SUSTAINABLE FINANCE POLL 2023: Asian debt markets sharpen ESG focus | FinanceAsia

It’s looking increasingly like the time for sustainable finance to shine. After a fall in the year-on-year volume of green, social and sustainability (GSS) instruments globally during 2022, a rebound is forecast this year – to around US$1 trillion in issuance, forecasts S&P Global.

Asia Pacific (APAC) is well-placed to capitalise on this upswing. S&P Global’s projections, for example, are that GSS issuance volume in the region will jump by as much as 20%, to reach US$240 billion, roughly a quarter of the global landscape.

The longer-term story looks promising, too, especially amid ambitious climate goals. Even in South-east Asia alone, about US$180 billion needs to be invested in clean energy projects every year until 2030 to keep the transition journey on track, based on the International Energy Agency’s Sustainable Development Scenario. Putting this in context, from 2016 to 2020, investment in clean energy was $30 billion per year, on average.

Adapting to climate change is certainly a key driver. But according to more than 100 investors and borrowers in APAC who took part in the 6th annual poll by ANZ and FinanceAsia in April and May 2023, multiple dynamics indicate an ever-bigger role for GSS instruments.

Among the key factors is a mix of policy and regulatory initiatives to foster greater transparency. This should, in turn, boost investor demand and issuer appetite. At the same time, as this segment of the region’s capital market continues to mature, active GSS bond investors and issuers can expect greater potential for newer formats of issuance to help bridge social and environmental priorities such as biodiversity and gender equality.

10 top takeaways from the survey

  1. 92% of all respondents have integrated GSS factors within their strategy, with 77% confirming that the market volatility over the past 12-18 months either hasn’t changed or has increased their focus on GSS.
  2. Nearly half (49%) of investors now have their own in-house ESG research and analysis capability, a notable increase from the 42% poll finding 12 months ago.
  3. 70% of investors have some type of experience with sustainable finance, with bonds much more popular than loans.
  4. While just under one-third of investors have exposure to transition finance instruments, another 45% are interested in investing in them, either in the next year or over the medium to long term.
  5. Although 92% of investors haven’t yet invested in Orange (gender equality) bonds, half of them say they would do so if they were more widely available.
  6. 88% of investors and 90% of borrowers believe further regulation of sustainability and sustainable finance would have a positive impact on the market overall.
  7. 49% of investors and 41% of issuers say a ‘greenium’ of at least 4 bps is typically priced-in to new GSS bond issues.
  8. Alignment with sustainability objectives, better access to capital and investor diversification are the top three drivers for issuers of GSS instruments.
  9. Time, availability of targets and set-up cost are the biggest hurdles to issuing GSS instruments.
  10. Only 19% of borrowers have never issued a GSS instrument – compared with 64% in last year’s poll.

Read more survey findings and analysis here

 

¬ Haymarket Media Limited. All rights reserved.

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FinanceAsia Volume Two 2023 | FinanceAsia

By now, most of our subscribers will have received print editions of the latest FinanceAsia Magazine: Volume Two 2023. 

Over the course of the summer, we look forward to sharing online our in-depth magazine features, including the detailed rationale behind our jury’s selection of winners across our recent flagship FA Awards process.

You can access the full online edition here.

To whet your appetite, read on for our editor’s note.

Positive predictions

As a snake (according to the Chinese zodiac), I have so far fulfilled my Year of the Rabbit prophecy in securing opportunity for career growth within the Haymarket Asia business. A successor will soon have the good fortune to step up as editor in my place, as I become content and business director and oversee the editorial strategy of our finance publications: FinanceAsia, CorporateTreasurer and AsianInvestor.

It is said that those born in 2023 will be blessed with vigilance and quick-mindedness. Very useful personality traits, I would think, as artificial intelligence (AI) advances globally, at pace. We are witnessing great development in this field in Hong Kong – and across the wider Asian economy, as emerging tech becomes the next positive disruptor and the capital markets work to respond through evolving regulation and new listing regimes.

In this summer issue, Christopher Chu delves into the value disruption put forward by generative AI, with consultants estimating its worth to breach $16 trillion by 2030. He explores its sophistication and how its potential is interwoven with political factors, while questions are posed around data ownership.

