDII and QFII products for various clients.
Apenbrick plans within the next 12 months to have opened two new onshore businesses in the region. HSBC Investments currently has offices in Hong Kong, Singapore, Taipei, Tokyo and Mumbai, as well as its JV in Shanghai.
It is in the process of opening a rep office in Brunei û a client-marketing team has been hired that will report to the Singapore office û and is looking to do something in Vietnam to support the group effort (HSBC Insurance has a 10% stake in Vietnam Insurance Corporation, also known as BaoViet). But Apenbrick says the investment firm is investigating full-fledged onshore licenses elsewhere for its own business.
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