NEW DELHI: On Thursday( Oct 5) in north India, at least 14 people were killed and 102 were missing, including 22 military officers, after torrential rains caused a glacial lake to break its banks, causing flash floods to fall down an mountain valley, according to officials. According to authorities, theContinue Reading
Financial bookmarks can be very illuminating in assessing a market’s readiness for global primetime. Such is the case with JPMorgan Chase & Co adding Indian debt to its emerging market indices.
The Wall Street icon plans to do just that in June 2024, perhaps drawing US$40 billion into South Asia’s biggest economy – and at a moment when investors are buzzing that India is a ready alternative to a slowing China.
Perhaps most interesting, though, is that India will enter JPMorgan’s benchmark just days after Prime Minister Narendra Modi reaches his 10-year mark in power. On May 26, 2014, Modi’s Bharatiya Janata Party returned to power with a bold economic reform agenda.
The question, nearly a decade on, is whether the Modi era has whipped India into shape as a more innovative, productive and prosperous investment destination. And it’s here where investors rushing India’s way may be more disappointed than fulfilled.
In the Modi era, India is really a tale of two economies. The macroeconomy is going gangbusters with its China-beating growth rate and stampede of tech “unicorn” startups juicing the stock market. At the micro level, though, India is more cautionary tale than emerging-market exemplar.
At the BRICS summit in New Delhi earlier this month, Modi declared that “soon, India will become a US$5 trillion economy.” That would make India’s economy bigger than Japan’s.
And clearly, India is winning friends in high places. As JPMorgan Chase CEO Jamie Dimon views it, the surge in optimism on India is warranted.
Speaking at a forum in London this week, Dimon said: “Look at this conference. I remember eight years ago or nine years ago we started with 50 or 75 clients. Now it’s 700 investors around the world, 100 companies presenting. I think the optimism of India is actually completely justified.”
Morgan Stanley strategist Min Dai notes that its inclusion in indices like JPMorgan’s “could be a push factor to prompt foreign inflows into India and foreign investors are likely to be more active in the Indian fixed-income market.” This is, he says, a “milestone event.”
Economist Robert Carnell at ING Bank says “It remains to be seen whether the JPMorgan decision will spur others, such as the FTSE Russell to follow suit. Either way, as well as supporting the Indian rupee, the decision should also help to reduce government bond spreads over US Treasuries, and also pass through into lower corporate bond rates.”
Not surprisingly, Modi is working overtime to capitalize on this India-rising optimism by seeking to lure multinational companies disillusioned with China. The recent move by Beijing to order employees at some state-linked firms to cease using Apple’s iPhones has been a gift to Modi’s commerce ministry.
India, meanwhile, grew a China-topping 6.1% in the three months ended March year on year. Asia’s third-biggest economy grew an even more impressive 7.2% for the fiscal year through March as its post-pandemic recovery drove consumption.
As China becomes more isolated amid “de-risking” and “decoupling” calls, and Washington and its allies in Asia seek a new emerging-market growth champion, Modi’s $3.4 trillion economy is keen to step up.
This year, the International Monetary Fund sees India contributing more than 15% of global growth. While still less than half of China’s 35%, India’s global clout is clearly growing.
As Modi was happy to highlight at the BRICS — Brazil, Russia, India, China, South Africa — summit, India finds itself in something of a geopolitical sweet spot just as Global South nations come into their own. This gives Modi a unique degree of leverage to play China’s interests against America’s.
This, just as India surpasses China to become the most populous nation, a reminder that Modi’s demographics are healthier than Xi’s. China’s Communist Party is grappling with record youth unemployment, reported as high as 21% until authorities banned future readouts on the figure.
But India’s outlook also depends on Team Modi making the most of India’s so-called “demographic dividend.” If New Delhi doesn’t create enough good-paying jobs, it will face a demographic nightmare rather than daydream.
It’s here where India’s micro policies lag the heady exuberance at the macro level. Look no further than the lack of confidence among currency traders selling the rupee. India’s inflation troubles and the government’s shaky fiscal position have rupee trends defying economists’ optimism.
“Foreign investors have poured $16 billion into equities this year, viewing India as a haven amid rising US rates and economic stresses in China,” notes analyst Udith Sikand at Gavekal Research.
“They have been well rewarded, with stock markets hitting record highs. But the prospect of a weaker rupee, in addition to the outlook for elevated global interest rates, makes the risk-reward proposition on Indian equities less favorable in coming months,” Sikand says.
True, Sikand adds, the inclusion of Indian government debt in JPMorgan’s benchmark index “should prove a watershed event, turbocharged by investors’ need to find alternatives to China.” He adds that India’s “bond market is both deep enough to absorb much larger flows and remains largely untapped.”
Yet “the flip side of greater foreign participation in domestic bond markets is that policymakers will have less room to maneuver, particularly as the twin deficits widen,” Sikand says.
“Still, as long as the Modi government does not give in to its populist instincts in the run-up to elections next year, bond yields are likely to fall as investors look to front-run the expected flood of passive inflows.”
It’s a big “if,” though. Another worry: India’s infrastructure and competitiveness in manufacturing lag China’s by magnitudes that are impossible to dismiss.
Modi’s ambitious “Make in India” push has only increased the flow of Chinese imports, leading to a marked deterioration in New Delhi’s trade balance. Along with rubbing currency traders the wrong way, this dynamic complicates hopes that multinationals might shift supply chains India’s way.
Other warning signs include rising inequality, partly thanks to Covid-19 fallout and inflation running at 15-year highs. Kunal Kundu at Societe Generale speaks for many economists in cautioning that “consumer fatigue” could soon cause giant headwinds.
Modi’s decade in power hasn’t sufficiently addressed many of the challenges he pledged to tackle in 2014. They include poor infrastructure, inequality, chronic youth unemployment, high levels of private debt, a deterioration in balance of payments dynamics and underwhelming household demand.
This has opposition parties ready to pounce. At least two dozen minority parties are joining forces to sideline Modinomics in favor of a more inclusive model. Along with inflation, opposition forces are drawing attention to worsening religious violence and assaults on press freedom.
