Macquarie eyes China growth, despite trade tensions

Macquarie Group has played down the risks to its business in China from the mounting trade tensions between  the world’s two biggest economies, as it eyes the opportunities created by Asia's rising middle class and a global infrastructure splurge.

After regional heads of Macquarie briefed investors on Tuesday, Ben Way, chief executive of Macquarie Group Asia, signalled the bank remained focused on long-term growth potential of China, alongside Japan, Korea, Taiwan, and India.

Ben Way, chief executive of Macquarie Group Asia.Credit:Louie Douvis

“Like everyone in the market, we’re watching the constantly changing geopolitical trends, and clearly there is heightening tension geopolitically in terms of the trade wars,” Mr Way said.

“I don’t think, personally, for what we do, that’s really affecting our business at this time. So I think that’s more a geopolitical issue between two sovereign nations than a business issue.”

Mr Way, who has been based in Asia for more than 18 years, said the region was the biggest "growth engine" behind a global build-up of capital, due to the rise of its middle class.

As some of this capital is poured into a wave of infrastructure projects across the world, this creates opportunities for the Sydney-based investment bank, a leading specialist in infrastructure and energy financing.

Asked about the risks created by the trade war between China and the United States, Mr Way said the bank was targeting areas where it had a distinct advantage over rivals, but it was focused on China's long-term potential.

These people are not cufflink-wearing excel jockeys, these are people in hard hats and steel-cap boots.

“Obviously trade tensions cause some concern for business and it can affect businesses’ confidence, and potentially over time we may see an impact on growth because of the trade wars. But at this time we think China is a market that we have had a track record in for 25 years,” Mr Way said, pointing to its offices in Beijing, Shanghai and Hong Kong.

About 12 per cent of the revenue Macquarie makes is booked in Asia, but this figure does not fully reflect the importance of the region to its operations, as Asia has become a key source of capital for its infrastructure funds.

In a presentation to investors, Macquarie executives highlighted infrastructure opportunities across the region, including renewable energy, or infrastructure such as roads.

Mr Way noted that Macquarie Capital has been hiring more staff in countries including Singapore, Taiwan and Japan for developing assets such as offshore wind or solar –  and many of the new employees were not typical bankers.

“These people are not cufflink-wearing excel jockeys, these are people in hard hats and steel-cap boots that have experience in pouring concrete foundations under the surface of the ocean for offshore wind, they’re people who’ve got expertise in environmental and health and safety, all those sorts of things,” he said.

Macquarie has $58 billion in assets under management in Asia, about 12 per cent of the group’s total.

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