Finance & Investment

When Anthony Espina visited Kazakhstan for the first time in 2007, he felt right at home. “I was struck by how similar Kazakhstan was to Australia, from the open fields to the friendly people and multicultural society,” said Espina, a Filipino-Indonesian born in Hong Kong and educated in Australia.

Espina was attracted by the growth potential of Kazakhstan. On his first trip to the country in 2007, Espina, then owner of a Hong Kong-based securities dealer of the Hong Kong stock market and Chairman of the Hong Kong Securities Association, was part of a government delegation to promote Hong Kong Stock Exchange as a destination for listing Kazakh companies. Meeting the locals allowed him to glean a better understanding of Kazakhstan, which, as he learned, has an abundance of natural resources and is one of the best economic performers among all former republics of the Soviet Union in Central Asia. Espina immediately saw business opportunities.

His instinct proved right. A few months later, a Kazakh business contact approached him and sought his help to import TV set-top boxes from China.

“They had sourced set-top boxes from Ukraine and other former Soviet republics. The cost was US$40 to $50 per unit, compared with only $30 from Shenzhen manufacturers. So they wanted to source directly from China. But in those days, trade between China and Kazakhstan was rare and language was a barrier. Chinese companies required Kazakh buyers to settle all payments before goods were shipped out of China,” Espina said.

“For me, the deal was very simple. I only had to cross the border to liaise with mainland manufacturers and help with the shipping, making sure everything was right before and after payment was made,” he said. “Hong Kong is a long-established trading port and we have the experience to handle such deals.”

The collaboration was soon followed by more business opportunities. For instance, another Kazakh company enlisted Espina’s help to import agricultural chemicals. Espina also started to dabble in Kazakhstan’s financial sector, facilitating companies to complete merger and acquisition transactions. In 2012, a turning point came. The Italian bank UniCredit wanted to sell its stake in ATF Bank, one of Kazakhstan’s five largest banks by assets. At the time, Espina had been with a Kazakh company handling a merger and acquisition transaction. He then helped that company take over ATF from UniCredit. The deal was closed in early 2013 upon getting approval from the National Bank of Kazakhstan, and Espina has been ATF’s CEO since then.

For Hong Kong businesses interested in investing in Kazakhstan, Espina said patience and finding a reliable local partner are key. “There are many business opportunities in Kazakhstan, but it takes time to capture them.”

In September 2013, Chinese President Xi visited Kazakhstan and outlined for the first time the plan to build a Silk Road Economic Belt when he delivered a speech at Nazarbayev University in Astana. The Silk Road Economic Belt is a land-based component that, together with the oceanic Maritime Silk Road, forms the Belt and Road Initiative.

It is a development that has excited Espina till this day. “Central Asia occupies the biggest share of the Belt and Road. Kazakhstan, the biggest country in the region, has many advantages as far as the Belt and Road Initiative is concerned,” he said.

According to the Kazakh government, Kazakhstan and China have drafted more than 50 projects totalling US$27 billion and involving various fields, including the chemical, mining, infrastructure, energy and agricultural sectors.

Hong Kong, being a financial hub that has long been playing the role of financial intermediary to China, also stands to gain, Espina said. “Under the Belt and Road Initiative, Hong Kong is the ideal place for fundraising for Kazakh companies and foreign companies doing projects in Kazakhstan. Given Hong Kong’s financial knowledge, we can help Kazakh companies carry out feasibility studies and raise funds at lower financial costs.” he said. “Hong Kong is more than a ‘connector’. It is an international financial centre that Kazakhstan can use to build its own capital and debt markets.”

According to Espina, the Kazakh government has set a strategic goal to reduce its role in the economy through privatisation. In February 2018, he was appointed as advisor to the CEO and Chairman of the management board of Samruk Kazyna, the sovereign wealth fund of Kazakhstan. The fund is the holding company of all the major state-owned enterprises of Kazakhstan. Espina is currently advising on the privatisation of four companies of the fund. The state-owned companies to be privatised will be listed on the Astana International Exchange (AIX), which is part of the Astana International Financial Centre (AIFC).

Officially opened in July 2018, the AIFC is a planned financial free zone in Astana designed to open up the country for international business. Positioned as a financial hub in Central Asia, it has a special legal framework based on the principles of English law and the preferential tax regime, which will make it easier for foreigners to invest in Kazakhstan. Espina said the AIFC encourages Kazakh companies to list debt and equity securities there, and in the long run other Central Asian companies will also be attracted to list their shares on the AIFC. In the process of privatisation, Hong Kong can also play a part, he said.

