Affin Hwang sets sights on new heights

FRESH off a significant acquisition last year, Malaysia's Affin Hwang Capital has hefty ambitions to top the tables in investment banking, asset management and equity sales in its home market in five years' time, and double its revenue within the same period.

Maimoonah Hussain, this year's winner of the Singapore Business Awards' best chief/senior executive of a foreign company, will lead the charge, after orchestrating the acquisition by Affin Holdings of the investment banking and asset management assets of HwangDBS for RM1.36 billion (S$507 million) last year.

Says Mdm Maimoonah in an e-mail interview: "Each of the group's five core units - investment banking, asset management, institutional equities, retail equities and operations support - aspires to be No 1 in their respective areas within five years."

"An aspirational target of hitting one billion ringgit of revenues in five years is also part of this ambition - we recognise this is a very ambitious target, representing a doubling of our revenues in a market that is increasingly more competitive day by day, but we believe in setting a high bar to realise value for our shareholders and also to set appropriate transformation benchmarks for our staff."

CLIENT MANAGEMENT

But this will mean a hard look at the way that customers are served at Affin Hwang - the largest equities brokerage in Malaysia - particularly as clients become savvier.

"Clients today are more informed, and demand more value from their advisers. There is no place left for players who produce carbon-copy, one-size-fits-all vanilla solutions for their clients," says Mdm Maimoonah, who joined the group in 2003 from Standard Chartered in Singapore.

For example, Affin Hwang is clear that, to attract younger investors, more focus needs to be put on the online brokerage model.

"The previous model of a remisier-led market is slowly giving way to a new breed of younger, more tech-savvy investor base where the core competencies are shifting from being more relationship-focused towards a model of personal trading and accessibility," says Mdm Maimoonah.

"Here, it is clear to us that the next push will come in the online brokerage space, where being able to develop a convenient, reliable yet highly differentiated online offering will separate the winners from the losers. We are making a big effort to start understanding the needs of this market segment, and developing a model to meet these needs."

As for institutional investors, they are pushing to seize regional and global investments. "Many of the largest Malaysian institutional players are being encouraged to diversify their portfolio with international assets. This is driven both by push factors, such as the Malaysian government directive to increase non-Malaysian portion of portfolio, and pull factors - for example, due to the relative size of these players and potential crowding-out effect in Malaysia, these houses need to find opportunities outside Malaysia to continue generating the level of return required," observes Mdm Maimoonah.

"In a sense, here we are playing a bit of a catch up game as many of our Malaysian peers - including the likes of Maybank and CIMB - had already started to make a regional push many years ago."

Under Mdm Maimoonah's leadership over the last eight years, the group has already gone through "strategic refocus" of its merchant banking and securities teams. It has established a multi-disciplinary investment banking client coverage team, and expanded the domestic network of the retail securities business.

Affin Hwang's investment bank was ranked last year as the top brokerage by both traded volume and traded value by Bursa Malaysia, with its market share in trading value at about 12 per cent.

In the same year, it was named the best equities investment bank and the best institutional equities investment bank at Bursa Malaysia Broker Awards.

MAKING INROADS

And Affin Hwang is banking on its larger size today as well as its 2013 alliance with Daiwa Securities Group to facilitate cross-border institutional equity trading and distribution of co-branded research, to stand out amid the competition.

"We are already making some inroads, particularly given Daiwa's Asia-Pacific, and Japan specifically, focus, as we are able to offer a slightly differentiated menu to our clients compared to houses whom traditionally have only focused on Western markets," says Mdm Maimoonah.

Meanwhile, the changes in the securities market also come amid weakening capital market activities.

"We have always positioned our business for the long run - we do not believe in trying to second guess short-term cycles and macroeconomic gyrations, as this would be an irrelevant parlour game yielding no benefit to our strategy whatsoever," says Mdm Maimoonah.

"That being said, one of the core tenets of our merger was to create a business that was more diversified from an income perspective, making it better-equipped to ride out the vagaries of economic cycles," Mdm Maimoonah adds.

"Today, with the Hwang merger, we believe that we have gone some way towards achieving this goal. For instance, the market-linked performance of our merchant banking and securities businesses are nicely counter-balanced by the more stable and predictable nature of our asset management business, where assets under management (AUM) tends to be stickier and therefore, income is more predictable."

Notably, it is projecting a growth rate of 13 per cent to achieve RM50 billion in AUM by 2019, with growth coming from its retail, government-linked companies and high net worth individuals segments.

WHAT THE FUTURE HOLDS

"Demand for regular fixed income products will continue to be strong in the retail segment. We also cater to clients seeking to diversify their currency holdings positions into the Australian dollar and the Singapore dollar," she says.

"For clients who are seeking higher growth investments, we offer small (and) mid-cap Asian, as well as large cap funds, such as the Affin Hwang Select Asia Opportunity Fund. We will also focus on increasing our current suite of syariah compliant products to meet the needs of the bumiputra segment."

To boost sales further, it opened a new branch in Malacca. And in November last year, it became the first Malaysian company to launch a Luxembourg-registered Undertaking for Collective Investments in Transferable Securities (UCITS) fund. Such a fund can be sold in all countries that belong to the European Union. Correspondingly, it launched two Asian equity focused funds - Affin Hwang Select Asia Opportunity Fund and Affin Hwang Select Asia Quantum Fund.

"The alliance with Daiwa will also, we believe, help us to improve the resilience of our business. Essentially how this works is while other purely domestically-focused houses worry about turf wars in a declining market, fighting for smaller scraps from the table, we will hopefully be able to explore opportunities stemming from outbound or inbound transactions," Mdm Maimoonah observes.

"Although we cannot completely eliminate the linkage between our business performance to that of the performance of our home core market, our hope is that this strategy will make us less vulnerable to and dependant on the idiosyncrasies of a single market."

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