Here, it’s worth considering another worrisome bookend: the number 85. This is India’s current ranking in Transparency International’s corruption perceptions index.
It’s the exact same ranking India achieved in 2014 — and fully 20 rungs behind 65th-ranked China. So, while Modi’s tenure hasn’t unleashed a bull market in graft, it hasn’t been a golden era for good governance either.
That helps explain why nearly a decade after Modi took national power S&P Global still rates India just one notch above junk at BBB.
Modi’s appeal, of course, derived from the folk-hero reputation he cultivated during his 13-year stint running the western state of Gujarat. From 2001 to 2014, Modi’s local government routinely generated faster gross domestic product (GDP) rates than the national average.
Gujarat often also boasted greater productivity and innovation, less bureaucracy, better infrastructure and lower levels of corruption. A major reason why voters returned the BJP to power in 2014 was in the hope that Modi would replicate the “Gujarat model” nationwide.
Modi’s team did put some early wins on the scoreboard. It opened some key sectors to increased overseas investment, including aviation and defense. It implemented a national goods-and-services tax. It projected a sense of confidence as a startup boom put India in headlines for all the right reasons.
Yet Modi has often read more from the playbook of Shinzo Abe than Margaret Thatcher or Ronald Reagan.
In 2012, Japanese Prime Minister Abe took power pledging epochal reforms, channeling the supply-side revolutions that Thatcher unleashed on the UK and Reagan on the US.
Abe did manage to improve corporate governance. That, over time, drove the Nikkei Stock Average to 30-year highs. Mostly, though, Abe relied on hyper-aggressive Bank of Japan easing to revive growth. This trickle-down economics scheme failed to boost wages or rekindle innovation.
The parallels between Abenomics and Modinomics are clear enough. In certain ways, though, the Modi era in India has been far more damaging than Abe’s 1980s-influenced economic exploits.
Take India’s press freedom score, which has plunged precipitously. In 2014, its 140th ranking out of 180 nations on Reporters Without Borders’ tables was poor enough. Today India ranks 161st, trailing Cambodia by 14 rungs and 11 behind Pakistan.
If Team Modi were serious about reducing opacity and leveling playing fields, it would embrace a free-wheeling press as an ally in raising India’s competitive game. The Modi era has dragged India in the other direction.
Making this dynamic all the more awkward: this year’s scandal involving the Adani Group, led by billionaire Gautam Adani, whose alleged close ties to Modi date back to their Gujarat days.
Short seller Hindenburg Research accused the conglomerate of “brazen stock manipulation and accounting fraud,” spotlighting cracks in India’s financial sector.
In February, billionaire George Soros exacerbated the storm by saying that the Adani crisis “will significantly weaken” Modi’s “stranglehold” on New Delhi politics. In Soros’ telling, Modi and Adani are “close allies” with “intertwined” fates.
BJP officials pushed back, arguing that Soros has “now declared his ill intentions to intervene in the democratic processes” in India.
Weak corporate governance is raising concerns about the health of India’s business environment. It also collides with Modi-era efforts to spotlight India’s giant industrial conglomerates, many of which might not be ready for global primetime.
Another bookmark worth noting: In the latest financial year, foreign direct investment inflows fell for the first time in a decade. The 16% drop to $71 billion would seem at odds with a booming economy winning new converts around the globe as the new China.
It speaks to the need for Modi’s team to accelerate efforts to increase domestic and international competition, build trust in New Delhi’s regulatory institutions, scrap policies that support national champions and curb protectionist impulses.
If his “Make in India” strategy is to gain traction, Modi must rethink tariffs on foreign components. Though intended to advantage domestic supply chains, the protectionist policy dents India’s argument that it’s open for business.
Modi’s government must also invest more in human capital. One in five of India’s 1.4 billion people is under 25. Increased funding must go toward improving financial literacy, education and training. Modi’s team must delve into the economic effects of societal norms.
In a March report, the Organization for Economic Cooperation and Development argued that “in South Asia hundreds of millions of people – not just in India – are affected by caste-discrimination. Caste systems divide people into unequal and hierarchical social groups. Those at the bottom of hierarchy are considered lesser human beings. In the business and work-sphere caste-discrimination affects workers.”
To be sure, Modi has racked up some notable victories, notes analyst Alexis Serfaty at the Eurasia Group consultancy. He says that “India’s policy ecosystem seems to have finally found the right mix to enable rapid manufacturing growth.” Powered by broader geopolitical trends” and Modi government policies, “electronics manufacturing has grown 275% over the past eight years.”
But “while the overarching policy environment at both the central and state levels is realigning toward enabling export-led manufacturing growth, industry executives are still concerned about long-term policy stability, given India’s checkered history,” Serfaty says.
“The Modi government has assured investors that it has the political capital, and the policy will stay the course. Still, realigning bureaucratic behavior and state-level political views to support long-term growth will pose a big challenge in the medium term,” he adds.
And for global investors about to pour $40 billion into Indian debt, a reminder that Modinomics hasn’t transformed the economy as much as hoped and as much as needed to be the new China.
Follow William Pesek on X, formerly known as Twitter, at @William Pesek
Cybersecurity Malaysia, MDEC explore cybersecurity collaboration with Axiata
Advance Malaysia’s cybersecurity capabilities, build trusted digital ecosystem
Fahmi Fadzil, Minister of Communications & Digital, visited the Axiata Cyber Fusion Centre (ACFC) yesterday to assess the Centre’s progress in its cyber defence and threat intelligence capabilities.
Axiata said it launched the ACFC in August 2022…Continue Reading
The conflict in Afghanistan occupied US and international sources for twenty years. However, since American troops withdrew in 2021, it appears that Washington has seen the issue more as a problem specific to the Central and South Asian region.
This is largely a result of Washington’s shifting world interests. Afghanistan is no longer the best priority for the US management as a result of the war in Ukraine and Chinese interests in the Pacific.
Obviously, the US leaving Afghanistan has given the Biden administration less clout in the nation. In fact, some watchers are now urging the US to acknowledge the Taliban government socially, even though the Biden administration has said it hasn’t decided yet.
