Sometimes companies say what they mean, and what they then do ends up confirming the central message.
And sometimes that message from offshore has meaning in Australia and is one that Australian investors should remember.
Take what HSBC, one of the world’s major banks, is doing at the moment.
Last month the bank surprised by revealing that CEO, Michael Geoghegan would move to Hong Kong to run the bank and assume greater control over its strategy.
The bank would not abandon its UK HQ, where chairman, Stephen Green remains.
But the message was clear: Asia and its emerging markets (not Japan) were the future.
Seeing it has been in Asia for decades, there’s also a sense of returning to its roots.
Then yesterday Mr Geoghegan popped up in the Financial Times with perhaps the gloomiest comments from a major bank CEO for months.
"Michael Geoghegan, chief executive of HSBC, is so convinced there will be a second downturn in the coming months that he plans to delay any rush to expand the bank," the FT reported.
“Is this a V recovery or a W?” Mr Geoghegan asked in an interview with the FT. “[I think] it’s the latter. [If I’m right], we have to be very careful we don’t grow the balance sheet so far before the recovery has come only to write it back into the impairment line later on. I’m cautious about growing too fast.”
“I’m not as convinced we’re through the worst as others are. The reality is that profits will be quite reduced.”
The FT interview makes clear why the HSBC decided to locate the CEO in Asia.
The bank had a huge presence in Asia from its fabled HQ in the city before it decamped for London after buying Midland Bank, then it expanded in the US, where it lost the best part of $US60 billion because the business it bought sold subprime housing loans, subprime credit cards and car loans, and these have mostly gone bad.
But on Monday HSBC said that it had sold its New York headquarters building for $US330 million and will lease back the entire office tower for a year.
It expects the sale to be completed by the first quarter of the new year.
It has plans to retain New York as headquarters for the US operations and has agreed to lease the first 11 floors of building, for 10 years.
While not a HQ for the entire group, it’s a further recognition that the bank is retreating from the US and the very expensive adventures there and consolidating in Asia, then Europe.
That $US330 million will be deployed in Asia to grow the business, make a takeover, and expand the bank’s already large presence.
HSBC is said to be a prime candidate for an approved acquisition in mainland China and it wants to be the first foreign company to list on the Shanghai stock exchange, possibly in the first half of 2010.
The HSBC move is justified by research from its economics team titled, "The Tipping Point — The rise of the East and Demise of the West".
HSBC says emerging nations will dominate world economic activity in the years ahead.
A key reason is the debt burden of the developed world. It says that recent policy may have stabilized financial markets in the West, but individuals and governments remain awash in debt.
With banks no longer enjoying the easy funding conditions of old, profits will come under pressure.
Money will flow into Asian markets looking for superior returns and HSBC is positioning itself to grab some of this.
So what has this to do with Australia?
HSBC has had a small bank and finance operation in Australia.
Its Wardley merchant bank funded the likes of Alan Bond in the 1980s in Australia and Asia. It also invested heavily in property and lost heavily in the collapse in the 1990’s recession and shakeout.
It walked away from Australia after that experience, maintaining a low key banking business that has grown as our links to Asia have grown.
Could a move to grow in Asia to expand its links be on the cards?
Of all the Australian banks, the ANZ is positioning itself to be a substantial Asian player.
Our other banks are anchored in Australia (although the CBA has a solid involvement in Indonesia).
But Australia, as a whole, is positioned to ride, exploit and make money from the Asian boom that HSBC is seeking to exploit.
Of the other major economies only Canada has the same product line up, with energy and lots of metals, the very things emerging Asia want and will want for the best part of the next 50 years to a century.
The Reserve Bank has been telling us this now for the best part of three years.
It’s something to remember after the first rate rise from the RBA: it’s going to be all about growth and trying to ensure we don’t blow it all by inflating all our gains away in higher house prices, wages and silly government taxes and charges.
