By Yantoultra Ngui and Selena Li
SINGAPORE/HONG KONG (Reuters) – China International Capital Corp (CICC) plans to expand its presence in Southeast Asia by opening offices in countries including Indonesia and Malaysia, its investment banking chief said, as a slump in dealmaking in the country hurts its prospects.
Founded in 1995, the Beijing-based investment bank currently has a presence in seven international financial centers outside mainland China, including Hong Kong, New York, London and Singapore.
State-owned CICC opened a representative office in Vietnam in June, expanding its presence in Southeast Asia, home to several fast-growing economies.
CICC, China’s oldest and also one of the largest investment banks, has been severely affected by declining transactional activities on the mainland and Hong Kong due to the slowdown in the Chinese economy and rising geopolitical tensions.
“CICC is looking to expand its presence in other regional markets (in Southeast Asia),” Wang Shuguang, a member of CICC’s management committee and head of its investment banking department, told Reuters.
“CICC is seeing business opportunities in these countries and markets and wants to have a presence by opening offices to get closer to local clients and help them grow,” added Wang, who leads more than 2,000 investment bankers at CICC.
Wang did not disclose how much CICC plans to invest or how many people it will hire to expand into Southeast Asia. He also did not mention revenue targets or deals in the region.
In its core markets, China and Hong Kong, CICC has cut bankers’ salaries and considered downsizing its workforce. The investment bank has also suffered a drop in profits and its share price.
Other investment banks in China have also been similarly affected, prompting a race between Chinese and Wall Street banks to seize business opportunities in other Asia Pacific markets.
MAGNET FOR INVESTMENTS
Southeast Asia has been a magnet for global investment in recent years, driven by the region’s fast-growing economies, young and digitally savvy population and improving infrastructure.
Despite the pessimism about China-related business activities, the country’s outbound investments in Southeast Asian countries increased by 27% in 2023 compared to the previous year, according to a report by Griffith University. Indonesia was the main recipient of this investment, with some $7.3 billion.
CICC, in which major Chinese technology companies Tencent and Alibaba (NYSE:) are strategic shareholders and see significant opportunities in raising private funds for unicorns and local startups in Southeast Asia, Wang said at the firm’s China-Southeast Asia Economic and Financial Forum in June.
Other opportunities include increasing cross-border investments by Chinese companies, particularly in sectors such as consumer, technology, media, telecoms, fintech, logistics and electric vehicles, in Southeast Asia, he added.
Reuters reported in May that CICC could cut its investment banking staff by at least 10% this year, affecting more than 200 bankers in the country and in Hong Kong, where most of its offshore staff are based.
CICC shares have fallen by about a fifth so far this year, after falling 23% last year.