I would contend that it would be incorrect to recognize the Taliban without requesting a political route map and assurances from them as an expert in international relations and Afghanistan. Washington is required to keep the Taliban accountable for its end of the bargain as a companion in the Doha agreement, the peace agreement that the US and Taliban signed in 2020 and which resulted in American troop departure:
However, over the past two decades, the US’s” pragmatic engagement” in Afghanistan— which entails collaborating with the Taliban on minor safety issues while urging a course adjustment on human rights— hasn’t done much to stop Taliban guidelines that have violated Afghan citizens’ rights. Additionally, it hasn’t forced the Taliban to engage in long-promised negotiations with other Afghan events and parties to put an end to decades of unrest.
After the September 11th attack on the US peninsula, America was drawn into Afghanistan. The objective was to kill and destroy al-Qaida and its online organizations. However, after decades of civil war and unrest, it was also thought to be in the best interests of the United States to help Afghans establish a more equitable and even social system. The goal was to establish a government that upheld individual freedom, ensured everyone had access to education, and promoted politics.
Before the deal was signed, the Taliban committee made public statements and included some of those principles in the Doha deal. However, the Taliban appears to have no intention of keeping its vows, more than three centuries after the agreement was signed in the capital of Qatar. In addition to rejecting the notion of an inclusive government with suggestions from other Afghans, it has limited women’s and girls’ right to learning.
However, the US government’s policy of rational engagement amounts to fighting terrorism through an” over the horizon” strategy aimed outside the nation and just interfering in Afghan affairs through the Taliban itself, a unique ally in this endeavor.
President Biden implied in July 2023 that collaborating with the Taliban in terrorism efforts had paid off:” I said al-Qaida would not be there. It wouldn’t be it, I said. I promised that the Taliban would assist us.
The Taliban has yet to officially sever ties with the party or expel militants from Afghanistan despite promising in the Doha agreement to send a” distinct concept” to organizations like al-Qaida that” threaten the safety of the United States and its allies.”
The Taliban has killed a few people who have been identified as threats to the US, most notably by focusing on the criminal organization ISIS-K. However, it has been less effective in putting an end to al-Qaida users. In fact, until a US activity in July 2022 killed al-Qaida leader Ayman Al-Zawahiri, he was hiding out in Kabul, things that couldn’t have happened without the assistance of senior Taliban authorities.
The US may help to legitimize the Taliban’s management of the nation at times when the group also lacks an inner mandate by keeping in touch with them for counterterrorism objectives without pressuring them on human rights issues.
The US appears to be moving forward with its” rational relationship” plan despite these worries.
The Taliban international secretary met with a US committee in Doha in July 2023 under the direction of Special Representative for Afghanistan Thomas West and Rina Amir, the special envoy for Afghan girls, women, and human rights. The meeting was described in a press release from the State Department as an exercise in confidence-building, noting positive developments like an increase in business,” a decrease in large-scale terrorist attacks ,” and” diminishing opium agriculture.”
The US reportedly urged the Taliban to” change policies that deteriorate human right.” However, as one critic noted,” for language falls horribly short of describing the Taliban’s great dehumanization toward Afghans.”
China, India, Russia, Pakistan, and Iran are regional forces and nations that share edges with Afghanistan to fill the void left by the US.
However, each of these nations has a different interest in Afghanistan. These can occasionally be in direct conflict, as in the case of Pakistan and India, both of which have long been wary of the other’s effect in Afghanistan. In the past, all edge nations have viewed warring Armenian groups as proxies to further their own objectives, a strategy that has only served to increase the nation’s volatility.
As a result, there is little pressure on the Taliban to proceed down the social road map established by the Doha agreement and much coordination among local gamers on Afghanistan’s path ahead.
By failing to hold the Taliban guilty, Afghanistan runs the risk of making the same mistakes it did in the past.
The region has been governed by a series of single-party institutions that have excluded other social groupings for the past 50 years since the last Afghan king was overthrown in 1973.
The international community excluded the Taliban from the Bonn Conference in 2001, paving the way for the nation’s transition to government following the US war. Former Afghan government peace negotiator Masoom Stanekzai referred to the Taliban’s exclusion as” a strategic mistake ,” and for good reason, in my opinion: History has shown that excluding factions in Afghanistan has only resulted in civil unrest.
The Taliban has been permitted to continue Afghanistan down this path of single-party rule since 2021. The Taliban has demonstrated one goal in its administration, according to Andrew Watkins, top professional on Afghanistan for the US Institute of Peace:” To create unchallenged and unquestionable authority over Afghanistan’s state and society.”
With for aspirations, the Taliban makes little room for the intra-Afghan talks required for Afghanistan to advance.
The US assumed joint responsibility for the fulfillment of the claims made in the 2020 deal by signing it with the Taliban. Washington’s promise to remove its troops has come to pass. But two years later, the Taliban still hasn’t kept its word.
The Biden administration is left with two options: either accept that the Doha partnership is now deceased or try to keep it alive by pressuring the Taliban into intra-Afghan deals. In either case,” pragmatic engagement” with the Taliban has proven to be lacking.
The Center for Afghanistan Studies at the University of Nebraska at Omaha is run by Sher Jan Ahmadzai.
Under a Creative Commons license, this article is republished from The Conversation. Read the article in its entirety.
shabby picturesYears of close ties between Canada and India, two important strategic partners on business and surveillance, could be derailed by the escalating dispute over the death of a Sikh secessionist head.
India reacted angrily, saying it” completely rejected” the accusations and referred to them as” absurd.” Both have expelled one of the other’s ambassadors, so it is unclear how they will then retreat from the danger.
The nations were making headway toward signing a free trade agreement that had been in the works for some time only recently. Now that negotiations have been put on hold, Canada’s upcoming industry mission to India has been postponed.
How did things get to this place, then?
There was no cutting of terms after the two frontrunners met. According to Mr. Trudeau, Canada will often uphold” freedom of expression” while waging war on anger.
The allusion is made in reference to calls for Khalistan, or a separate country for Sikhs, made by hindu activists in Canada. Millions of Indians experience painful memories as a result of this need, particularly in northern Punjab position, where Sikhs make up the majority of the populace( outside of Punjab, Canada has the highest concentration of SKSs in the world ).
