China’s CICC eyes Southeast Asia expansion in bid to ease domestic woes

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, said its investment banking head, as a slump in deals at home hurts its prospects.

Founded in 1995, the Beijing-based investment bank currently has a presence in seven international financial centers outside of mainland China, including in Hong Kong, New York, London and Singapore.

State-owned CICC opened a representative office in Vietnam in June, extending its presence in Southeast Asia, home to several fast growing economies.

CICC, China’s oldest investment bank and also one of its largest, has been badly hit by shrinking dealmaking activities in the mainland and Hong Kong due to a slowing Chinese economy and rising geopolitical tensions.

“CICC is looking to expand its presence in other (Southeast Asian) regional markets next,” Wang Shuguang, a member of the CICC management committee and head of the 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 clients grow,” Wang, who heads more than 2,000 investment bankers at CICC, added.

Wang did not disclose how much CICC plans to invest or how many people it will hire for the push into Southeast Asia. He also did not mention any targets for revenue or deals from the region.

At its main markets of China and Hong Kong, CICC has slashed banker pay and considered reduce staffing levels. The investment bank has also suffered a slide in profit and in its stock price.

Other investment banks in China have also been similarly hit, sparking a rush among Chinese and Wall Street banks to tap business opportunities in other Asia Pacific markets.

MAGNET FOR INVESTMENTS

Southeast Asia has been a magnet for global investments over the last few years, driven by the region’s fast growing economies, its young and digitally savvy population, and its improving infrastructure.

Thus, despite the gloom on China-linked dealmaking activities, the country’s outbound investments into Southeast Asian countries rose 27% in 2023 from a year earlier, according to a report from the Griffith University. Indonesia was the top recipient of that with about $7.3 billion.

CICC, in which top Chinese technology companies Tencent and Alibaba (NYSE:) are strategic shareholders, sees significant opportunities in private fundraising for local unicorns and startups in Southeast Asia, Wang said at the firm’s China-Southeast Asia economic and finance forum in June.

Other opportunities include the rise in cross-border investments from Chinese companies, particularly in sectors such as consumer, technology, media, telecom, fintech, logistics, and electric vehicles, in Southeast Asia, he had added.

Reuters reported in May that CICC may reduce its investment banking headcount by at least 10% this year, affecting more than 200 bankers at home and in Hong Kong, where most of its offshore staff are based.

CICC shares have tumbled by about a fifth so far this year after falling 23% last year.