Also intertwined within the realm of transformative technology, is this edition’s flagship interview with BNP Paribas’ CEO for Asia Pacific, Paul Yang. He shares his journey navigating a career path that has taken him from IT coding in Paris, to leadership of the bank’s Asia Pacific business. He offers insights around his accomplishments to date and details plans to progress the bank’s 2025 Growth, Technology and Sustainability (GTS) strategy.

Reviewing activity across Southeast Asia, Liza Tan inspects the market’s prominent position in the ongoing start-up story, through assessment of the current venture capital (VC) fundraising landscape. Her discussion with experts asserts that fintech is inherently fused with human approach and that quality conversations and connections are key to future success.

Indeed, as FinanceAsia’s recent in-person awards celebration underlined, we have much to look forward to in the second half of the year and it is the human elements involved in dealmaking that have capacity to shape the road ahead. I think we all agree that recognising and nurturing talent is vital and so I hope you enjoy reading our evaluation of market resourcefulness, ingenuity and skill that informed the jury’s selection of award winners, amongst truly outstanding competition.

Finally, Sara Velezmoro and I explore the outlook for Asia’s debt capital markets – investigating what opportunity is on offer alongside the changing environment; and whether the momentum surrounding Japanese equities can be sustained, if the government were to reverse yield curve control.

Amid uncertainty we must focus on potential, so please join me in acknowledging the positive strides being taken by Asia’s market movers.

Ella Arwyn Jones

(Please feel free to send feedback or suggestions to [email protected])

 

¬ Haymarket Media Limited. All rights reserved.

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SocGen announces new Asian leadership roles | FinanceAsia

Paris-headquartered Société Générale has announced via media note two newly created leadership appointments within its global banking and advisory businesses.

In addition to her role as head of Corporate Coverage for Southeast Asia, Singapore-based Eliza Ng becomes head of Global Banking and Advisory for the Southeast Asian region; meanwhile, Kanta Murata takes on responsibility for Japan as market leader of Global Banking and Advisory, alongside his current capacity as Japan head of Corporate Client Coverage and deputy branch manager of the bank’s Tokyo office.

Effective from the end of June, the appointments mark the bank’s continued commitment to strengthen its local capabilities to support clients in local markets, the release detailed.

In their new roles, the pair will supervise all global banking and advisory endeavours, excluding business related to the bank’s institutional and debt capital markets (DCM) efforts. They both report regionally to Stephanie Clement de Givry, head of Global Banking and Advisory for Asia Pacific; and to Olivier Vercaemer, her deputy.

Ng and Murata shared with FinanceAsia their priorities as they settle into their new functions.

“My priorities revolve around three main areas: customer-oriented approach; regulatory compliance and credit risk management; and growth, especially across ESG-related aspects,” said Murata.

He emphasised his work to enhance client experience through expertly structured finance arrangements to meet evolving market needs, while prioritising robust risk management practices to ensure the security and stability of the bank’s operations.

The ESG arena is another area where he targets expansion. “To stay competitive and relevant in a rapidly evolving ESG landscape, it is essential to embrace innovative approaches,” he explained.
Ng agreed that ESG is embedded in the bank’s business and is a focus for the regional teams.

“My immediate priority is to leverage the expertise and capabilities that our expanded franchise can offer our clients in the Southeast Asia region,” she said, adding that she looks forward to continuing to accompany clients on their energy transition aims.

This effort, she explained would complement and further support development across the region’s emerging economies.

Ng added that such regional sustainability efforts are bringing with them new business opportunities across several segments, “including the transportation value chain and new technologies in the renewable energy sector.” 

Murata also observes a trend towards decarbonisation across Japanese activity.

“According to the latest preliminary figures as of 1Q23, the Bank of Japan’s “Flow of Funds” [demonstrate that] the loan balance of private non-financial corporations has been steadily growing during past quarters; partly driven by economic recovery, capital expenditure, and ESG-related investment opportunities.”

He said that this growth opportunity is further supported by the Japanese government’s push for carbon neutrality by 2050, which will require more than JPY150 trillion ($1 trillion) in investment from public and private sectors over the next ten years.

In terms of landmark deals, both Ng and Murata have been involved in a number of the bank’s key transactions.

Murata pointed to his involvement in an accelerated bookbuild for a Japanese client that saw the bank organise a block trade so it could divest European stocks; meanwhile, Ng highlighted the bank’s role across Temasek Financial’s EUR 1.5 billion ($1.65 billion) four and ten-year dual tranche senior unsecured bonds, earlier this year. 

¬ Haymarket Media Limited. All rights reserved.

