November 05, 2013
Hong Kong ... The Asia Securities Industry & Financial Markets Association (ASIFMA), a regional trade association, and Latham & Watkins, a leading global law firm, today co-hosted a senior level industry summit entitled “Maximizing Outcomes in Upcoming Asia Restructurings.” The conference provided a platform for industry leaders from across Asia, London and the US to debate the economic environment, rising debt levels in Asia and signs that more Asian companies will have to restructure their obligations.
The conference featured leading economists, analysts, and market commentators, as well as senior partners from the banking, private equity and legal sectors.
"This is the opportune time to bring together the views of restructuring experts from around the region. Given the economic climate in Asia, we foresee an increasing number of corporates defaulting in the next 6 to 12 month window and a corresponding spike in restructurings," said Mark Austen, Chief Executive Offer of ASIFMA.
"In particular, we see a pressing need to discuss issues surrounding China's potentially looming credit crunch," Austen added.
Ben Simpfendorfer, Managing Director of Silk Road Associates, delivered the keynote address. “China’s hidden debt problems are manageable, but will drag on economic growth rates for years to come. Ten years ago China was able to shake off its bad debts through a combination of growth and inflation. But nominal growth rates have since halved making today’s challenge much tougher.”
In his speech, Simpfendorfer noted that “commercial hotspots will outperform and investors will increasingly differentiate between regions.” Simpfendorfer was the former Chief China Economist for the Royal Bank of Scotland and Senior China Economist for JP Morgan.
Bryant Edwards, a corporate partner at Latham & Watkins in Hong Kong and Vice Chair of the Credit Committee of ASIFMA, added: “We heard a wide range of opinions today about where China and the rest of Asia are headed. There was consensus that better procedures and legal frameworks are needed to minimize the destruction of value that often occurs in distressed situations in Asia.”
Robyn Meredith, Managing Director of REORIENT Financial Markets Limited and best-selling author, moderated the keynote bull versus bear debate on the future of China between two market commentators: Louis-Vincent Gave, CEO of GaveKal Research, and Gordon G. Chang, China Correspondent for Forbes.
The conference also featured a series of panels that focused on a wide range of topics, including:
- is China headed for a credit crunch and how vulnerable is China to a banking crisis;
- the outlook for real estate investors and how exposed is the market to a banking and debt crisis;
- the opportunities for private equity in distressed market conditions;
- the risks facing holders of offshore Chinese bonds;
- Suntech as a test case for China’s bankruptcy laws; and
- the lessons from recent European and Middle East restructurings.
“Market estimates point to $100 billion plus of private equity capital remaining to be spent in Asia. Restructuring situations in China, Japan and elsewhere in Asia may represent a significant opportunity to deploy some of this dry powder,” said Tim Gardner, a partner in Latham & Watkins’ Hong Kong office and moderator of one of the panels.
"As a barometer of the health of the wider economy there's growing concern that the real estate sector in China may represent a bubble that could trigger a financial crisis," said Rowland Cheng, Office Managing Partner of Latham & Watkins' Shanghai office who moderated a panel discussion on the topic.
John Houghton, Global Co-chair of Latham & Watkins' Insolvency Practice and head of the European Restructuring and Insolvency Practice, added: "There are lessons to be applied to Asia which can be learned from Western Europe, which has a well-established insolvency regime, and the Middle East, which had to rapidly develop insolvency laws to deal with large scale corporate restructurings in the wake of the financial crisis. Clearly in any Asian restructuring boom there will be a lot of common themes with Europe, such as the importance of the distressed debt investors in bringing liquidity to the markets, but also a number of cultural differences of which people would be wise to be cognizant."
The “Maximizing Outcomes in Upcoming Asia Restructurings” was jointly organized and hosted by ASIFMA and Latham & Watkins, and the summit took place in Hong Kong on November 5, 2013.
About Latham & Watkins LLP
Latham & Watkins is a global law firm with approximately 2,100 lawyers in its 32 offices located in Asia, Europe, the Middle East and the United States. With over 100 legal professionals operating from the five principal commercial and financial centers in Asia in Beijing, Hong Kong, Shanghai, Singapore and Tokyo, Latham offers clients US, English, Hong Kong, Singapore and Japanese law advice. Latham is consistently ranked in the top tier by leading legal and business publications such as The American Lawyer, Financial Times, mergermarket, Chambers and Partners, The Legal 500 and Asia Legal Business. For more information on Latham & Watkins, please visit the website at www.lw.com.
The Asia Securities Industry & Financial Markets Association (ASIFMA) is an independent association that promotes the development of liquid, efficient and transparent capital markets in Asia and facilitates their orderly integration into the global financial system. ASIFMA priorities are driven by over 50 member companies involved in Asian capital markets, including global and regional banks, securities dealers, brokers, asset managers, credit rating agencies, law firms, trading and analytic platforms, and clearance and settlement providers. ASIFMA is located in Hong Kong and works closely with global alliance partners: the Global Financial Markets Association (GFMA), the Securities Industry and Financial Markets Association (SIFMA) and the Association for Financial Markets in Europe (AFME). More information about ASIFMA can be found at: www.asifma.org.
Bryant Edwards, corporate partner, Hong Kong +852.2912.2684
Tim Gardner, corporate partner, Hong Kong +852.2912.2565
Rowland Cheng, Office Managing Partner, Shanghai +86.21.6101.6123
John Houghton, Global Co-chair of the Insolvency Practice and Head of the European Restructuring and Insolvency Practice, London +44.20.7710.1847