Record start to the year in Asia-Pacific
By Sundeep Tucker in Hong Kong
Investment banks are celebrating their most lucrative start to the year yet in the Asia-Pacific region with buoyant takeover activity and equity issuance pushing up revenues.
The banks have pocketed an estimated $4.7bn in fees in the first five months of the year, up 30 per cent on the corresponding period last year, according to Thomson Financial, the data provider.The strong start means that 2007 is odds-on to be a record year for fees in the region, topping the $10bn that investment banks earned last year.
UBS has bagged the most, with core investment banking revenues of $350m, ahead of JPMorgan and Goldman Sachs. The data includes fees earned from mergers and acquisitions, equity and debt capital markets and loans in Asia-Pacific, excluding Japan.
Most fees earned by investment banks, including those from derivatives and trading, remain unpublished and executives say that the figures captured by firms such as Thomson Financial grossly underestimate their companies’ true earnings.
Trading of equities across the region is at record levels.
Nevertheless, the data does highlight how the rapid growth in revenues has turned the region into a key battleground for global investment banks.
A succession of big listings, including April’s $6bn initial public offering by China’s Citic Bank, a take-over bonanza in Australia and strong M&A and capital raising activity in the financial, real estate and energy sectors have helped Asia to shrug off its reputation as a region of slim pickings for global investment banks.
Asia-Pacific is the fastest-growing region for the banks, the majority of which are ramping up headcounts to take advantage of lucrative opportunities.
Meanwhile, executives say that they remain bullish that Chinese companies’ thirst for overseas capital will not be affected by the recent wobbles in the mainland stock market.
Paul Calello, chief executive of Credit Suisse Asia Pacific, said that the region was benefiting from the huge levels of global liquidity seeking exposure to fast-growing economies such as China and India.Mr Calello said: “We have seen record volumes in equity and fixed income, both in the public and secondary markets. Traditional and private equity investors believe that they cannot afford to ignore these markets.”
The data showed that, while activity relating to China and Australia continued to provide the bulk of the fees, south-east Asia is providing an ever-increasing slice of the pie with rising M&A and IPO activity in countries such as Vietnam and Indonesia.
