- 1 week ago
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00:00Your business is doing very well, almost across all verticals.
00:04I alluded to trading just now in the trading business.
00:07Equities have been doing well.
00:09FIG has been doing well.
00:10How have things been on the trading side of things?
00:12It's been a very strong period, and that applies, as you have probably said, to all our businesses.
00:17And so, of course, we continue to remain very vigilant around the risks in the marketplace,
00:21but I can tell you that trading remains pretty strong.
00:24I think we definitely saw the first half at levels that, from a volume point of view,
00:29were two and a half times what they were two years ago.
00:31So you really see a lot of strength.
00:33It's moderated a little since then, but still remains elevated.
00:37Right, and I think we've had a bit of a wobble in July on price, just generally speaking,
00:41but it's been obviously very volatile as well.
00:43I mean, very small sample size we have so far of the second half.
00:46I think we're about two months in.
00:48Give us a sense of what's happened.
00:49What's stood out to you so far across all your businesses?
00:51Well, across all our businesses, I think we remain pretty positive.
00:54I think if you look at the standout performance of equity,
00:57which is follow-ons, issuances, you saw in the first half $266 billion of issuance.
01:04That's up over 60% year-to-date versus the prior year.
01:08July alone, $89 billion.
01:11Wow, OK.
01:12Those kind of numbers are clearly at the very upper end of history.
01:17Will it remain at that level?
01:19We'll see.
01:19But certainly the pipelines remain relatively full.
01:22So if you look at it from that point of view, I think we remain pretty confident as the year
01:26unfolds.
01:27I think certainly the trading, we've already discussed trading.
01:29Trading remains strong.
01:31And we therefore remain pretty confident that the interests and the themes that have stoked that level of activity remain.
01:37Namely, the AI theme, a lot going on there.
01:39I'm sure we're going to talk about that.
01:41Secondly, quants have very much looked at Asia.
01:44So the quants have brought a lot of capital into this part of the world.
01:47And thirdly, in parts of the region, we see governance reform, Japan, Korea, that continues.
01:53And so in that context, a lot of strength.
01:55And of course, that's before we discuss private wealth, where you've got a generational wealth transfer taking place,
02:01or asset management, where there continues to be a search for returns.
02:04So across the piece, yes, it's a moment in time when things are relatively strong and the outlook remains robust.
02:10On the banking side, on all this fundraising that's going on, whether that's in the credit markets or the equity
02:16markets and the follow-on offerings,
02:18are we barely scratching the surface here?
02:20The reason I ask you that, just to caveat, is, is there also, do you get a sense that there
02:25is enough in the market to absorb all of these companies
02:28and all your clients that want to raise money?
02:30And it's understandable they want to do so at this point in time.
02:32Well, there's a lot of demand and there's a lot of need.
02:35And when those two things coincide, you get activity.
02:37And that's where we are right now.
02:38And we follow our clients to a large extent.
02:40I think one of the things we've sought to make sure is that there is capacity to absorb this extraordinary
02:46level of demand
02:47that the AI theme in particular has generated.
02:50And I think in that context, I would say to you, yes, we remain relatively confident that the market can
02:56absorb.
02:56It's been a bit of a correction in the third quarter on the equity side.
02:59But even so, we continue to see activity levels remain high and need will not reduce.
03:04At this point, the need remains high.
03:06And I think that's ultimately what is driving this.
03:09The capital markets have depth.
03:10That's particularly true in the U.S., of course.
03:13But here in Asia, it's also true.
03:14We've seen a lot of liquidity come into the market.
03:16And a lot of what's happening here in Hong Kong or onshore in China reflects that.
03:20And so, yes, I think at the moment, the markets remain well-placed to absorb the amount of requirement that
03:25there is.
03:26What's your sense of appetite among foreign investors for all the listings in Hong Kong and perhaps some of the
03:31listings that they can buy in the onshore markets in China?
03:34Well, foreign investors are going to have a high bar in quality.
03:37And I think that's what we have seen.
03:40Appetite remains high.
03:41If you look at the listings and you look at who the anchor investors are, it's pretty much a who's
03:45who collection of global investors.
03:47And I think that's stood true across a broad swathe, whether it's in the consumer space or the soft tech
03:53space.
03:53Of course, there are parts of the market which remain relatively more anchored to domestic investors.
03:59But on the whole, one of the things that has stood out, of course, has been the return of the
04:03global investor to the region over the course of the last 9 to 12 months.
04:07Right. And you guys are, I think we alluded to this at the start of the interview, firing almost in
04:12all cylinders.
04:13Is there a specific risk that you're looking to manage as things do look very good, I have to say,
04:19just about across the board?
04:21Well, as you say that, going through my head, what could possibly go wrong?
04:24Right.
04:25And that's a question we ask every morning.
04:26OK.
04:27I think the reality check on all of this is things do go bump in the night.
04:31But that's one of the experiences, being in this business for a long time, when it is strong and good,
04:36you have to increase your risk discipline.
04:38And so we're looking pretty much across the priests.
04:40Of course, we're looking for bad actors.
04:42We always do that.
04:43We're looking for interventions that could shift the way in which policy shapes the marketplace.
04:48We, of course, are well aware of the geopolitical context in which we operate.
04:51We're not short of risk to keep an eye on.