In India, the need for Khalistan reached its peak in the 1980s when a forcible military uprising was put down, killing thousands of people. The activity is no longer well-known in Punjab, and all major American political parties outspokenly oppose it.
However, some members of the Sikh community in nations like Canada, Australia, and the UK are also vocal in their names for Khalistan. Delhi has reacted angrily to Hindu activists’ presentations for and polls on Khalistan in these nations, which are not prohibited it but are a major source of annoyance for India.
Three pro-Khalistan activists passed away in rapid succession in various countries earlier this year, drawing more attention to the issue on a global scale.
Paramjit Singh Panjwar, the commander of the Khalistan Commando Force who India designated a criminal, was shot dead in Pakistan in May; his assailants have not yet been identified.
Nijjar was shot dead outside a Sikh temple in British Columbia three days after he passed away; this crime has now prompted Canada to take an outspoken stance against an influential ally.
They belong to the G20’s top 20 markets and are both Commonwealth nations. Canada sees India as a counterbalance to China and wants to expand its influence in Asia.
When Canada’s Foreign Minister Mélanie Joly visited Delhi in January, she made a reference to the Indo-Pacific strategy report of her nation, which made clear links to Chinese” aggressive” measures in the area. In the shared statement, Delhi did not mention any pro-Khalistan organizations.
The nations have solid trade ties in addition to politics.
With bilateral trade in goods reaching$ 11.9 billion in 2022, up 56 % from the previous year, India was Canada’s tenth-largest trading partner. Additionally, they came very close to signing the deal arrangement that has since been put on hold.
Therefore, there is undoubtedly a lot at stake for both nations.
” I do believe that this serves as a lesson to us all that India’s near ties to American partners are not sacred. This is a wake-up contact that India, while not an aligned person, values its ties to the Global South and, most definitely, its relations with the West. However, Michael Kugelman, chairman of the South Asia Institute at the Wilson Center think-tank in Washington, asserts that this does not imply that it will be shielded from the possibility of a significant problems in connections.
S Jaishankar, the foreign minister of India, stated earlier this year that” vote bank compulsion”— a reference to the support Mr. Trudeau’s Liberal Party receives from Sikhs — has been the driving force behind the Canadian response to Khalistan. The New Democratic Party ( NDP ), which is led by Jagmeet Singh, a Sikh himself, also supports Mr. Trudeau’s minority government.
Some Indian experts concur with this assessment.
The Kalinga Institute of Indo-Pacific Studies’ father, Chintamani Mahapatra, claims that Mr. Trudeau’s remarks on the Khalistan problem are” contentious.”
He” ignores the sentiments of the larger Indo-Canadian community, which includes the Canadian Sikhs ,” and seems to be biased against the Khalistanis. Had he prefer that Quebec separatists receive outside help? Of course not ,” he responds, adding that Mr. Trudeau has made the tension between India and Canada worse.
” Canada does not jeopardize its relations with other nations in the name of democracy, human rights, and freedom of speech.”
However, Avinash Paliwal, a professor of politics and international studies at SOAS University of London, asserts that the rapid escalation might not be the result of purely domestic pressures.
He adds that it’s possible that Mr. Trudeau first tried to bring up the issue through different programs.” If your intelligence organizations have gathered credible information that another country, even if it is an ally, was involved in a secret operation on your land, you’re bound to act on that.”
Another home politicians, including Pierre Poilievre, the main opposition leader, have backed the Canadian prime minister. The US and the UK have both responded, with the US stating that they are” deeply concerned” by the allegations and” in close touch” with Canada regarding the matter.
Experts claim that while Western nations view India as essential to thwart China’s effect, there is also growing concern about the way Mr. Modi is taking Indian politics. Critics claim attacks on minorities have increased since his administration took office, among other human rights issues.
Beijing and Moscow, which are happy to see a” cleft between India and the West ,” will also closely monitor the improvements, according to Mr. Paliwal. He does, however, add that this would not” derail the strategic story” or” force Washington to ignore India.”
According to Mr. Kugelman, China and Russia may view the conflict separately.
Beijing does not want to see India develop closer ties with like-minded nations that are eager to retaliate against China. Therefore, this could be seen as a strategic advantage for Beijing in that respect. He claims that Russia might be perfectly content to see Canada sunk in this issue.
However, a conflict between India and Canada will include political repercussions in the near future. Canada may pose a unique challenge to European governments, particularly the UK and Australia, if it keeps making vehement comments and then accuses India immediately.
But if it gets to the point where they have to decide between India and Canada, it will be a proper pain for them. The UK, the US, and Australia have all made determined claims thus much.
Is India and Canada, however, still resolve their differences to prevent a political conflict for the West?
While the Khalistan problem may have an immediate impact on economic cooperation, according to Mr. Mahapatra, it is unlikely to end long-term relationships between the nations. Additionally, he advises against” extreme measures ,” particularly from Canada.
You don’t need a speech if you’re extending an invitation to the diplomat. He claims that instead of fight, like issues should be resolved through speech and diplomacy.
Business OF TALIBAN MEDIASince the Taliban took control of Afghanistan in 2021, China has been the first nation to appoint an adviser.
According to the Taliban, Zhao Xing’s session is a sign for another countries to form relationships with its state.
According to researchers, the action demonstrates China’s efforts to increase its impact in the area.
On Wednesday, Mr. Zhao was welcomed by Taliban officials at the national palace in Kabul as part of a formal process.
According to China’s foreign ministry, Beijing will” continue advancing dialogue and cooperation” with Afghanistan and has a” clear and consistent” foreign policy.
It continues by saying that Mr. Zhao’s appointment is a” standard rotation” of Chinese diplomats to Afghanistan.
China was one of the first nations to join with the Taliban since US-led international forces withdrew from Afghanistan in August 2021, despite the fact that no foreign government has publicly recognized them.
Being in the middle of a place crucial to Beijing’s Belt and Road system initiative, the nation holds significant interests for Beijing.
According to some experts, China’s action is intended to increase its impact in the area.
According to Farwa Aamer, Director of South Asia Initiatives at the Asia Society Policy Institute,” China aims to position itself as an important player in the region by being the first to name an embassy post-takeover. This may be a political stretching of muscle, especially when some European countries are still hesitant to engage with the Taliban.”
