Tim Human talks to William Wang, head of IR at digital assets company BC Technology Group, about being on the wrong side of market sentiment
William Wang, BC Technology Group
In the first half of 2022, BC Technology Group was the epitome of out-of-favor stocks. As a small-cap, Hong Kong-listed, technology business focused on crypto, it sat at the nexus of everything investors were trying to avoid. But sentiment may be turning. China and Hong Kong stocks, now sitting at historically cheap levels, are back on the radar of international investors (see Investors warm to Chinese equities). Tech companies, too, are attracting buyers again. And the crypto industry is hopeful that the worst of 2022 is behind it, following the collapse of the Luna token, which cost investors tens of billions of dollars, and a string of bankruptcies among major players.
In fact, the turmoil may have boosted BC Technology’s appeal. The group’s main business, OSL, provides digital asset services to professional investors, such as prime brokerage, custody and an SaaS platform.
While others in the crypto world have viewed regulation as an afterthought, BC Technology has tried to stay on the right side of the authorities. In December 2020, OSL received two licenses from the Securities and Futures Commission (SFC), Hong Kong’s financial regulator, allowing it to conduct certain broker services focused on digital assets.
In this interview, William Wang, head of investor relations at BC Technology Group, talks to IR Magazine about negative market sentiment, managing the crypto crunch and how to find opportunity in adversity.
How did you get into IR? I definitely didn’t expect to go into IR. I actually began my career with my own start-up with a couple of elementary school friends. Back in college, we developed a social media aggregator tool for marketers, called Tint, which was later sold to a private equity firm.
At that point in time, we were a small team of five and I was wearing multiple hats, including business development, operations and finance, because the rest of the team were engineers and designers. That was really my first exposure to companies and investors, and dealing with financials.
After we sold Tint, I went fully into finance. I was working at a Hong Kong hedge fund, which was then the largest shareholder of Chinasoft, the Hong Kong-listed IT services company. It was starting a new business, which was like Uber for engineers in China.
When the CEO realized I had start-up experience, and I realized I didn’t want to be a typical investment analyst (I enjoy human interaction more than analytical work), I joined Chinasoft as a product manager for the new business.
The new business then became the centerpiece of the equity story for Chinasoft and, given my ability to speak English, outgoing personality and financial background, the CFO asked me to go on different roadshows with the company.
Slowly from there, I began to integrate more and more into the corporate finance function – and into investor relations.
We are a crypto company, a tech company, a small cap and we’re based in Asia – definitely not the market’s cup of tea, at least not right now
How have macro issues been affecting investor sentiment this year? We are a crypto company, a tech company, a small cap and we’re based in Asia. These four things mean that whether looking at macro or specific industry conditions, we are definitely not the market’s cup of tea, at least not right now. At the same time, this is part of what makes us unique and puts us in a different position from other firms.
At heart, we are a regulatory-first-mindset crypto company. In fact, we are right now the only Type 1 [dealing in securities] and Type 7 [providing automated trading services] SFC-licensed crypto company in Hong Kong. And we’ve been the only one for more than a year now – that shows how hard it is to acquire these licenses.
For us, this is the best time to communicate and prove to our investors that our strategy and vision is correct – to build our company around compliance regulations. We’re looking at the long-term growth of the sector, rather than some of our peers, which may just be facing regulatory concerns now and getting hit by the market.
We are very lucky to have large institutions that share that vision with us, including companies like Fidelity and GIC. Fidelity, which owns about 9 percent of the company, has been accumulating through the recent market turmoil.
We position ourselves not only as an IR team that talks about the company, but also as the go-to guys for crypto-related topics. We definitely have the credentials for this: our leadership team has decades in traditional finance, and has been in crypto since the beginning.
People know we really understand what’s going on so we’ve put on more analyst days focused on crypto topics – not just the company – to build out that trust factor.
There have been job cuts and insolvencies in the crypto world this year. To what extent have you been fielding questions on these areas? As a regulatory-first exchange, we remain rather unimpacted by recent events. We don’t have any exposure to the high-profile cryptocurrencies or projects [that suffered problems], such as staked ether [a derivative token], Luna or USTC.
In fact, to demonstrate how rigid we are in terms of listing tokens on our platform, Luna didn’t make the cut.
But given recent macro conditions along with the indirect impact of these events, we have realigned our workforce. We had to have some lay-offs, about 10 percent-15 percent of the workforce, in order to focus on the most important parts of our business, which are the prime brokerage and SaaS. We definitely want to conserve our ammunition for a crypto winter.
People joke that everything in crypto moves five times faster than in traditional finance, so you really need to be on top of everything
What has it been like answering questions during this huge deleveraging in the crypto space? The market has been less than ideal in recent months, and even more so in the digital asset space. It seems like every week bad news comes out, and that has snowballed. A recurring theme is how to show investors that the digital asset space is here to stay and we are just in the early stages of it.