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Commentary: Outside of politics, Thailand has a good story to tell

SINGAPORE: When central bankers line up almost daily to assert their commitment to fighting inflation, it makes me think of Thailand. Not the fine resorts and great food. The country’s untrumpeted success is seriously taming prices to the point where officials might want to think about easing up, lest the economy slows too much.

Like the rest of Southeast Asia, Thailand has been blindsided by the modest nature of China’s rebound. Tourism, a key industry, is gradually recovering. The number of Chinese visitors is heading in the right direction, but nothing like the surge that was anticipated when Beijing canceled zero-COVID.

Thailand’s divisive politics aren’t helpful: Two months after an election, the country is without a prime minister.

Don’t let these caveats subtract from a fine story. Most policymakers would prefer to forget that when inflation first started to climb in 2021, they played it down. Having wrestled with how to fire it up in the years before the pandemic, they weren’t going to jump at the initial upticks.

A host of terms were used to describe the benign scenario: Temporary, short-lived and, of course, the now infamous “transitory.” Federal Reserve Chair Jerome Powell stuck by the “T” word too long, before ultimately burying it and embarking on an aggressive tightening.

The Bank of Thailand, by contrast, has embraced transitory – and rightly so. The pace of consumer price increases retreated to 0.2 per cent in June from a year earlier. That’s a dramatic decline from almost 8 per cent in August 2022.

Officials don’t see it staying so anemic for long, but even forecasts of 2.4 per cent next year mean inflation is well and truly reined in. And they did it without smothering the economy by panicking and ratcheting up borrowing costs too rapidly.  

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Dark Pink, Ocean Buffalo: Hackers and cyber-espionage in SEA

A lack of bloodshed doesn’t mean an absence of war. 

For the past two years, a cyber conflict has quietly boiled across the Asia Pacific region. At the centre of the virtual fighting is a shadowy figure: known to some as Ocean Buffalo or to others as Dark Pink. Not to be mistaken for the K-pop group with a similar name, the enigmatic hacker group has been targeting government and military agencies mainly in Southeast Asia but also as far away as eastern Europe. 

“Every attack starts from a human,” said Dmitry Volkov, CEO and co-founder of the global cybersecurity provider Group-IB, a private firm that works with national authorities and groups such as Interpol. 

The company has been tracking the hacks and came up with the Dark Pink codename. The use of such names is a common practice in the cybersecurity sector, where analysts caution there’s seldom any true certainty in nailing down organisations that exist only as digital shadows. 

Since the hacker organisation’s attacks gained public attention in June 2021, the perpetrators have infiltrated 13 entities, mostly in Southeast Asia. This spree targeted government agencies in Brunei, Cambodia, Indonesia and Bosnia and Herzegovina; military bodies in Malaysia, the Philippines and Thailand; and religious groups, non-profit organisations and educational institutions in Vietnam and Belgium.

The latest moves triggered major concerns among international cybersecurity experts who say the scope of the attacks might be much broader than they originally thought. 

But analysts also say the group is just one of many engaged in constant, simmering cyber-espionage campaigns across the region and beyond. As the world increasingly goes digital, both criminal groups and national intelligence organisations alike have pushed fast-developing techniques to more efficiently break down defences, steal information and carry out attacks of real-world significance. Sometimes, as with Dark Pink or Ocean Buffalo, the line between rogue groups and officially sanctioned activities is blurry as can be.

“There’s a lot of sensationalising around it,” Aaron Ng, senior systems engineer at CrowdStrike, another global cybersecurity firm that came up with the Ocean Buffalo name. “At the core, it is really just an extension of spycraft evolving with the times. Like a business adopting digital technologies, spying organisations across the world also have to follow the trend.” 

According to Group-IB, Dark Pink seems to follow that pattern. The entity’s latest intrusion was detected in May, showing no sign of an end to its espionage campaign.

“Dark Pink has a strong focus on military organisations,” Volkov said. “They want to get military secrets and we need to think a few steps ahead if we want to catch who’s behind these attacks.”

They started off primarily as an instrument of the state.

Aaron Ng, CrowdStrike

But while the group gained publicity as Dark Pink only two years ago, there are hints that suggest its true origins could extend much further back. Threat intelligence at CrowdStrike reported the group’s attacks bear a very close similarity to the activities of what they’ve been referring to as Ocean Buffalo, a hacker entity that has likely been working since 2012. CrowdStrike believes the earlier-detected group is likely connected to the Vietnamese government – and maybe only recently turned outwards into the rest of the world.