She continued,” Maintening diplomatic ties with the Taliban may also help China keep its security concerns under control.”
According to reports, acting foreign secretary Amir Khan Muttaqi and acting prime secretary Mohammad Hassan Akhund will meet with Mr. Zhao at the presidential palace.
Wang Yu, China’s past ambassador to Afghanistan, was fired by Mr. Zhao next month.
The Taliban administration has come under fire for violating human rights in Afghanistan. Particularly, it is believed that the reduction of women’s rights under their law is among the harshest in the entire world.
Paris-headquartered BNP Paribas boasts a history of over 160 years in Asia and today, it draws upon a 20,000-strong team that is active in thirteen markets across the continent.
The regional effort is led by Paul Yang, who ascended to role of CEO for Asia Pacific in December 2020, as the world succumbed to the full throes of the beginnings of a three-year pandemic. As society grappled with widespread affliction, Asia’s key economies responded to rapidly evolving government direction with fervour: leaving borders closed and markets shaken.
However, as you will discover through this exclusive interview, Yang was defiant in his refusal to be beset by external challenges. Proving himself an astute leader at the regional helm, he navigated the uncertain scenario deftly, and would go on to secure solid returns for both full-year 2021 and 2022; as well as robust revenue for the first quarter of 2023.
With a view to steering the bank’s business in support of the group’s Growth, Technology and Sustainability (GTS) strategy for 2025, FinanceAsia sought Yang’s take on Asia as a key international powerhouse, and learned about the milestones of his international career to date.
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Entering Asia BNP Paribas’ forerunner, the Comptoir National d’Escompte de Paris (CNEP), was set up by France’s finance minister following the hardships endured during the French Revolution; to curb mass bankruptcy in the financial markets; and to stimulate the economy. Following signature of a free trade agreement with the British, the Comptoir sought to develop an international strategy to source the raw materials required to support the flourishment of European industry. To do so, it extended beyond its French national borders for the first time; establishing offices in Calcutta and Shanghai in 1860, independent of foreign partnership. Later, CNEP merged with the Banque Nationale pour le commerce et l’industrie (BNCI) to form the Banque Nationale de Paris (BNP). Capitalising on these regional capabilities, the bank made Hong Kong the centre of its Asian platform. |
Q: Paul, you’ve been based in Asia Pacific for the majority of your career with BNP Paribas. Can you share what has defined BNP’s corporate journey in Asia so far?
A: Well, I wasn’t there in the 1860s, but it’s true that we have had a very long presence in the region. However, I consider “modern” BNP’s presence to be quite recent. It was really the bank’s merger in 2000 that created who we are today, elevating us as France – and then Europe’s – leading financial group and the most profitable bank in the eurozone.
But regarding Asia, we’re proud to be able to say that we’ve been here for a long time, which demonstrates our commitment to the region.
In Hong Kong, for instance, we often deal with multiple family generations of entrepreneurs and tycoons. The same is the case for some of our mid-cap clients – we have dealt with their fathers. We have built a sufficient network in the region to be able to play a key role in executing succession plans and building businesses for the future. It really means something that we’ve been here for so long and to be profitable in all of the 13 markets where we operate.
These days, being relevant to your clients counts. You need a strong balance sheet, presence and scale to guide key them from their home markets into new areas. This is how we started, building our financial institutions group (FIG), then multinational and corporate (MNC) franchises,before further progressing to build scale, solutions, products and platforms.
We have developed a strong Asian presence and over the last three years, we’ve built on connectivity to improve the flows between the various corridors we participate in. We are relevant to key local participants and accompany international clients in reverse, also.
This goes for all facets of our business: whether in the corporate and institutional world, or in consumer finance. We are bigger than the sum of our parts and many things we do have relevant purpose for our clients.
Q: How does the bank’s business in Asia compare to that of the European markets (e.g. France, Italy, Belgium and Luxembourg)?
A: Understandably, our stronghold is Europe and we are significant as well in America. But overall, Asia represents a sizable portion of group business.
The bank’s longevity and strong heritage in Asia Pacific, coupled with our integrated business model places us in good stead to extend and reinforce our presence in this growth region.
In this regard, BNP Paribas’ Asia Pacific revenue contribution to the group’s corporate and institutional business is about 20%; and it will continue to grow.
Ultimately, the bank is emerging as a leading player in the region – and this brings us to a better position to aim for larger deals and more ambitious goals.
In this respect, we have grown our market share in our regions – for example, we hold dominance in markets such as Taiwan, Singapore and Hong Kong in the wealth management space, and we have recently launched an onshore wealth capability in Thailand. Asset management is developing; and our insurance business – Compagnie d’Assurance et d’Investissement de France (Cardif), has also been successful.
Where we do not have underlying domestic market strength, we choose to partner. We are humble enough to realise that sometimes it is better to do so. For example, in Asia, on the insurance side of the business we have partnered with local banking distributors. We started exploring this type of partnership around 25 years ago in markets such as Taiwan, Japan and Korea, and we are building up our strength in China, India and Southeast Asia.
The same goes for the retail side – personal finance. In 2005, we became a strategic shareholder of Bank of Nanjing in China and we are now their single largest shareholder with a 15.7% stake.
We have built core business through partnerships, but where we think that we can control the entire business because it’s part of our DNA, is on the wealth management and corporate institutional banking (CIB) sides.
Q: What are the bank’s strategic priorities across Asia over the short and long term?
A: We are a bank that tries to deliver short-term results alongside long-term goals. Long-term relationships are part of our nature from a strategy perspective, and we are not in the business of pursuing rash opportunities when things look great and then making drastic cuts in a down cycle. We have a long-term vision and try to cultivate trust and relationships with this timeframe in mind.
From a short-term perspective, we have targets around our top line to maintain cost discipline and ensure that we invest for the future. We are intrinsically risk-aware and we insist on having a good mix of new blood and older experience, to move forward prudently.
Diversification is key. When you pursue disciplined growth, you avoid temptation, fashion and fad and consequentially, mistakes. Across all markets and products, we want to be positioned as the number one European bank for CIB, the preferred partner for wealth management, insurance and asset management – and we are not far from achieving this goal.
