September 13, 2018 Views

Newgate wins Financial Comms Agency of the Year (APAC)

Posted by Newgate.Asia on September 13, 2018

We are very proud to announce that Newgate Communications has won the prestigious Holmes Report 2018 APAC (Asia Pacific including Australia) Financial Communications Agency of the Year award.

“This is a great team effort and reflects the quality of our people, our growth and the quality of our clients across the region.” Richard Barton, Managing Partner, Greater China.

The Holmes Report is a benchmark for the industry and conducts exhaustive research to identify the best PR firms for its Sabre Awards programme each year. The judges also referenced Newgate as one of the leading agencies in the Asia Pacific region, which is a fantastic reflection of the past five years of incredible effort.

Full details available here.

Richard Barton

Managing Partner, Greater China

(852) 3758 2680

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Newgate wins Financial Comms Agency of the Year (APAC)

January 10, 2018 Views

MRF – How Asset Managers can use strategic communications to cut through MRF hype…

Newgate Communication’s takes stock of the MRF hype to see if there is a way for Asset Managers to build bridges early on.

Hong Kong remains front-and-center in China’s capital markets expansion
The Mutual Recognition of Funds (MRF) scheme is another coordinated effort between securities regulators in Hong Kong and Beijing to globalise the mainland Chinese capital markets. Similar to the Hong Kong-Shanghai Stock Connect program launched in 2014, funds approved under the MRF scheme will for the first time be available to mainland Chinese and Hong Kong investors alike.

While certainly a milestone in the continued opening of China’s capital account, the timing for MRF’s launch could not have been worse for investors. The circular announcing details of the scheme was distributed on 22 May 2015 – since then global equity markets have dramatically fallen into (or nearly into) bear territory, with China’s slowing economy blamed as the primary catalyst.

Chinese fund products don’t have the same appeal to international investors as they did last spring, but tough market conditions haven’t stopped the MRF scheme from advancing. At latest count, seven Hong Kong domiciled funds have been approved by the scheme to sell in China (so-called “northbound” funds), while 32 China-domiciled funds have been approved for sale in Hong Kong (“southbound” funds).

Indeed there have been both more applications and more approvals for southbound funds than northbound, illustrating the importance of the scheme to Chinese asset managers looking to grow their asset base.

While the takeoff runway for MRF may be longer than expected, the scheme is another boon in Hong Kong’s continuing efforts to solidify its place at the center of China’s capital markets. It maintains the city’s attractiveness as the primary domicile for international asset managers to manage their Asian operations, while it also draws new Mainland Chinese asset managers to the market as a safe and transparent place to interact with western investors.

The funds universe is already crowded and set to become even more competitive – it’s more important than ever that asset managers think critically and urgently about their communications strategy.

Who can play in the sandbox?
The China Securities Regulatory Commission will approve northbound funds for sale in the mainland, while Hong Kong’s Securities & Futures Commission will approve Chinese funds for distribution in the SAR. Fund sales will have a quota of 300 billion RMB on both sides of the border. Most of the available products will be conventional in their asset class mix – equities, bonds, and index funds (including ETFs) will be on offer.

Both the mainland and Hong Kong regulators have agreed to eligibility requirements intended to comply broadly with international best practice in terms of governance, disclosure, liquidity and other metrics.

Mainland funds are expected to follow Hong Kong standards of distribution and disclosure (“complete, accurate, fair, clear, effective, and … capable of being easily understood by investors”). This may be the first experience Mainland asset managers have in dealing with Hong Kong’s SFC – understanding the expectations of the regulator is thus an immediate issue to resolve for Mainland funds entering the SAR.

Challenges for Global Asset Managers
Capital outflows from China in response to slowing economic growth may be a big bump in the road for MRF, but global asset managers would be wise to look at the scheme as a long-term game. Indeed, perhaps more than ever, mainland Chinese investors are hungry for global investment opportunities.

Foreign asset managers that were previously unrecognisable to the Chinese investing public will find themselves with a new task: branding themselves to one of the world’s most coveted investor bases. They will have to think differently about their Hong Kong business to stand out in a crowded market for new investment products.

How will these western funds attract capital away from the established Chinese brands? Indeed, the recent trend in Mainland consumer tastes show that Chinese consumers increasingly prefer Chinese brands. A few years ago, multinational luxury brands thought selling their products to China’s new billionaires and expanding middle class as shooting fish in a barrel, but sales haven’t lived up to the lofty expectations. Asset managers may face a similarly unwelcome response from Chinese investors.