“We have been tracking these intrusion activities for so many years, but we attribute the intrusions to the group Ocean Buffalo,” said Ng. “Ocean Buffalo has been around for more than a decade now and they started off primarily as an instrument of the state to perform domestic surveillance.”

According to Ng’s experience researching the group’s activities, Ocean Buffalo’s modus operandi matches with that of what Group-IB is tracking as Dark Pink. As earlier research already confirmed that Ocean Buffalo was Vietnam-originated, CrowdStrike has strong reasons to believe that so is Dark Pink.

The inherently secretive nature of digital espionage helps give cover to such organisations as they evolve and expand their reach. Even if groups such as CrowdStrike are confident about the origins of Ocean Buffalo, national cybersecurity authorities in Southeast Asia are still investigating the nature of Dark Pink. The group’s attacks were mostly carried out through sophisticated custom malware and “spear-phishing” emails aimed at specific users. 

Both experts explained that cyberattacks almost always begin with gathering information on the data potential and internal procedures of the targeted organisation.

While Ocean Buffalo may have Vietnamese roots, Ng believes the vast majority of today’s cyberattacks across Southeast Asia are carried out by groups from China for the purposes of intelligence gathering and economic espionage.

“That often means collecting information that would help them with better foreign policy decision-making and that fits the Chinese communist regime’s agenda,” he said. “For example, gathering information about dissidents who live abroad.”

Ng added that he saw a correlation between the Chinese governments five-year policy plan and the nature of the intellectual property threats happening in the cyber-realm. He also pointed to the conflicting interests of China and Vietnam in the disputed South China Sea as another thread carrying over into the digital world.

“Intelligence is inherently political,” Ng said. “The countries would collect information that would help them with better foreign policy decision-making.”

While sharing similar perspectives on the reasons behind cyberattacks, Group-IB refrained from calling out any specific country. However, they linked the early intrusions by Dark Pink to a sequence of attacks in Vietnam and Indonesia in mid-2021. 

The hacking group was seemingly inactive throughout the second half of last year. But Group-IB was later able to link several attacks on government institutions in Indonesia, Malaysia and Thailand to Dark Pink using digital evidence gathered through the analysis of past infection chains.

“We identified Dark Pink attackers in their early stage, information gathering,” Volkov said. “That’s why we are motivated to follow their steps and find them before they get a command to disrupt some kind of military operations in the Asia Pacific region.”

What is most concerning, according to Group-IB, is that once the threat group gains access to its target, it can remain undetected and control the conquered cyberspace.

Threats are similar everywhere, but the devil is in the details

Dmitry Volkov, Group-IB

Whoever is behind Dark Pink is clearly skilled in keeping their activities original enough to remain active while getting away with their crimes. 

According to malware analysts at Group-IB, Dark Pink uses spear-phishing to gain initial access and tricks users into opening a file that looks like it’s from Microsoft Word but is really a virus. 

The group also uses the off-the-shelf commercial programme Microsoft Build to launch a highly advanced form of malware called KamiKakaBot, which can control devices and steal sensitive information while evading detection by anti-virus software. Through commands from a Telegram channel, hackers can use this tool to intercept key data by placing their attack between an infected system and the targeted institution. 

The use of the well-known Microsoft Build and a popular communication platform such as Telegram makes it even more difficult to diagnose and prevent these attacks. 

Speaking generally, Volkov said organisations should take measures to protect their systems and users from such attacks, such as educating employees on the risks of spear-phishing. He also said countries should invest more on a national level to train experts who can stay up-to-date on the rapidly evolving cybersecurity landscape.

“Threats are similar everywhere, but the devil is in the details,” he said. “We need to understand how exactly these threat factors are able to bypass different security control systems. Without this knowledge, it is impossible to develop the right protection technologies and respond effectively to cyber threats.”

Given the persistent, international threat posed by groups such as Dark Pink and Ocean Buffalo, the analysts who spoke to Globe said it was crucial for governments and international organisations to stay ahead of the curve in the digital arms race.

“This is the reason why threat intelligence exists,” said Volkov. “We try to understand what happens in one region, then structure the collected information and share it with the rest of the world so other regions can be prepared in advance.” 