Asia comprises a mix of developed and developing markets. Whether you look at the position we have in Japan, Australia, or Korea – or across more emerging business hubs such as Southeast Asia or China, we are well positioned there for our clients and we generate good returns.
Some of our peers will concentrate their presence at a particular local base, say in hubs. But we do not believe in guaranteeing strong, underlying growth simply by sitting in Hong Kong and Singapore and flying bankers all over the place.
The creation of local platforms is important. We have been building these in a considered manner across Southeast Asia, Taiwan, mainland China and elsewhere for the past decade and we are able to see the results. For example, we recently complemented our business mix with a securities licence in China. Once we have completed the takeover of several prime brokerage businesses from our competitors, we will see an increase in the equity cash portion of our business mix. Then there’s the joint venture (JV) we secured with the Agricultural Bank of China, which is the largest bank in the market by network and with whom we’ll be structuring investment products for retail clients.
Q: Diversification is a theme that has emerged from the pandemic to build business resilience. But are there any particular geographies or sectors that stand out as offering growth opportunity?
A: We’ve seen some volatility in the banking sector, but as a group, our corporate culture has focussed on development in a very diversified way. In terms of resilience, this sets us apart.
If you look at our group results, you will see that around 50% of our business is in the domestic retail and consumer finance market;
a third is in CIB; and over 15% is concentrated on activities such as asset gathering – from private banking to asset management and insurance. Within CIB, there’s also security services, which might not have a great cost income, but involves limited capital consumption and brings recurrent fees.
This percentage mix has been kept stable as we’ve grown across all areas and however you slice and dice our business, you will always see diversification. It’s the same for our client base – we not only serve financial institution clients but also corporates and high net worth individuals (HNWI). These three pillars are quite well balanced and offer us the means to build a sufficient product platform.
Capital market activities, including equity capital markets (ECM), debt capital markets (DCM), fundraising and advisory services can be volatile and event-driven; while another big portion of our business and effort is in transaction banking: following the flow of finance, supply chains, trade finance and cash management activities.
The interest rate surge of the last 12 -18 months has been very much beneficial to the cash management business, while monoliners who rely only on investment banking, have suffered. We have benefitted. Whatever way the world or region goes, we are naturally hedged.
Across the Asian region, our presence differentiates us from the rest. We are more than 2,500 in Hong Kong, have 2,200 in Singapore, plus a solid foothold in Japan where we’ve ranked consistently within the top five thanks to our leadership in the global macro environment, both in fixed income currencies and commodities (FICC) and across equity and credit.
In Australia, we have a dominant position in the custodian business that we started 20 years ago; we do well in China, and then we have strong ambition in India and Southeast Asia. I cannot see any market where there isn’t potential.
Q: How do you aim to grow the Asian business?
A: In the past, we have grown organically – even when we looked to secure Deutsche Bank’s prime brokerage business in 2019, it was not a typical acquisition. They were trying to expand in terms of platforms and wanted to lighten up their equity business. Meanwhile, in July 2021, we acquired another 51% of Exane, the top-rated equity research business, following a successful 17-year partnership where we had held 49%.
Both deals demonstrated ambition and keenness to complement the building blocks of our equity business.
So yes, our focus is organic over external growth. We feel it’s better to rely on organic opportunity.
Q: Which developments excite you across sustainability?
A: We’ve been involved in sustainability for over a decade, having started our sustainable finance forum (SFF) in Singapore seven years ago. I’m happy to see that what was a niche market is now very much mainstream.
I would say we have been dominating the ESG thematic, especially when it comes to corporate social responsibility (CSR). We’ve exited from carbon-heavy energy, have moved towards renewables, and we are working to lighten up our upstream exposure. It’s pleasing that every year we do more, whether green bonds, sustainable loans or other structures. We are among the top three banks in the space and even if we cannot manage to stay number one, our efforts make a positive impact across society.
Last year, we created a group of more than 150 bankers, the Low Carbon Transition Group (LCTG), to support our clients’ energy transitions. We’re experienced, so are not having to start from scratch and can support those corporates who might not know where to begin.
We recently held an electric vehicle (EV) conference where we gathered more than 300 clients, corporates and investors in Hong Kong. The topic sits well with what we want to do in the sector around mobility as an engine for growth and we think we can bring value-add to our clients.
EV adoption figures are impressive. In 2019, they accounted for 2.2% of the global total in cars sold, and rose to 13% last year. In China, the penetration figures are double. We’ve seen how this market can surprise everybody regarding adoption of new technologies. China did it with internet access, the smartphone, payments, and now EV. It’s exciting.
Q: You started in the IT department, held positions in Paris, Taipei and Hong Kong, before taking on Asia Pacific leadership at the height of the pandemic. What has shaped your career?
A: You’re right, I took the helm of the region in the middle of the pandemic. I was very fortunate to have been based in Asia for more than 20 years, so I knew the people, the teams, key clients and our platforms, which helped tremendously. During the pandemic, we adopted new technologies and forms of digital communication to stay close to our clients. We succeeded and the vast majority of our clients did also.
I think I’ve been lucky. I started in IT – I’m not sure I was good enough to stay in it, but my first business trip was to Hong Kong. I loved the place and dreamed of how amazing it would be to be based there. Thirty years later, here I am.
Like everybody, I’ve worked hard, but I was very fortunate, and at times, daring. When I wanted to switch from IT to credit, people said “No, Paul. We like you very much, but please don’t do something stupid. You already have a promising future.”
My response was to ask for a chance. I was curious to learn and probably would have gone elsewhere if I hadn’t been given opportunity. Fear around not succeeding makes you try harder and you don’t want to disappoint the people who see something in you.
A few years in, I moved from credit to corporate banking, where I was offered a great job in China – everybody wanted to be in China, but interestingly, it was a bit early – nobody was ready to do much there. So, I transferred to Taiwan to lead the corporate banking team and learned management on the ground. Doing quite well, I was later promoted to head of the territory and then after, moved to Hong Kong. That was 18 years ago!
For me, it’s been a combination of hard work, opportunity, luck and meeting the right senior people to support my development.