04:54But the strength of this market, I think thus far, at least, has offset more than offset those risks.
04:59But we remain vigilant.
05:00I think you were, was it APAC 18%, 1.8% of the group's revenue in the last period?
05:07Do you want to see that increase?
05:08I would imagine so.
05:10Do you look like you have a path to get there?
05:12Well, look, the great news is Goldman Sachs had an exceptional first half, a very strong first half.
05:17And yes, in our public numbers, we were 18%.
05:19So that was a high mark for ourselves here in the region.
05:22But it was also a high mark for Goldman Sachs globally, which gives you a sense of the momentum in
05:27the business across the world.
05:28I want Goldman Sachs to do well globally.
05:31If that means that Asia is going to play its part and drive a little bit more of the growth,
05:35well, that maybe is to be expected.
05:36This is the growth region.
05:38As you well know, the numbers are out there.
05:3960% of global growth happens here.
05:42So we should expect a little more from Asia.
05:44And I hope that will continue.
05:46And just more granularly, across geographies, does anything stand out to you as a really fast-growing part of the
05:51franchise here?
05:52I love all my children equally.
05:54And this has been the moment that we're in.
05:56And then the one outperforms the other.
05:57Well, the reality is we've had a moment in time when, look at the strength in Japan, look at the
06:02strength in Korea, look at the strength in China, look at the strength in Taiwan.
06:06The list is long.
06:07And I think it's hard to say that any one of those is going to take a different growth path
06:12at this moment in time.
06:13They're all well set.
06:14And that's why I think when I look at the region as a whole, it is a moment when you
06:20really do have most geographies operating at higher levels of performance.
06:24And places like Australia, which have been a little bit sluggish, actually on the M&A front, it's now setting
06:30the pace.
06:31So things can change too.
06:33Where are you in headcount?
06:34Did you increase headcount this year?
06:35Because everything's gone well.
06:36We're hiring.
06:37You know, we are out there hiring.
06:39One of the things I always say to my colleagues about headcount is remember two things that really shape how
06:44to think about headcount in this moment.
06:46The first is we did not seek to cut our footprint dramatically when things were not the way they are
06:51right now.
06:52So the footprint was preserved, which gives us a foundation.
06:54And the second point is a lot of our businesses do not scale with headcount.
06:59They scale with technology.
07:00And one of the things we've been doing here in this region is investing in our technology infrastructure.
07:06Yes, because of AI, but also because we saw an opportunity to close some gaps, to reset and improve the
07:12technology offering that we have.
07:14And that gives us a lot of capacity for growth that we're using right now.
07:18Right.
07:18And what have we learned, at least as far as you and you look at your operations stack internally, what
07:24have we learned about AI and how it improves how you guys do things or how you serve your clients?
07:28Well, I think we've learned a few things.
07:30First and foremost, AI is not just about a technology.
07:34It's about processes, simplifying, streamlining processes.
07:37That's part of what leads to the productivity game enabled by AI.
07:41And we're doing just that.
07:42So if I look at the way in which we're leveraging it within engineering, where we've seen very strong impact,
07:47as much as 20% in some cases, of efficiency gains from our software engineering, we're also looking at some
07:53of the core processes, how we onboard our clients, how we manage our vendors, how we engage on a sales
08:00side.
08:00It's all against the backdrop of looking for that process improvement and finding ways to serve our clients better.
08:06The other thing I think we've learned is it's a productivity tool in the sense that it helps colleagues.
08:11I don't think we're going to be replacing some of the people that interface with our clients.
08:16Clients want more interaction.
08:18But we can certainly bring tools and devices that leverage AI and make that interaction more productive, more efficient, and
08:25better for our clients.
08:27It doesn't replace colleagues everywhere.
08:28It augments what they do.
08:30It gives them more capacity and capability.
08:32And I think we've learned that AI is going to sit alongside a lot of our frontline teams and help
08:38them do more.
08:39And, you know, when this whole AI story began, like my immediate thought was how does this change the day
08:47-to-day of an analyst in the nitty-gritty work?
08:49What have we learned about that?
08:50Just quickly, just quickly.
08:52Well, it does.
08:52I mean, I go back to when I was an analyst and you're sitting putting together data and you have
08:57this eureka moment.
08:58You were there too.
08:58You have the eureka moment.
08:59My goodness, I figured out the market share.
09:02There's no eureka moment now anymore.
09:04It's a press of a button.
09:05That's a little bit of an anti-climax.
09:06We have absolutely learned that you can indeed do a lot more than just automate.
09:11You can improve the quality of the output.
09:13And you don't need your analyst to be sweating the chart.
09:17Instead, what they can sweat is the idea.
09:19What is it we should engage our client on?
09:21How do we bring to them something that will really make a difference to their performance, their value?
09:26And that is what, across GlobalSats, we're actually very focused on, is giving our colleagues this extra boost so they
09:33can do more and better with our clients.
09:36And I think we've learned that that's actually where the big opportunity stands.
09:40Better client experience, better production from our side makes a better outcome for everyone.
09:45That's a big focus.
09:46And, of course, we've also learned you can streamline and change processes.
09:50But to do that, you've got to take an end-to-end view.
09:53You can't just dive in and do one little process here or there.
09:56And I'm particularly pleased that the approach we've adopted is really now beginning to appear to show real value because
10:02we've taken a more holistic model.
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