Antoine Sire, head of Company Engagement at BNP Paribas, recalls the Group's support for...
Investing—why choose Asia?
A spring awakening is sweeping through Asia’s financial markets, which have become increasingly popular among investors. Asia constitutes a strong growth region, notably for BNP Paribas Asset Management. The Group has positioned itself as a leading investor in the region, while integrating Environmental, Social and Governance (ESG) criteria into its asset management.
Flourishing activity across Asia’s financial markets
While the world’s financial markets have seen a slowdown since the start of 2018, Asia’s financial markets have witnessed a flurry of activity for over a year, underlining the strong economic growth among countries in the region. China’s growth has picked up to reach 6.9%, while its benchmark stock market, the Shanghai Stock Exchange, has expanded by 6.58%. The Hong Kong stock exchange also shot up 36% and in 2017 recorded its strongest rally in six years.
Japan has not lagged behind—Japanese stocks earned 6.5% in 2017 and the Nikkei, the country’s leading stock index, rocketed up 19.10%. The Land of the Rising Sun is now one of the main beneficiaries of the uptick in global growth. The country has also benefited from vast internal reforms—a depreciating Yen overseen by the Bank of Japan, lower tax rates on corporations, pension funds invested in industry, etc.
A key region for BNP Paribas Asset Management
The Asian stock markets—and Japanese equities in particular—have won favor among investors.
For Arthur Kwong, Chief Investment Officer of Asia Pacific Equities at BNP Paribas Asset Management, “it’s a very good time to look into Asian equities. The valuations are very attractive at this moment and Asian companies have a lot of cash in their balance sheets, which is good for raising dividend payouts, performing mergers and acquisitions and carrying out buybacks.”
BNP Paribas Asset Management is now one of the top financial service providers for corporate and institutional investors in Asia-Pacific, with the subsidiary managing 60 billion euros in assets for these customers.
it’s a very good time to look into Asian equities. The valuations are very attractive at this moment and Asian companies have a lot of cash in their balance sheets
BNP Paribas’s subsidiary aims to expand its activities, notably in Japan, and plans to boost the value of its medium-term funds by investing in equities issued by Japanese companies and/or companies operating in Japan. The subsidiary also recently launched two new SRI funds allowing investors to buy into Japanese stock markets, while accounting for financial and extra-financial criteria, notably tied to a company’s environmental and social responsibility and its corporate governance.
BNP Paribas Asset Management accelerates in China
Continuing the Group’s expansion across Asia, BNP Paribas Asset Management’s WFOE (Wholly Foreign Owned Enterprise) unit just received QDLP qualification, enabling it to invest in Chinese assets from abroad, with no need to create a joint venture with a local company.
China is a critical growth market. Through this program, both individual customers with capital and Chinese institutional investors can now benefit from our global investment expertise.
Typically, a certain number of activities, notably banking activities, cannot be performed by an overseas investor without a local associate in China. To operate in the country, overseas investors must create a joint venture with a Chinese partner, also known as a foreign-invested enterprise (FIE).
However, since 2013, the country has eased its rules. The QDLP (Qualified Domestic Limited Partnership) program enables foreign asset managers to steer the portfolios of Chinese investors through wholly-owned companies, or WFOES, established overseas. Though it was temporarily suspended in 2015, the program is now available again. To take part, companies must receive approval from authorities in Shanghai. Its activity is then closely monitored and subject to quotas established on a case-by-case basis.
Ligia Torres, Asia-Pacific Manager of BNP Paribas Asset Management, commented on receiving QDLP status, “China is a critical growth market for BNPP AM. Through this program, both individual customers with capital and Chinese institutional investors seeking to diversify their portfolios by incorporating a wide array of asset classes and country allocations can now benefit from our global investment expertise.”
BNP Paribas’s ESG fund and responsible commitments in China
In China and around the world, BNP Paribas Asset Management complies with the Group’s Sustainable Development policy. The subsidiary positions itself as the first international asset manager with a QDLP quota to offer a fund managed on the basis of ESG criteria.
These efforts have earned recognition on several occasions, including the “Most Responsible Investor” award in APAC and Hong Kong, given out by Asia Asset Management, and the “Sustainable Impact” and “Sustainable Investment (Overall Leader)” awards at the 14th “BENCHMARK Fund of the Year Awards” gala, held in Hong Kong in January 2018. These two awards recognize the quality of the ESG approach taken by asset managers and their ability to manage risks and opportunities over the medium and long terms, with respect to environmental, social and governance factors.
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