Shanghai's STAR board is introducing a more market-driven approach to China's initial public offerings. Listing on the STAR market is more streamlined than the traditional process in China, where new listings are subject to an informal price cap of 23 times earnings and a 44% ceiling for first-day gains. Before the Shanghai STAR Board was launched it July 2019, it could take many years before companies' plans to go public were approved. Now a flurry of tech listings on the Shanghai STAR market are shaking up China's capital markets.
Before covid-19, the sky seemed to be the limit for Australia's virtual banks. They were rapidly accruing users, in some cases surpassing their own forecasts. Venture capital kept flowing into their coffers. The pandemic slammed the brakes on the neobanks' ascendancy. Demand in Australia remains for innovative digital banking services - if the neobanks can survive the downturn. Since the neobanks are startups built for fast growth, rather than steely resilience, they face a long road ahead.
The Philippines has not raced to go cashless. Efforts to digitize the financial system got underway nearly two decades ago, but have made limited inroads. Cash still accounts for 90% of transactions, according to the Better than Cash Alliance, and looked like it was going to remain dominant - until the pandemic. Within a few months, the payments landscape has changed dramatically in the Philippines, with digital payments emerging as a must-have.
The pandemic has disrupted Malaysia's digital banking plans, but the ensuing delay may be a boon for interested firms that now have more time to select partners. The original contenders for up to five digital bank licenses include ride-hailing giant Grab, telecoms juggernaut Axiata Group Bhd (owner of e-wallet Boost) and the banks CIMB, Affin Hong Leong, AMMB Holdings and Standard Chartered Bank. Those banks are now reportedly less interested in obtaining a license, while several non-financial firms may throw their hat into the ring: gaming giant Razer, conglomerate Sunway Group, telecoms company Green Packet. Hong Kong investment bank AMTD may also bid for a license.
For the IPO of China's fintech giant Ant Group, two listings are better than one. Instead of going public only on the Hong Kong Stock Exchange or the Shanghai STAR Market, Ant plans to list on both. Ant has not disclosed the size of its coming IPO, but the firm is reportedly valued at US$200 billion, up from US$150 billion during its 2018 fundraising. Ant reportedly plans to sell 10% of its shares through the twin listing, which could come this year or in 2021. An uncertain market outlook will inevitably weigh on timing.
Airwallex is among a handful of fintech unicorns that have closed huge funding rounds in the middle of the coronavirus pandemic. In April, Airwallex raised US$160 million from investors as its valuation climbed to US$1.8 billion. Airwallex was established in Australia in 2015 and while now headquartered in Hong Kong, is still considered an Australian fintech. The company has sought to capitalize on demand for cheaper cross-border payments services among SMEs in its home market, where the major banks are notorious for charging high foreign-exchange fees. Airwallex says that its machine-learning technology enables fast, inexpensive and transparent global payments.
Japan has been trying to digitize financial services for years, given the high costs of maintaining a cash-based economy and the need for convenient payment options during the upcoming Olympics. The government's"Cashless Vision" initiative that seeks to increase non-cash transactions to 40% by 2025 began back in 2018, well before the covid-induced cashless drive that's sweeping across Asia. Going cashless to promote hygiene would probably seem superfluous in Japan, a country already known for its exacting hygiene standards.
AMTD is stepping up efforts to build a regional fintech ecosystem in Southeast Asia and plans to take a controlling stake in Singapore's FOMO Pay, a payments solution provider. The FOMO Pay deal follows AMTD's recent acquisitions of the leading insurtech PolicyPal, and CapBridge, Singapore’s first regulated securities exchange for digital assets and private companies.
Southeast Asia's most valuable tech startup is coming down to earth at last, despite maintaining a sky-high valuation of more than US$14 billion. Faced with the pandemic-induced downturn, Singapore-based Grab is scaling back its ambitions and remarkably, cutting costs. That involves eliminating some superfluous business units and trimming about 5% of its workforce. Grab's professed goal is to rejig its operations to focus on three core businesses: ride-hailing, food delivery and digital banking. Its unstated goal is to get its finances in order so that its bid for a Singapore digital full back license is successful.
China's payments market is so big that U.S. credit-card giants reckon it's better to arrive late to the party than never. Although China's fintech giants Ant Group and Tencent control about 90% of the US$27 trillion payments market, the remaining 10%, at US$2.7 trillion, is not exactly chump change. Among the U.S.'s big three card companies, Amex is the first to have its clearing license approved for China. That first mover's advantage, coupled with cooperation with numerous local banks and payments firms, could give Amex an edge over Visa and Mastercard.
Australia launched its open banking regime on July 1, ushering in an era of increased competition and customer choice. The regime allows a customer of any of Australia's Big Four banks - National Australia Bank, Commonwealth Bank, Australia and New Zealand Banking Group and Westpac - to ask that their account and card data be sent to a third party accredited by the Australian Competition and Consumer Commission. In November, mortgages and personal loan data will be introduced, while smaller banks will join in 2021.
Cambodia's digital banking initiatives are increasingly on the money. The Kingdom has focused on fast-tracking digital banking to boost financial inclusion and develop the broader banking sector, which only serves a limited portion of the population. Just 22% of Cambodia's population of 16.2 million is banked. The good news is that fintech is bringing more Cambodians into the formal financial system. In 2019, active digital wallets in Cambodia jumped 64% to 5.22 million, according to a June report by the National Bank of Cambodia (NBC).
Taiwan's virtual banks were supposed to go live this summer but the coronavirus pandemic has delayed the launch date. The three neobanks, which include consortia led by Line Financial, Chunghwa Telecom and Japanese e-commerce giant Rakuten, will likely launch later in the year, according to Taiwan's Financial Supervisory Commission (FSC). The three neobanks have yet to start one-month operation simulation tests, a pilot period required by the FSC to ensure the banks are in shipshape.
By now it's a familiar story: COVID-19 is driving cashless payments adoption in Southeast Asia. As one of the region's key economies and recipients of fintech investment, Vietnam is a market to watch. What's notable about Vietnam is that it's better poised for an economic recovery than almost any other country because of how well it has controlled the coronavirus pandemic. While the rest of the world was in recession, Vietnam's economy grew 0.36% in the second quarter, beating a 0.9% contraction forecast by economists surveyed by Bloomberg.
The Singapore digital banking race is accelerating. The Monetary Authority of Singapaore (MAS) has winnowed down the applicant field from 21 to 14. While the MAS did not say which contenders failed to make the cut, observers close to the matter say that the consortia headed by Grab/Singtel, Sea, Razer and MatchMove have all advanced to the next round. Those four applicants are all bidding for a coveted digital full bank (DFB) license, which permits holders to serve both retail and non-retail customers. The MAS plans to issue a maximum of two DFB licenses.