“Hong Kong has played an important role in the privatisation of mainland state-owned enterprises. We have the knowledge, expertise and experience in facilitating the privatisation of mainland companies. We can do the same for Kazakhstan,” Espina explained.

“If Kazakh companies decide to dual-list their shares on the Hong Kong Stock Exchange (SEHK) and the Astana International Exchange (AIX), then Hong Kong-based financial services providers will definitely have to set up operations in the AIFC to advise on SEHK listing rules. Also, if Kazakh companies were to raise funds through Hong Kong from the Chinese mainland, for example, the financial services providers can also advise on taxation and other issues.

Espina called for the Hong Kong government, the Financial Services Development Council and the SEHK to take the initiative to promote Hong Kong’s advantages and bring Hong Kong-based financial services companies to Kazakhstan.  

The Hong Kong University of Science and Technology is playing a key research role for Belt and Road Initiative opportunities, says HKUST’s Albert Park. Co-presenting a series of market insight seminars, Professor Park says the HKUST’s Business School has a major collaboration with overseas academics while as founding member of the Asian Universities Alliance it is promoting two-way partnerships with Belt and Road countries and opportunities in Hong Kong.

Speaker:
Albert Park, Director, HKUST Institute for Emerging Market Studies

Related Links:
Hong Kong Trade Development Council
http://www.hktdc.com

HKTDC Belt and Road Portal
http://beltandroad.hktdc.com/en/

Tax incentives and financing expertise for Belt and Road Initiative projects offer huge opportunities for Hong Kong as a treasury centre, says Paul She of global accounting and consultancy firm, Mazars. The firm is focusing on technology clients related to the Belt and Road – some for IPO launch on the Hong Kong Stock Exchange – companies “often missed by the market”.

Speaker:
Paul She, Practising Director, Mazars CPA Limited

Related Links:
Hong Kong Trade Development Council
http://www.hktdc.com

HKTDC Belt and Road Portal
http://beltandroad.hktdc.com/en/

Between 60 per cent and 70 per cent of all investment in infrastructure across the Belt and Road in 2016 flowed through Hong Kong in some way, says PwC’s Simon Booker – and Hong Kong has everything to gain in 2017. PwC’s Belt and Road Watch research for the past year shows that overall investment exceeded US$490 billion, with one third taking place or originating on the Chinese mainland.

Speakers:
Simon Booker, Partner, Corporate Finance, PwC
Gabriel Wong, Head, Corporate Finance, PwC China & Hong Kong 

Related Links:
Hong Kong Trade Development Council
http://www.hktdc.com

HKTDC Belt and Road Portal
http://beltandroad.hktdc.com/en/ 

Based in Hong Kong with a history spanning more than a century, China Construction Bank (Asia) Corporation Ltd (“China Construction Bank (Asia)” or “CCB (Asia)”) is the flagship subsidiary of China Construction Bank Corporation (“CCB”) with the largest and most comprehensive operation, the most diverse range of products, and a pool of exceptional talents for CCB’s overseas business. With the establishment of its Credit Approval Centre Asia-Pacific in Hong Kong, CCB (Asia) will continue to play a pivotal role working in partnership with other CCB affiliates in Hong Kong in supporting Chinese mainland enterprises’ “going global” as well as participation in the Belt and Road Initiative.

As an international financial hub, Hong Kong is a key strategic link within the Belt and Road Initiative. As most mainland enterprises have chosen to set up their offshore headquarters or fund management platforms in Hong Kong, the Special Administrative Region has become the “going global” bridgehead for mainland enterprises, presenting CCB (Asia) with tremendous opportunities. Hong Kong is one of Asia’s most dynamic markets in syndicated loans, bonds, IPOs, asset management and corporate treasury management. It is also the world’s leading offshore renminbi market with a high degree of connectivity to global markets. To mainland enterprises, Hong Kong possesses a distinctive talent edge by virtue of its biliterate and trilingual financial talent pool armed with global insight and vision, its wealth of professionals in accounting, law and tax, as well as its high level of marketisation in human resources and flexible employment mechanism.

CCB (Asia) has in recent years assembled and cultivated a pool of specialists who, by playing key roles in major overseas financing projects in the past, have been instrumental in driving the development of CCB’s overseas financing business. As CCB’s largest comprehensive banking platform outside of the mainland, CCB (Asia) is a key financing centre for major overseas projects involving mainland enterprises. Its independent Structured Finance Team and Syndication Team are in a position to offer companies a suite of financial services products ranging from international syndication and M&A loans to project financing and asset financing. Its services include deal structuring, project evaluation and advisory services, financial modelling, syndicated loan distribution, loan documentation negotiation, arrangement for signing of legal documents and loan drawdown.