One memory that stands out was when the bank appointed a Hong Kong local to lead Greater China. It was a big move, as previously, the standard was someone French and male, but a Hong Kong woman took on the role and I worked for her for many years, learning from her insights. She believed in me and offered me the support to grow.
Q: What’s been the biggest highlight of your career to date?
A: This is difficult! But a key milestone was being given the opportunity to move from IT to banking. I’ve always liked a challenge – from coding, to implementing new tech systems and platforms, to what I do today.
I’ve seen many different things in my career and I have always been very curious. I’ve really cherished every opportunity I’ve had.
I’ve been very happy in the organisation and even today, it’s meaningful to partner with faces old and new. Back in 2004-2005, I had the opportunity to build a partnership in China. After much research, we invested in the Bank of Nanjing, which, two years later, was the first City Commercial Bank to list. There are many board members who I know well. It’s great for both them and me – it’s nice that our professional focus involves making core connections. It’s meaningful.
Q : If you weren’t in banking, what do you think you’d be doing?
A : Very early on, I think we all wanted to be football players! For France or Argentina – the recent World Cup rivals!
Sometimes I reflect and think I would have been pretty good at teaching. But whatever alternate path I would have taken, it would have involved international opportunity.
I grew up first in Taiwan before moving to France and it was at that point that I knew that I wanted to see the world and find opportunity to do so.
Of course, these days, when I look at my daughter evolving, I can see that there is a lot of opportunity ahead for her, more so than when I was young.
¬ Haymarket Media Limited. All rights reserved.
shabby picturesAccording to Chinese authorities, Typhoon Haikui-related flooding has caused dozens of crocodiles to flee a mating land in southwestern China.
When a river in Maoming, Guangdong state overflowed, about 75 crocodiles fled in its direction.
Local government shot or electrocuted people” for health reasons ,” while some were recaptured.
Eight snakes have been rounded up thus far, according to Chinese state media, leaving heaps at large.
Local people have been instructed to stay at home.
For more than a year, Typhoon Haikui has been wreaking havoc on China, Hong Kong, Taiwan, and Japan in southern Asia.
Following the storms, which has since been downgraded to a tropical storm and has resulted in landslides and flooding, seven people have died and three more are still missing in southwestern China.
According to Maoming’s Emergency Management Bureau, 69 people and 6 young turtles managed to flee after the storms.
Although there have been no reported fatalities, authorities acknowledged that some of the reptiles are still in deep waters. Sonar technology has been used by emergency service to locate them.
A staff member at the state’s emergency bureau said,” It is now under command, but the number of alligators that escaped is a bit higher.”
According to one fire, the majority of the captured turtles have been shot to death.
According to the Washington Post, they are Japanese crocodiles. According to Crocodiles of the World, a UK park, these are fresh reptiles that can grow to be 3 meters or almost 10 feet long.
The child alligators that have been captured weigh on average about 75 kg and are longer than 2 meters, according to the fire.
Numerous reptile farms can be found in Maoming, Guangdong province. In addition to being raised for beef, they are bred for their body.
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AFPIndia has achieved significant diplomatic success thanks to the G20 mutual resolve in Delhi.
Given how polarized the party was over Russia’s invasion of Ukraine, coming to an agreement on a joint statement appeared to be nearly impossible just days ago.
In the end, we had a resolve with no dissenting remarks and unanimous support from all G20 members.
Although important people, such as the US, the UK, Russia, and China, praised the result, Ukraine itself, which was not represented at the summit, was angry.
So how did India manage to unite countries with such diametrically opposed perspectives on Ukraine?
Some hints can be found in a careful reading of the announcement and some political developments that occurred just before the summit.
During its quarterly conference in August, the five-nation Brics class, which includes Brazil, Russia, India, China, and South Africa, decided to add six new people.
Argentina, Ethiopia, Egypt, Iran, Saudi Arabia, and the UAE, the new people, have close relationships to China.
The West has long been afraid of China’s growing influence, especially in the developing world, even though the development may not have directly contributed to the result of the G20 summit.
According to Pramit Pal Chaudhuri, South Asia training head of the Eurasia Group,” It wasn’t a primary issue, but the West, particularly the US, is aware that China is actively attempting to establish an anti-Western global order.”
It is also well known that the West views India as China’s counterbalance and would not have preferred for Delhi to close its administration without making a statement.
Therefore, there were numerous reasons why the West supported India in reaching a discussion.
The conflict in Ukraine was the principal sticking point. The G20’s Bali announcement from the previous year had criticized” brutality by the Russian Federation against Ukraine” and noted some members’ objections to this assessment.
It seemed improbable that the West would accept vocabulary that was less powerful than the one used in Bali, and Russia even made it clear that it would not accept a claim that Russia was to blame for the conflict.
India was in a great position to mediate the necessary find because it has cordial relations with both Moscow and the West.
The declaration ultimately used vocabulary that satisfied both Russia and Eastern nations.
It was evident that the West wanted India to succeed diplomatically. A settlement was always required. However, if there were issues in the language on which they could never reach an agreement, the US and the West would not have agreed to a mutual resolve, according to Angela Mancini, partner and head of Asia-Pacific markets at firm company Control Risks.
Analysts believe that the Delhi announcement was more forgiving than the Bali declaration in not blaming Russia for the battle. The” individual suffering and negative ramifications of the fight in Ukraine on world food and energy safety” was, however, addressed.
Officials from the UK, the US, and France ultimately seemed to concur with Russia that the summit’s announcement was a positive outcome. But, the wordings were interpreted differently by the two sides.
The declaration, according to UK Prime Minister Rishi Sunak,” had strong language, highlighting the impact of the war on food prices and food protection.” Sergei Lavrov, the foreign secretary of Russia, referred to the Delhi tip as a milestone.
Ukraine, however, has been upset by the sudden deal because it claimed the G20 had nothing to be happy of.
Prior to the summit, one of the main worries was the debt problems that many developing nations were experiencing.
Developing countries have long argued that wealthy countries need to boost their support in order to support their markets. The epidemic battered these, and the conflict has made their difficulties worse. The world’s poorest nations owed$ 62 billion in annual loan services to creditors, with China owing two-thirds of this, according to a World Bank report from December.