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Paywatch, Visa sign MoU to promote financial inclusion among Asia’s workforce

Aims to bridge gap between traditional banking & Asia’s unbanked
Plans to expand across Asia via Visa’s cross-border capabilities, network

Paywatch, an Earned Wage Access (EWA) startup based in Malaysia, announced last week an MoU with Visa to promote financial inclusion among Asia’s workforce. In a statement, the firm said it aims to…Continue Reading

The Big Read: Young, retrenched and ready to start over – a new norm for workers in a more volatile economy?

However, Mr Adrian Choo, chief executive of recruitment firm Career Agility International, believes that retrenchments now “are no longer necessarily tied to recession cycles”. Instead, they may be due to rapidly changing technology or shifting of customer demand for products, which may sometimes result in the company closing entire businessContinue Reading

Book by exiled academic banned for ‘insulting’ the King: Gazette

A book about the monarchy written by academic-in-exile Pavin Chatchavalpongpun has been banned in Thailand for defaming the monarchy, according to a police announcement published in the Royal Gazette on Friday.

The announcement said the cover and contents of Rama X: The Thai Monarchy under King Vajiralongkorn reflected attitudes that are insulting, defamatory and display great malice towards the king, the queen, the heir apparent or regent and threaten national security, peace, order and public morality.

The announcement was signed by Pol Gen Damrongsak Kittiprapas, the national police chief, on June 19, according to the Royal Gazette. It cited Section 10 of the Printing Recordation Act 2007 in banning the book.

Anyone who imports the book into Thailand is liable to a jail term of up to 3 years and/or a fine of up to 60,000 baht. The police chief has the authority to destroy the book, said the announcement, which takes effect immediately.

“My book has been banned despite the fact that nobody has read it,” Mr Pavin wrote on his Facebook page. “It will be on shelves in the United States in October and an e-book will also be available.”

Mr Pavin, 52, is a professor at Kyoto University and editor-in-chief of the Kyoto Review of Southeast Asia, published by the school’s Center for Southeast Asian Studies. He worked for the Ministry of Foreign Affairs for 13 years before becoming a political science academic. He has been an outspoken critic of the political establishment and pushed for reform of Section 112 of the Criminal Code, the lése-majesté law.

He moved to Japan in 2012 to take up his position at Kyoto University, but comments regularly on Thai affairs for international publications. After the 2014 military coup, he was ordered to report to authorities but refused.

The National Council for Peace and Order later issued an arrest warrant for Mr Pavin but he declined to return to Thailand and has been living abroad ever since.

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S Korea’s Gyeonggi urges Thais to visit

the 'real korea': Cho Won-yong, CEO of the Gyeonggi Tourism Organisation, left, presents a Memorandum of Understanding with Charoen Wangananont, president of the Thai Travel Agents Association, right, while Kim Dong Yeon, Gyeonggi governor, centre, is a witness at the Park Hyatt Bangkok hotel in Bangkok on Friday.
the ‘real korea’: Cho Won-yong, CEO of the Gyeonggi Tourism Organisation, left, presents a Memorandum of Understanding with Charoen Wangananont, president of the Thai Travel Agents Association, right, while Kim Dong Yeon, Gyeonggi governor, centre, is a witness at the Park Hyatt Bangkok hotel in Bangkok on Friday.

The Thai Travel Agents Association (TTAA) and Gyeonggi Tourism Organisation (GTO) have signed a Memorandum of Understanding (MoU) to promote bilateral cooperation and initiatives on tourism.

Kim Dong Yeon, Gyeonggi governor, said Thailand had become the most likely destination for the “next” Korean Wave in Southeast Asia. With the expansion of airline routes, the province had sought to promote tourism between the countries.

He said the GTO realised the need to create awareness about the province among Thais, so organised the “Come to the real Korea, Gyeonggi” seminar on Friday in Bangkok to promote the region.

Gyeonggi is a province in the northwest of South Korea, surrounding the capital city of Seoul. It is the largest local autonomy area in South Korea and home to more than a quarter of the country’s population. Tourist highlights include the demilitarised zone (DMZ) in Paju City where both North and South Korean flags are flown at Bora Observatory Hall, he said.

The province is also popular for film shoots due its abundance of historical sites as well as Unesco World Heritage sites such as Hwaseong Fortress, constructed during the Joseon Dynasty and located in Suwon City, and the royal tombs of the Joseon Dynasty and Namhansanseong Fortress. The province is also a hub for semiconductor production and a home to world-renowned Korean businesses such as Samsung and Hyundai.

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