With that in mind, those banks with a longstanding presence and a strong reputation in Asia, for example HSBC or Standard Chartered, have a clear advantage out of the gates. Over time, international players will need to carefully tailor their marketing efforts in China to gain genuine trust with the investing public. Diversification as a theme will likely be well-received by Mainland investors keen to minimize risks in their own unpredictable market.

Challenges for Chinese asset managers entering Hong Kong
Mainland asset managers face a different set of challenges competing in Hong Kong. They will need to quickly acquaint themselves with Hong Kong fund regulations, and market their brands to a western investor base they are not necessarily familiar with.

Governance will also be a key concern. Most of the regulatory detail around the MRF scheme concerns eligibility requirements for products from CSRC-regulated funds. It’s a clear move to give some assurance to international investors that mainland funds sold under MRF meet Hong Kong’s proud governance standards.

While weak governance is often forgiven during boom times, these same issues can become a critical priority for investors in down markets when good governance can mean the difference between gains and losses. Chinese asset managers in particular will need to bring their governance and sustainability policies to the forefront of their marketing and distribution efforts.

What to Expect in the Near Term
There will be winners and losers among asset managers participating in the MRF-scheme – competition for capital will be fierce, and marketing efforts could be at best ineffective or at worst value-destructive.

Furthermore, as the IMF noted in its annual country report on Hong Kong, the further intertwining of Hong Kong and China’s capital markets also increases the risk of financial shocks in China spreading to Hong Kong’s “small and open” economy. It will be important for market observers to watch closely the daily reporting of mutual fund redemptions as the MRF scheme progresses.

Inarguably though, the big winners will be Chinese investors, who will finally have access to global investment opportunities in a market that meets global best-practice in governance, transparency, disclosure and liquidity.

It is also a huge win for Hong Kong, which remains as relevant as ever in bridging Mainland and global capital. Just as luxury brands have long seen Hong Kong as a shop-front to brand themselves in the Asian consumer market, the Hong Kong cityscape itself will be the primary marketing platform for fund managers to promote themselves. Communications will be a critical component of these efforts.

Richard Barton

Managing Partner, Greater China

(852) 3758 2680

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MRF – How Asset Managers can use strategic communications to cut through MRF hype…

December 25, 2017 Views

Change is in the Air – Communicating Through Change

Communicating during uncertainty or structural realignment requires a close and experienced eye from professionals well used to periods of change, says Richard Barton

Investment banks are often seen as corporate trailblazers but in today’s markets they are having a tough time and taking the knife to costs, the effect of which in Asia is creating a surge of bankers and asset managers back on the street, literally.

Headline-grabbing redundancy news from bulge bracket i-banks in recent weeks highlights this stark reality. So with scores of talent now looking for their next ‘big opportunity’, hopefully at least the Fintech start-ups stand to gain, at least until the banking sector improves.

Of course it’s not new that companies need to get through tough times and re-engineer existing organizational structures. But how does an organization prepare to communicate with its stakeholders and how do they manage to protect their brand while doing so? After all, livelihoods, high-flying careers and keeping a happy investor base are at stake.

Having helped implement many change programmes with companies across APAC, ranging from global MNCs to SMEs in need of advice around pre and post-merger situations, recessionary cycles and financial crises, we know that experience is critical when it comes to communicating through change. In fact, having senior communications advisors in place at the earliest stage can make the difference between a smooth transition or an ugly outcome that could do irreparable damage to a company’s stock price.

While some financial institutions have it sewn up when it comes keeping their ex-employees “in-line” with financial “loyalty rewards” that extend far beyond the employment contract and pink slip, corporate change can create more serious short-term challenges. Recognising that every situation is different, overcoming these challenges always comes back to the basic principles of clear, concise and consistent communications – whatever and wherever the channel of delivery.

Additionally, many firms – and especially the smaller ones – may not have a permanent team of communications experts to help them manage through the issue, be it business unit closures and divestments, employee cutbacks and job outsourcing, or widescale corporate reorganisation exercises, to name a few.

But as long as there is business to be done, there will always be change, so these basics might, at the very least, be helpful to consider in this choppy and unpredictable market environment:

– Get your communications experts involved early on in the process.
– If there is a management consultancy involved in the ‘right-sizing’ process, they should include a strong
communications element in the plan and ensure it includes a media component.
– Ensure the messages are clear – relevant managers should be able to walk around the office with a one pager
(not a booklet!) of simple messages that tell the story
– Decide on the “go live” date even if the process needs to be staged across multiple stakeholder groups with
different messages and meeting times. Internal announcements should always be considered public.
– Put your best external spokesperson forward – ensure that person is media trained and ready to get the
message across in a way that is, most importantly, human.
– Line managers are the best internal deliverers of bad news – anyone else would not be sincere.
– Align all communications tools and publicly accessible information to reflect the changes.
– Think about how the story will fit into the bigger picture for the business going forward.