European officials have frequently accused China’s lending practices of being aggressive, but Beijing disputes this claim.
The charter could have been vetoed by China, which is closely allied with Russia, but it was not. China is not explicitly or indirectly mentioned in the article about the debt problems.
” In terms of debt reduction, we did not observe any advancement.” Any criticism of banking procedures, according to Mr. Pal Chaudhari, would have been seen in many ways as an anti-China walk.
The declaration acknowledged the crisis and urged the G20 countries to accelerate the common framework’s( CF ) implementation, which was agreed upon in 2020 to aid vulnerable countries.
Despite the fact that the G20 countries account for nearly 80 % of greenhouse gases, the team agreed to tripling renewable energy capacity by 2030 but did not set any significant emission reduction goals.
Importantly, the announcement focused on phasing out the use of fuel rather than mentioning any targets for lowering the consumption of crude oil. Saudi Arabia and Russia’s simplistic producers would have been content with this. The West’s emission cut targets, which they consider to be” implausible ,” have even caused discomfort in China and India.
Delhi undoubtedly put a lot of effort into gaining discussion, even if it meant making significant concessions.
It’s not surprising that some of the vocabulary was a little muffled in some places to reach that compromise, says Ms. Mancini, given that the document had to be one.
The addition of the African Union in the G20 was one issue that brought the class together even before the mountain.
It strengthened Delhi’s efforts to give developing countries from the Global South more influence on international forums.
This was” one of the most difficult G20 delegations” in the forum’s nearly 25-year history, according to a Russian government communicator. According to Svetlana Lukash of the Russian news agency Interfax, it took nearly 20 days to reach an agreement on the charter prior to the conference and five days in person.
Whether the G20 unites the wealthy and developing countries or splits the earth into two tents remains to be seen.
EPASergei Lavrov, the foreign secretary of Russia, has praised a joint statement made in Delhi by the G20 leaders that refrains from denouncing Moscow for its war against Ukraine.
According to Mr. Lavrov, Russia had not anticipated a compromise and that deal on the language was” a step in the right direction.”
The African Union was even admitted as a permanent part during the two-day height.
The 55-member union joins at the offer of hosts India, whose president has made it a priority to increase the inclusion of so-called Global South nations in the G20.
Although there was censure of the tournament’s failure to send to phase-outing fossil fuels, the largest economies in the world reached another significant agreements in Delhi, including one on weather and biofuels.
There was no established G20″ family picture” for the second time in a column. There was no explanation given, but according to reports, many officials declined to be photographed, indicating that Russia was present at the conference.
Some people, not least on the summit’s opening moment, had anticipated a joint announcement at the G20 this year. Regarding Russia’s invasion of Ukraine last year, the group is bitterly fragmented. Neither Xi Jinping of China nor Vladimir Putin of Russia showed up in Delhi, sending lower-level ambassadors in their place.
Therefore, it came as a shock when Indian Prime Minister Mr. Narendra Modi announced that the Ukraine part of the statement, which had last month’s direct criticism of Russia watered down, had reached consensus just hours after the summit began.
On Sunday, Mr. Lavrov declared that a” step” had been accomplished.
Sincerely, we didn’t anticipate that. We were prepared to defend the text’s language. In response to a query from the BBC’s Yogita Limaye, he stated that” the Global South is no longer willing to be lectured.”
The joint statement was promoted by the UK and the US as well, but Ukraine, which attended the Bali summit last year but was not invited this year, claimed it was” nothing to be happy of.”
The majority of users expressed” in the strongest terms” their regret for the Russian Federation’s aggression against Ukraine in Bali next year. The Delhi announcement, in contrast, discusses” the people suffering and additional negative effects of the war in Ukraine with regard to international food and energy security.”
In addition to urging state to” abstain from the threat or use of force to get regional skill ,” which could be interpreted as being directed at Russia, it also mentions” different views and analyses of the condition.”
According to analysts, the G20’s financial balance and power dynamics are shifting apart from Western developed market economies and toward emerging giants, especially in Asia.
There were other significant events at the tip as well, such as significant agreements aimed at combating climate change.
A complete agreement has been reached among the G20 members to” do and stimulate efforts to triple global renewable energy capacity through existing targets and policies.” More than 75 % of the nation’s greenhouse gas emissions come from the union.
In order to encourage the use of cleaner fuels, India also established a global biodiesel alliance with the US and Brazil. By facilitating industry in renewables made from plant and animal waste, the clustering aims to hasten international efforts to achieve net zero emissions targets.
On the outside of the conference, there was also a global road and port agreement connecting the Middle East and South Asia. The agreement is seen as a response to China’s Belt and Road initiative to improve world equipment.
Mr. Modi concluded months of hype and excitement by closing the summit early on Sunday evening. President Luiz Inacio Lula da Silva of Brazil, who is assuming the presidency, received a royal hand from him.
President Lula’s talk was largely focused on issues facing developing nations.
He claimed that” we are living in a world where money is more concentrated, where millions of people continue to go hungry, in which sustainable development is perpetually threatened, and where global government institutions still reflect the reality of the 20th century.”
Leaders walked in the rain to honor Mahatma Gandhi, India’s independence warrior, at the location of his death because the rain downpours had derailed some earlier-in-the-day plans. A meeting to plant trees was downgraded to a symbolical swap of trees between G20 presidents in the past, present, and potential.
Delegates were treated to social shows, a gala dinner party, and the best of American hospitality as part of Mr. Modi’s luxurious show, which was put on from beginning to end.
However, it also sparked some debates, particularly after Mr. Modi’s sign, which introduced India as” Bharat”( which means India in Hindi ) as he opened the summit, suggested that the nation might change its name.
But, Mr. Modi and his officials hailed the occasion as a huge success and claimed that India’s G20 administration had demonstrated its leadership skills on the international stage.
Foreign Minister S Jaishankar stated,” We have sought to make this G20 as inclusive as possible.”
According to Nirmala Sitharaman, the finance minister, India has succeeded in preventing issues from obscuring the fundamental development issues facing the world.
She stated that” India’s G20 Presidency has walked the discuss safely.”
