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Belt And Road Initiative To Give Important Financial Implications For Investors -- HSBC
Last update: 11/07/2017

KUALA LUMPUR, July 11 (Bernama) --†China's Belt and Road Initiative, which focuses†on physical infrastructures like†railway lines, ports and highways, has important financial implications for investors in Malaysia,†said HSBC Bank (M) Bhd.

In †a statement today, the bank said, the†initiative, which was announced in 2013,†would†galvanise infrastructure constructions as far afield as South-East Asia,†West Asia, Africa and Europe.

"There are already many significant Chinese investments in major Malaysian†infrastructure projects.

"One such example is†the†strategic partnership between Melaka and China's Guangdong province, which aimed†to promote various projects that would†help develop the state†as a strategic port and†hub along the Belt and Road route,"†it said.

According to Asian Development Bank estimates, about RM112 trillion would be needed for†infrastructure development in Asia between 2016 and 2030, as developing nations aimed to raise productivity and deal with†growing urbanisation and the impact of climate change, the bank said.

HSBC†Bank said†sovereign wealth funds had been deploying more of their assets to global infrastructure investments,†especially in Asia.

"The†steady return potential of infrastructure investment was also†a good fit for Asia's middle class investors.†The expected growth in capital-raising activity is also good news for the development of some of the†smaller markets along the Belt and Road route, as†many emerging local-currency bond markets have grown rapidly†in recent years,"†it said.

It said†the Malaysian bond and sukuk market also continued†to play a major role in†supporting economic growth by financing†business expansions and infrastructure developments.

It said†Malaysian bonds had †seen strong demand from local and foreign investors who had†been searching for higher-yielding assets after building up significant cash positions over time.

"Foreign†interest had resulted in†RM6.8 billion and RM10.1 billion of inflows to domestic debt markets this year in April and May respectively,"†it said.

Meanwhile,†HSBC†Malaysia Chief Executive Officer, Mukhtar†Hussain,†said it†would require all available sources of capital of the private and public sectors to finance†the†colossal need for transport, telecommunications†and energy infrastructure.

"But it will†also generate a broad spectrum of opportunities for local and international investors†and stimulate†capital markets development in many Asian markets, where bank lending still tends to dominate financing.

"Infrastructure projects, by their very nature, are large, complex, often multi-decade ventures that can involve†different kinds of funding over their lifetime.

"So the Belt and Road fund-raising will need to come†from the full range of sources - including bridge financing from banks, equity capital from governments, funds†and public and private equity markets, and long-term bond issuance from private and public†sector institutions,"†he said.

He said infrastructure projects and the stable, long-term returns they tended to provide also attracted investors looking to diversify their holdings.

Mukhtar†said†that increased capital-market activity could†also prompt more cross-border regulatory coordination among markets in South-East Asia or Central Asia, with†more cohesion†in areas like documentation, taxation, foreign exchange regulation and credit ratings.†



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Source: Bank Negara Malaysia

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