Naturally, the process of change can trigger external interest and you need to know what and what not to say when media, investors and other stakeholders call. Amongst our own client base, Newgate reinforces the importance of the communications function being part of the change process at the strategic level so it can be integrated from the start and throughout the business plan.

That said, we still see last minute, panicked calls and kneejerk reactions from ill-prepared management and spokespeople when something goes wrong. To support a pressured stock price or assuage investor unease in times of trouble, management have no option but to appear totally in control of the situation – and at the very least to have a clear plan of how to get to a position of control.

Newgate Communications is a full service agency specialising in corporate and financial communications, often helping companies manage their communications through difficult and contentious situations.

Richard Barton

Managing Partner, Greater China

(852) 3758 2680

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Change is in the Air – Communicating Through Change

October 25, 2016 Views

The great race to own the Fintech space….

Can Hong Kong leave its mark?

The NexChange Fintech O2O Meetup hosted its 6th event at the Cyberport in HK for Fintech and VC firms. From humble beginnings, the monthly Nexchange meetups are at near full capacity with hopeful startups, financiers and interested onlookers eager to find out more about Hong Kong’s burgeoning start-up space.

At the event, guest speaker Mr. Gordon Yen of Radiant Venture Capital said: “Hong Kong is currently less attractive fundraising market for fintech startups in Asia than China or Singapore.”  He notes the trillions of dollars under management in the city are generally not considering venture capital-style investments.

“There is a perception that there is so much money in Hong Kong and if you come here as an entrepreneur, you’re bound to get funded.  But it’s much harder than people think.”

By comparison, Singapore is throwing both public and private money to spur the development of startups and a venture capital ecosystem in the city-state.  It’s a strategy that has worked marvelously for Singapore over its 50 year history – mobilize resources into sectors where Singapore can compete aggressively throughout the region.

And…regulators in Western markets are taking notice of Singapore’s development.  This month, the UK Treasury formally announced a “fintech bridge” between both countries that allows regulators to “refer fintech firms to its counterpart… making it easier for fintechs to scale between countries.”  Essentially, fintech startups in the UK can enjoy easy access to Asia via Singapore.

Hong Kong has always taken a more laissez-faire approach, enshrined in the “positive non-interventionism” approach that has guided economic management in the city for decades.  But professional advisers are increasingly sounding the alarm that Hong Kong is rapidly falling behind  when it comes to developing a fintech ecosystem.

According to Yen, China is in a category of its own and notes that typically startups are much better funded, because they have the attitude of ‘spend first’ to gain customers and market share, all the while continuing to gain value.

Despite Hong Kong’s proximity to China, Yen hasn’t seen too many fintech startups trying to tackle the Chinese market.  “Perhaps this is due to differences in culture and regulation, but I think the business approach is also very different.”  He said.

Why should Hong Kong win the race

Certainly there are reasonable steps that the Hong Kong government will need to consider and implement, quickly, in order to attract entrepreneurs and risk-loving venture capital to the city.

Yen goes on to say: “There are many things the government can do to further support start-ups, such as developing a comprehensive register of VC investment and funding.  The Hong Kong regulatory approach is currently too basic; we recognise the public equity markets and then ‘everything else’.  There needs to be a more distinct set of regulations here.”

And Newgate Communications sees no reason why Hong Kong can’t quickly get up to speed after all Hong Kong has a critical mass in asset managementAccording to the HK Trade Development Council, total assets under management in Hong Kong reached US$2.27 trillion as at the end of 2014, while Singapore held about US$1.75 trillion.  Hong Kong’s advantage in private equity is even more pronounced: US$110bn in assets under management versus about US$68bn in Singapore.  If your start-up is for the asset management or private equity community, chances are you have many more customers in HK than in Singapore.

The other is open and independent mediaThe city is Asia’s unrivaled media center with an institutionalized commitment to press freedom.  There has always been more local and international media based in Hong Kong producing more regionally relevant content.  As a result, the region’s media industry and related technological developments are likely to stay concentrated in Hong Kong; meanwhile, entrepreneurs and investors seeking to reach the global investment community will likely need to speak with Hong Kong-based journalists.

Hong Kong is less centralized and more markets-driven in its economic development than Singapore, and this has worked to the city’s great advantage in the past and contributes to Hong Kong’s unique cultural vibrancy.

Regulators, entrepreneurs and investors will need to build on these strengths if they are to carve out a niche in Asia’s developing technology scene.

Richard Barton

Managing Partner, Greater China

(852) 3758 2680

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The great race to own the Fintech space….