Macau’s financial industry provides a vital nexus between the city and the global economy, and a crucial connection to the mainland for business and support. The city’s transformation over the past decade has put the industry on the fast-track to growth.
Among those forging a future in the sector is Chau Ho Kei, sales and marketing department manager for AXA Insurance Company (Bermuda) Limited.
He joined the financial industry with a Bachelor of Business Administration from the University of Macau, and believes financial markets can broaden people’s world vision and provide insights into the global economy and current affairs.

Professional skills
Proper professional qualifications and a grasp of what is going on in the world are crucial for anyone who wants to prosper in the financial world, and Chau worked hard to gain his fund investment strategist (US), fund investment adviser (US) and Chartered Marketer (UK) certificates.
He says the banking and insurance sector form the two key pillars of Macau’s financial industry and exist alongside a small number of local securities firms. Before gaming liberalisation, the banking sector was mainly driven by the local economy and real estate development, with profit derived from lending margins.
But the casino revolution saw the emergence of foreign enterprises and mega-scale construction projects, creating more business opportunities.

More demand
Since the first large foreign gaming enterprise was launched in 2004 and started paying higher wages, the demand for financial products and personal insurance has grown substantially. For Chau’s company, this has translated into double-digit growth each year since 2005, with turnover climbing to US$64 million in 2008, ranking it as the third highest according to the Monetary Authority of Macau (AMCM).
“The export-oriented economy of Macau is easily affected by external factors. But through the Asian financial crisis in 1997 and the global financial crisis in 2008, Macau people have been confident about conquering the challenges,’’ says Chau.
“Now, with sustained demand for financial products in the local market, the personal retail financial service is more likely to turn into cross-selling, making us similar to Hong Kong. Banks not only generate non-interest income, but also proactively expand their businesses to personal wealth management services, including the sale of insurance, cultivating an entirely different operational situation compared with before the handover,’’ he adds.

Offshore investments
Macau people are more likely to invest in security markets in the mainland and Hong Kong, which account for 50 percent of total offshore investment, according to an AMCM study in 2007. Other statistics show only 10 to 20 percent of Macau people invested in stocks in Hong Kong before the handover, though this increased when the Hong Kong stock market rose to 30,000 points in 2007.
However, the voluntary provident fund scheme proposed by the Macau SAR government has enhanced people’s awareness of retirement planning and financial management. But it is still fair to say that people tend to manage their wealth “on a wing and a prayer” rather than with strategic planning.
From a professional point of view, Chau says people used to think that “as long as they kept body and soul together, they could engage in the insurance sector”.
“Professional qualifications were not required before the handover and every insurer had a different way of operating. So, in January 2002 the government announced that insurance agents would be required to be licensed, in order to gradually improve the quality of the industry.
“Since then many insurance agents have acquired international qualifications such as Certified Financial Planner,” he adds.
Chau believes professionalism, regulations and ethical operations are the way forward for the industry in the wake of the Lehman Brothers collapse and money scandals linked to the global financial crisis.

Numbers don’t lie
Bank of China deputy general manager for corporate banking, Yueng Chi Kuang believes that “the numbers don’t lie’’ and tries to use statistics to illustrate the progress of the financial industry over the past decade.
He says overall profits for banks in Macau rose from US$1.7 billion in 1999 to US$3.39 billion in 2008, while the number of loans and deposits increased 2.5-fold.
“It can be seen that the operational environment in the financial industry has undergone dramatic changes since the handover,’’ he says.
After leaving high school in 1984, Yeung entered the banking sector. He finished a Master’s degree in Corporate Management from the Sun Yat-Sen University on the job.
Yeung says economic development is closely linked to the financial industry. Macau’s GDP in 2008 was MOP171.8 billion, 3.6 times higher than that in 1999, and the per capita GDP increased to become the second highest in Asia after Japan.

Historic growth
He also cites a string of figures depicting the historical growth of banking sector.
“In the decade after the handover, total loans and deposits went up and non-performing assets dropped. As foreign enterprises flooded in, enormous sums were needed to finance projects. Though the lending scale was too large for the Macau banks, fellow banks made profits.’’
Yeung says bank customers come from all over the world nowadays. As a result, the standard of banking services and products, as well as the quality of banking employees has improved.
While Macau’s official languages are Chinese and Portuguese, English is the common language of the international financial market. Furthermore, there is a surplus of legal talent.
These factors make it difficult to keep up with international standards, so a lot of hard work needs to be done.

Central database
He also thinks the government should establish a central credit database which keeps a record of individual’s and enterprise’s credit information. Banks could easily access the credit status and evaluate the risk of repayment, further protecting the interests of banks and depositors.
If the transparency of enterprises’ credit information is enhanced, banks can better grasp an understanding and analysis of their business, which will lead to a win-win situation.

Home is China
Yeung believes “home is where the motherland is” and the mainland has a huge impact on Macau’s financial sector, more so than Europe or the US, and as a result, banks in Macau have made remarkable achievements.
He also believes there are more opportunities than difficulties ahead for the financial sector and contends that the mainland will be the first to recover from the global financial crisis. In fact he makes a prediction that this will happen by next year and will lead to the steady development of Macau.
For the financial industry, he hopes Macau can develop as a financial management centre for the Pearl River Delta as the SAR positions itself as “the world’s leisure and tourism center”.

by Yuci Tai