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Emerging Markets

SG spies opportunity from growing trade surpluses

The French bank is expanding its fixed income and currencies team in Asia to capitalise on growing trade surpluses among China’s key trading partners.

  • 25 Nov 2009
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Société Générale aims to increase its fixed income and currencies team in Asia by more than 30% next year to capture opportunities arising from growing trade surpluses among China’s trading partners.

The French bank believes the Chinese economy will continue to grow quickly next year, increasing the need for more commodities and capital goods, such as machinery, tools and equipment.

As such, researchers at SG expect that import growth will increase by 42% next year, which will tip China into a trade deficit of US$150 billion. In October, it had a trade surplus of US$23.99 billion

It means that its key trading partners will benefit, namely commodities producers such as Australia and Brazil and capital goods and technology exporters such as Taiwan, South Korea, Japan and Singapore, says Adam Reynolds, SG’s co-head for flow fixed income and currencies for Asia.

If this transpires, central banks in these countries will enjoy more trade surpluses and the excess capital is likely to be injected into sovereign wealth funds to be invested, which offers a business opportunity for banks such as SG.

For instance, central banks and sovereign funds could increase investments in Asia’s fixed income products and currencies. They would likely also make equity investments in developed countries and in emerging markets, meaning more foreign exchange flows.

“A broader number of players with growing assets will make the markets bigger,” says Reynolds. “It is a positive development for Asian fixed income markets going forward.”

Earlier this year, SG moved the bulk of its fixed income and currencies sales and trading teams in Asia to Hong Kong. “The evolution for us is from a European capital markets house to a global markets house,” says Reynolds.

“We are adding a significant number of cash products across the region, government and agency debt from the US, Japan and the UK and other high grade credits. That’s a significant push for us into 2010.”

Reynolds, who oversees the sales function of the fixed income team, has spent most of the past few months interviewing and hiring new staff. Robert Reilly, the other co-head of the department, overlooks trading.

In total, the front-office team should be 57-strong at the end of the year and could grow to about 80 by the end of next year.

“We hope to get multi-product sales people who understand and can sell both FX and fixed income, especially to hedge funds, central banks and other asset managers,” adds Reynolds.

“In terms of coverage, we like those who can cover G-10 and emerging markets, rather than one or the other. That’s largely because we want to organise ourselves along the lines of how clients are organising themselves, rather than along the lines of the products.”

  • 25 Nov 2009

Bookrunners of International Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
1 Citi 17,937.65 77 10.67%
2 HSBC 17,202.71 88 10.24%
3 JPMorgan 15,720.00 64 9.35%
4 Deutsche Bank 13,208.40 58 7.86%
5 Bank of America Merrill Lynch 10,749.43 54 6.40%

Bookrunners of LatAm Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
1 HSBC 6,221.38 14 11.59%
2 JPMorgan 5,140.67 18 9.58%
3 Bank of America Merrill Lynch 4,497.27 18 8.38%
4 Deutsche Bank 4,264.56 14 7.95%
5 Credit Suisse 4,132.73 8 7.70%

Bookrunners of CEEMEA International Bonds

Rank Lead Manager Amount $m No of issues Share %
1 Citi 6,674.27 20 14.95%
2 JPMorgan 5,884.96 16 13.18%
3 Barclays 4,728.57 10 10.59%
4 Deutsche Bank 4,044.06 10 9.06%
5 Goldman Sachs 3,229.17 5 7.23%

EMEA M&A Revenue

Rank Lead Manager Amount $m No of issues Share %
1 Goldman Sachs 182.99 41 13.58%
2 Bank of America Merrill Lynch 90.70 28 6.73%
3 JPMorgan 88.18 43 6.54%
4 Deutsche Bank 85.13 29 6.32%
5 Lazard 80.06 43 5.94%

Bookrunners of Central and Eastern Europe: Loans

Rank Lead Manager Amount $m No of issues Share %
1 ING 382.49 5 8.60%
2 Commerzbank Group 292.65 4 6.58%
3 UniCredit 275.33 3 6.19%
4 SG Corporate & Investment Banking 271.81 3 6.11%
5 Raiffeisen Bank International AG 207.65 3 4.67%

Bookrunners of India DCM

Rank Lead Manager Amount $m No of issues Share %
1 Standard Chartered Bank 1,072.16 12 9.37%
2 Deutsche Bank 1,008.26 15 8.82%
3 AXIS Bank 1,000.88 27 8.75%
4 Barclays 699.87 9 6.12%
5 Trust Investment Advisors 698.72 32 6.11%