Future Focused: Depositary Receipts in Asia Pacific

Future Focused: Depositary Receipts in Asia Pacific

May 2020

By  Frank Giglio

How have you and your team continued to support clients through the Coronavirus situation?

 

Our last day in the Hong Kong office was the Thursday before Chinese New Year. Our team of eight were all getting ready to head out for the holiday. I returned to the U.S, and now here we are at the end of May. It's pretty unbelievable.

 

Ever since the initial coronavirus outbreak in Asia Pacific, we were already supporting our clients without the comforts of the office. Our team has been extremely proactive, and our clients were also in the same situation all the way back to January.

 

In a way, now it’s only a difference in degree. Over the last two years, we’ve been on the road every week to stay connected with our clients. They know who we are and what we're able to do. They trust us and know that we're able to continue to support them remotely in whatever way is needed.

 

How have your work setup and your working arrangements changed?

 

I've always split my time across time zones, with calls, meetings, webcasts, etc., in the evening New York, morning Hong Kong or vice versa. Now it's turned around and I'm doing it from the U.S., but in all honesty, it doesn't seem a whole lot different.

 

I've also appreciated being able to be more involved in the U.S. Earlier in the year I met with our Marketing team and our Global Investor Relations Advisory group in New York to discuss strategy. We're now executing on these strategies and we really hope for some good returns from those efforts.

 

What kinds of things have your clients been asking about specifically related to the impact of coronavirus?

 

We've seen greater activity and interest in a lot of DR programs. We are also hearing questions about the market volatility that has affected how these programs have traded over the past few months.

 

Beyond that, there’s been a significant increase in investor activity across the region. Asia Pacific has seen success stories with different markets and different parts of the region having handled this crisis well. They have set themselves up to come out of it strong on the other end.

 

What kinds of things have you been seeing that are relevant to clients and their DR programs?

 

The Asia Pacific region has been through many cycles over the past 10 years since I’ve been living there and even prior. We've seen continued interest from U.S. investors for greater exposure to Asia Pacific. From 2017 to 2019, there was a significant amount of activity where companies were coming to the U.S. to complete their IPOs.

 

That momentum was expected to continue into 2020 and had initially been put on hold, but we've seen new movement over the past few weeks. There have been public filings with the SEC in order to begin IPOs in New York. Other companies are starting to think about how to complete an IPO in 2020. There have been IPOs on Nasdaq and the HKSE that have been completed 100% virtually, which gives companies more confidence that they can move forward.

 

Finally, just because we find ourselves in this situation doesn't mean a company's need to raise funds for their continued growth and expansion in the future is put on hold. Companies still need access to the capital markets. That need doesn't go away. If anything, it's amplified at a time like this.

 

As the crisis starts to hopefully subside globally what are some potential scenarios you see for how things will change in the new world?

 

More than ever, DRs have shown their relevance. It's a product that provides investors a simple way to diversify and gain access to markets outside of their domestic market. Clients have been able to get in and out of positions they desire to be in and utilize the product as they wish in a time of heightened volatility. If this were a product that didn't work in a time of high stress, that would be a significant issue. We clearly demonstrated at a time of very high stress everywhere in the world that the product worked according to clients’ needs.

 

How have you seen this particular situation affecting IR teams?

 

My team across Asia Pacific is working with our Marketing team and with our Global Investor Relations Advisory team to continue to provide relevant IR information virtually, whether it be around ESG or the continued scrutiny on dividends. There's a lot of expertise that we can provide IR teams that they can then filter and make relevant for their management teams.

 

Overall, it's been amazing to see how my team, the entire business and our clients in China, Japan, Australia and elsewhere are dealing with this situation. Everyone has multiple aspects to deal with to do their job effectively in the face of personal, home, school and other factors in their life. It's a balancing act that people have done without dropping the ball anywhere along the way.

 

I can't say enough about the dedication and commitment of our team. It shows the people we have are truly committed and doing everything they can to make sure that our clients are being supported in whatever way they need.

Dave Stueber

Head of BNY Mellon’s Depositary Receipts business in Asia Pacific

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