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Brief: SEA stock exchanges need to play larger role to move region’s PE market; OCBC to invest HK$1.5 bil in facilities

The Edge Singapore
The Edge Singapore • 7 min read
Brief: SEA stock exchanges need to play larger role to move region’s PE market; OCBC to invest HK$1.5 bil in facilities
DPM Heng Swee Keat announcing Singapore’s plan to invest $300 million in quantum technology. Photo: IMDA
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Quoteworthy: "AI together with climate change are probably going to be the most complex and important challenges facing the global community... And with the most profound consequences if we get it right or wrong" –— President Tharman Shanmugaratnam

​​Southeast Asian stock exchanges need to play a larger role to move the region’s PE market forward: Bain & Co

Southeast Asian stock exchanges must enhance their velocity, liquidity, and depth to advance the region’s private equity (PE) market, says Bain & Company’s head of Southeast Asia PE practice, Usman Akhtar. 

This is amid a continued decline in overall deal value, which fell 39% to US$9 billion ($12.11 billion) in 2023 compared to the previous five-year average of 2018 to 2022, according to Bain’s Southeast Asia Private Equity Report 2024. Deal volume dropped 24% in the same period.

In 1Q2024, deal activity dropped 46% q-o-q to US$1.4 billion, with deal value back at the same level as 1Q2023.

“It has been a challenging year for dealmaking, exits and fundraising in Southeast Asia. Findings from our industry survey point to some of the drivers behind these challenges. 

See also: Retail investors pull record GBP1.8 bil from UK equity funds

“General partners and limited partners are telling us that the areas they are most concerned about are challenging exit conditions, lack of deal opportunities and uncertain economic outlook,” says Akhtar.

Compared to stock exchanges in other developed markets, those in Southeast Asia generally have lower market caps, numbers of companies listed and value of trades. 

According to data compiled by Bain, the velocity of the Singapore Exchange S68 -

, Indonesia Stock Exchange, Bursa Malaysia and Ho Chi Minh City Stock Exchange stood at 32%, 19%, 28%, and 9%, respectively, in 2023. In comparison, the velocity of the Korea Exchange, Shanghai Stock Exchange and Japan Exchange Group stood at 173%, 192% and 104%, respectively. 

See also: UK economy expands by 0.4% in May, double the expected pace

Beyond the need for regional stock exchanges to play a larger role, other factors can boost deal activity. Addressing exit overhang by actively exiting aged assets is crucial. Moreover, operational improvements in PE-owned assets must be evident, as relying solely on macroeconomic trends is no longer enough.  — Khairani Afifi Noordin

OCBC to invest HK$1.5 bil into tech and facilities across Greater China, hire 300 software engineers in China

Oversea-Chinese Banking Corporation (OCBC) will spend some HK$1.5 billion ($260 million) to upgrade its technology and facilities across Greater China by 2026, as part of an “accelerated” push to improve customer and staff experience with updated platforms, products and facilities. 

Of this sum, nearly HK$1 billion will go towards modernising OCBC Hong Kong’s technology platform. By 2026, the bank aims to standardise 90% of its channels, services, products and infrastructure. 

The remaining HK$500 million will go into workplace upgrading for OCBC’s third major site in Hong Kong, says Wang Ke, head of Greater China and CEO of OCBC Hong Kong. “We are signing a new lease for an office… to provide [a] better working environment for our staff, and it is also more convenient for them to commute.” 

The bank will hire 300 software engineers in China over the next three years to support the group’s digital transformation. OCBC’s new hiring target is up 75% over its talent pool of 400 software engineers as of the end of 2023, who are largely based in Malaysia, Indonesia, and Singapore.

OCBC Group CEO Helen Wong unveiled these plans at a May 29 briefing in Hong Kong. Speaking to analysts and media, Wong says Greater China is a key contributor to the group and has grown “significantly” at a CAGR of 24% over the past decade. In FY2023, Greater China contributed 21% of OCBC’s $8.4 billion in group profit before tax. 