The establishment of the Credit Approval Centre Asia-Pacific in Hong Kong signifies an important milestone in CCB’s internationalisation and will help to elevate the quality and efficiency of the loan approval process. It also underscores Hong Kong’s status as a “super-connector” between the mainland and international practices and standards. With the accumulation of valuable experience through execution of live deals, CCB's Hong Kong Training Centre leverages Hong Kong’s advantage in having a concentration of resources, information and talents to provide CCB staff with the mentorship of experienced professionals and the kind of international exposure vital to understanding offshore business. Furthermore, they will benefit from the synergies between enterprises and the financial services community. These advantages make Hong Kong the ideal location for CCB to provide superior support for Chinese enterprises’ “going global”.

Hong Kong’s AsiaPay has designed an advanced online system to access payments through local markets across Belt and Road countries and in the Guangdong-Hong Kong-Macao Greater Bay Area. Services cover Asia, including China and with opportunities in Africa and Europe, including many cross-trades says CEO Joseph Chan, while HKTDC events like the Asian e-tailing Summit add to the company’s brand promotion.

Speakers:
Joseph Chan, CEO, AsiaPay Limited
Edward Ng, Associate Director, IT, AsiaPay Limited
Andy Lam, Sales Director, AsiaPay Limited

Related Links:
Hong Kong Trade Development Council
http://www.hktdc.com

HKTDC Belt and Road Portal
http://beltandroad.hktdc.com/en/t

Asian e-tailing summit
http://www.hktdc.com/ncs/aes2019/en/main/index.html

Hong Kong-based consultancy, Professional Property Services, provides advice on all aspects of property investment across 17 regional centres, forming a corporate “mini Belt and Road”, according to Chairman Nicholas Brooke. Cities along Belt and Road Initiative routes, such as in China, India and Indonesia, can often look to Hong Kong’s urban and transport model, its property innovation and technology, to re-shape and re-generate.  

Speaker: Nicholas Brooke, Chairman, Professional Property Services Limited   

Related Links
Hong Kong Trade Development Council
https://www.hktdc.com/

Yanbu Aramco Sinopec Refining Company Limited (YASREF) is a joint venture formed between Saudi Aramco and Sinopec in 2012. YASREF developed a 400,000-barrels-per-day oil refinery in Yanbu, Saudi Arabia. The YASREF joint venture is another successful cooperation between Saudi Aramco and Sinopec after building a plant in Fujian Province of China in 2009. It is also the first refining project that Sinopec completed outside of China.

YASREF refinery was initially funded by shareholder loans. After reaching successful project completion in July 2015, YASREF sponsors approached the market to refinance the shareholder loans with commercial debt in January 2016.

A total of US$4.7 billion facilities were raised, comprising a seven-year US$3.1 billion Term Loan and a SAR 6 billion Murabaha facility. The facilities were oversubscribed and signed in April 2016. A total of 26 international and local banks participated in the facilities.

SMBC was appointed as Lead Coordinator, Bookrunner, Mandated Lead Arranger and Documentation Bank for the USD facility. SMBC Hong Kong branch contributed to the success of this transaction from a loan syndication perspective. SMBC syndication team based in Hong Kong actively coordinated with other Hong Kong based banks to make this multi-billion dollar refinancing happens under a short 4-month timeframe. This successful Hong Kong-driven syndication process illustrates the highly liquid, reactive and sophisticated Hong Kong banking market available for large infrastructure deals in Belt and Road countries.

The Shenzhen and Shanghai Stock Connect schemes accommodate the demand for multi-faceted investment opportunities on the Chinese mainland and in Hong Kong, fitting Belt and Road priorities such as Rmb internationalization, says MF Jebsen’s Clifford Wong. He believes the Initiative encourages increased business activities: good for MF Jebsen’s travel industry operations, for example.

Speaker:
Clifford Wong, Deputy Group Managing Director, MF Jebsen International Ltd

Related Link:
Hong Kong Trade Development Council
http://www.hktdc.com/

Hong Kong tops the list of corporate treasury centres for Belt and Road countries, according to Carmen Ling of Standard Chartered Bank, following a roadshow she took to nine countries in Africa, the Middle East, South Asia and Europe associated with the Initiative. She said the reasons include Hong Kong’s lack of currency controls, low taxes and its dominant role as an offshore Rmb centre – all exemplifying Hong Kong’s wealth of knowledge and experience.

Speaker:
Carmen Ling, Global Head, Renminbi Solutions, Corporate and Institutional Clients, Standard Chartered Bank

Related Link:
Hong Kong Trade Development Council
https://www.hktdc.com/