Presentation on theme: "FIA Asia Derivatives Conference Doing business in China Perspectives of Man Financial Mr. Simon Raybould Chief Executive Officer Man Financial Hong Kong."— Presentation transcript:
FIA Asia Derivatives Conference Doing business in China Perspectives of Man Financial Mr. Simon Raybould Chief Executive Officer Man Financial Hong Kong Beijing August 2005
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Doing business in China Man Financial: profile & business flows Perspective on the state of the Mainland Marketplace What are Man Financials strategic goals with regard to China?
MF offices: London, New York, Chicago, Paris, Taipei, Singapore, Sydney Man Group, plc Focused on Exchange Traded Business Man Financial: profile & business flows
Man Financial – Exchange rankings as at March 2005 Man Financial: profile & business flows
Man Metals 17 percent of market share on London Metal Exchange China business flows built upon end user hedging requirements Man Financial: profile & business flows Man Market Share *Man side of every RT trade
2004 Broker Rankings international survey of corporate risk managers –Cash (Man Financial #1) –Forwards (Man Financial #1) –Options (Man Financial #1) –Cash (Man Financial #1) –Forwards (Man Financial #2) –Options (Man Financial #1) –Cash (Man Financial #1) –Forwards (Man Financial #1) –Options (Man Financial #1) COPPER ALUMINUM OTHER BASE METALS # BASE METALS RANKINGS: 9 Man Financial: profile & business flows
State of Mainland Marketplace Strategic Relationships: Joint Ventures & acquisitions Closer Economic Partnership Agreement (CEPA) Recent Structural changes: Access to Mainland Futures planned for Foreign Investors QFII quota increased Mainland futures brokers to trade international futures State of the Mainland Securities business: State of Mainland Securities Brokerage Industry State of the Mainland Marketplace
Access to Mainland Futures planned for Foreign Investors Plans to allow QFIIs to trade domestic futures market. Yang Maijun, director of CSRC Futures Supervision Dept: Chinas futures market is short of big institutional players Development of the market hasnt caught up with investors demand Currently there are 11 Mainland futures contracts covering agriculture products, fuel oil and metals, with plans to approve contracts for sugar and steel wire. Yang Maijun: CSRC would make agricultural and strategic resource commodities a priority for developing new future products. Bloomberg 30 May 2005 China Economic Review July 2005 State of the Mainland Marketplace
QFII Quota increased Investment quota scheme on the amount invested by global money managers in Yuan denominated securities (ie A shares & bonds) Total QFII quota amount to increase from $4bn (less than 1% of total market cap) to $10bn. Data suggests almost one-third of foreign investors QFII allocations are being kept in cash. Source: Xinhua News Agency 13 July 2005 & Asiamoney, 1 April 2005 State of the Mainland Marketplace
Mainland futures brokers to trade international futures Pilot program approved by State Council Mainland futures brokerage firms to trade overseas futures on behalf of local mainland firms. Previously, only selected state-owned firms permitted to hedge physical requirements. AWSJ 17 June 2005 State of the Mainland Marketplace
State of the Mainland Securities Brokerage Industry Approx 120 brokerages – majority of income is trading fees Brokerage Industry lost 15bn Yuan last year State media have reported a 45 percent drop in revenue for Chinese brokerages during the first half of 2005: Mainland brokerages combined revenue: 9.57bn Yuan (vs 17.47bn first half 04). Securities houses collected 8.3bn Yuan in brokerage (vs 15.26bn first half 04) Revenue from Underwriting 345m Yuan (vs 829m first half 04) Many Mainland brokerages have applied to PBOC for bailout loans. PBOC have said 10bn Yuan in cheap financing available for better performers. CSRC spokesman: (SCMP 28 July 2005) hard to predict how many more of Chinas approximately 120 remaining brokerages would be shut down hinted that more closures were expected One-hundred-and-twenty brokerages is more than the market needs SCMP: 2 July 2005 & 19 July 2005 & 28 July 2005, China Economic Review July 2005 State of the Mainland Marketplace
Required developments from the perspective of Man Financial: FX Banking procedures Corporate Governance Bond Market Money Market Man Financial Perspective
Man Financial values building relationships with: Regulators Peoples Bank of China (PBOC) State Administration of Foreign Exchange (SAFE) China Securities Regulatory Commission (CSRC) China Banking Regulatory Commission (CBRC) Exchanges Shanghai Futures Exchange Dalian Commodity Exchange Zhengzhou Commodity Exchange Shanghai Stock Exchange Shenzhen Stock Exchange Man Financial Perspective
Differing Customer Profiles: Man Financial China Man Financial Perspective Need for Education Understanding the cash markets Transparency
China Mission Statement Continue to expand legitimate institutional customer base on the Mainland. Build links with Mainland brokers. Push for access to Chinese product base for our own international customer base. Be part of the educational process and development of the Chinese derivative markets.