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According to Wong, OCBC’s Greater China franchise revenue in Asean grew 39% y-o-y in 2023. Over the past decade, OCBC saw 10% CAGR growth in customer loans in Greater China. OCBC’s Premier Banking customer count in Greater China grew 30% y-o-y between 2022 and 2023. 

OCBC’s clients are also served by more than 50 dedicated regional Asean-Greater China wholesale relationship managers, supported by a network of over 400 branches in offices across Greater China and Asean. 

Wang says the bank serves more than 200,000 retail customers in Hong Kong. OCBC Macau, meanwhile, serves more than 20% of Macau’s population. “Our Macau business is roughly one-third the size of Hong Kong; it’s quite meaningful.”

Wang adds that wholesale banking in OCBC Hong Kong delivered double-digit growth over the past five years. During this period, OCBC Hong Kong grew loans at more than 10% CAGR, deposits at more than 15% CAGR and income at more than 20% CAGR.

OCBC Hong Kong’s continued investments in transaction banking capabilities have supported corporates looking to expand into Greater China and Asean, with 30% growth in related deposits last year, says Wang. 

The bank is also making strides in acquiring affluent customers, with a 47% y-o-y rise in the number of Premier Banking customers in Hong Kong. OCBC Hong Kong’s Premier Banking assets under management also grew 29% y-o-y. 

According to Wang, OCBC Hong Kong currently employs more than 2,400 staff, while OCBC Macau has more than 450 staff. As of 2023, OCBC Hong Kong has assets of some HK$363 billion, while OCBC Macau has assets of some HK$32 billion. — Jovi Ho

Singapore to invest $300 mil into quantum technology, to add 300MW in data centre capacity

Singapore will invest close to $300 million to pursue quantum technology, as part of its National Quantum Strategy which was launched on the first day of the ATxSummit on May 30 by Deputy Prime Minister (DPM) Heng Swee Keat. 

The summit is the country’s flagship technology event, organised by the Infocomm Media Development Authority (IMDA). This fourth edition will draw over 3,000 attendees from 55 countries. 

The city-state will invest in quantum technology across four areas — quantum research and development; engineering capabilities; talent; and partnerships. 

This is part of Singapore’s race to build quantum computers, a rapidly-emerging technology that harnesses the laws of quantum mechanics to solve problems too complex for classical computers. 

Quantum computing’s far higher processing capabilities can stimulate complex molecules for drug discovery, and improve the efficiency of developing and training advanced AI models, among others, says DPM Heng.

Yet the information-communication industry is an energy intensive sector which contributes greatly to greenhouse gas (GHG) emissions. DPM Heng notes that the technology industry emits an estimated 1.5% to 4% of GHG emissions, and is projected to “grow rapidly” as the use of AI expands and the need for data centre storage and processing grows. 

As such, DPM Heng announced in his opening speech the launch of the green data centre roadmap which will aim to provide 300 megawatts (MW) of additional capacity in the near term, and potentially 200MW and more, through green energy deployments. 

Senior Minister of State for Communications and Information Janil Puthucheary said at the launch of the green data centre roadmap on 30 May: “Digital sustainability is a critical issue that affects us all.”

“There is a need to balance the economic and social benefits with applications and environmental effects,” he adds. 

Much of Singapore’s digital economy growth is dependent on data centres, and as of 2022, the information-communication technology sector accounted for 17% of the country’s GDP. 

To that point, Puthucheary says that there are international climate commitments that Singapore has every intention of standing by. The data centre roadmap therefore sets out the type of support that the government will provide to the industry, such as through existing resource efficient grants. 

The roadmap also sets out how low-carbon energy sources, such as biofuel cells, low-carbon hydrogen and ammonia, can be utilised. 

At the opening gala on May 29, President Tharman Shanmugaratnam said in his speech that AI together with climate change are going to be the most “complex and important challenge” that the global community will face. 

“Ultimately, it’s not about the technologies, it’s all of us — scientists, engineers, policymakers, private operators, labour leaders, civil society — whose decisions, disagreements and hopefully growing affinity with each other because of our common interests that will determine the cause of humanity,” says President Tharman. — Nicole Lim 

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