The space moves so fast. People joke that everything in crypto moves five times faster than in traditional finance, so you really need to be on top of everything. We are always answering questions like: what just happened? Every time you get a big downturn, especially like now, people get nervous.
How do you approach IR more generally? How is the team set up? As a small-cap firm, we have a small team of two reporting to the CFO. The division is split between public-facing (media and PR-related) and investors/analyst-facing. We work together closely on IR strategy, planning and goal-setting.
We usually take part in one conference per month, and host a crypto seminar or analyst day quarterly. We also continuously do non-deal roadshows and one-on-one meetings with investors, in addition to our twice-yearly financial results calls and roadshows.
In April 2021, we fully offset our carbon footprint from the previous three years through the retirement of voluntary carbon credits
How are you approaching in-person versus virtual meetings this year? Over the last year, I spent time in Singapore because it was so difficult to get into Hong Kong. We’ve started doing in-person meetings again in Hong Kong. But with Covid cases going up again, a lot of people are still very cautious, as many have family members who are at risk.
Online meetings are the norm at the moment. All the conferences in Asia are still virtual, which is a good indication of the appetite people have for virtual versus in person. I was in New York for a quick roadshow at the end of June/start of July, and actually caught Covid for the first time.
Aside from our regular conferences, analyst days and one-on-ones, we’ve started hosting monthly gatherings with investors in Hong Kong and Singapore, hosted by different analysts. An interesting thing is that we don’t just invite the analysts and investors, but also some of our clients.
A lot of our investors are starting to look into digital assets themselves, so they could also become partners. Again, this is where things become a bit more blended between IR and PR.
For a long period, China and Hong Kong-listed equities have been out of favor with international investors. China’s regulatory crackdown on key sectors, such as tech and education, coupled with geopolitical tensions and tough Covid lockdowns, meant the risks were too high for many fund managers. Since the easing of Covid restrictions, however, global investors have started to warm to Chinese equities once again.
‘As China emerges from its spring lockdowns, tentative signs of rebound activity are encouraging,’ writes Andrew McCaffery, global chief investment officer for asset management at Fidelity International, in a post on Asia’s third-quarter outlook. ‘The hope is that loose monetary and fiscal policies can now begin to have their desired effect. We are positive on both China offshore and onshore equities, given positive drivers across fundamentals, valuations and technicals, across three-month and 12-month horizons.’
Significant risks remain, however. Principal among those is another bout of restrictions to support the country’s ‘zero-Covid’ policy. Recent economic data underlines the damaging impact of such moves: China’s economy nearly contracted in the second quarter, growing by just 0.4 percent.
William Wang, head of IR at BC Technology Group, says low valuations in the region are offering IR teams an opportunity. ‘There’s a lot of capital waiting to be deployed for companies in China and Hong Kong, which are now significantly cheaper than they used to be,’ he says. ‘Our job in IR is to find these investors and share our story with them. As a small cap, you are waiting to be discovered. Investors are shopping around and they are not just saying, Tencent is cheap. They are looking for new ideas.’
How commonly do you get asked about ESG issues? Which E and S topics are investors most interested in? ESG has become a topic in the digital asset space and we are often asked about this by our investors. Fortunately, at BC Group and OSL, we’ve taken a proactive approach to ESG, so we have a story to tell here and are on the front foot.
As part of our ESG program, we began an assessment for BC Group starting in the first half of 2021, which allows us to identify and assess the various potential ESG issues that could impact our business in the coming years. This initiative was led by our ESG committee, which is responsible for helping drive and execute our overall ESG strategy and activities. We see our ESG strategy as a real source of competitive advantage in the future.
Starting in April 2021, we fully offset our carbon footprint from the previous three years through the retirement of voluntary carbon credits. We’ve also made a strategic investment into Allinfra, a firm that brings access and liquidity to environmental or green assets using blockchain technologies.
In terms of social issues, especially given the Covid situation, we have been focused on talent acquisition, retention, wellness and – most importantly – diversity and inclusion. We are proud to say that at the end of 2021, about 30 percent of our workforce was female. Given that we are a tech and crypto company, we are very proud of that number.
Do you have any final thoughts or advice for IR teams to help them deal with the current market downturn? The market is bad, and investors and analysts get it – they’re not dumb – so it’s important to be transparent with communications, rather than sugarcoating it or waiting before releasing bad news. People appreciate the honesty.
And don’t be afraid to explore different technologies to communicate with investors. I don’t think our meetings today are the same as when I first started. I don’t think people are sitting in a room and just going over the financials.
Whether it's online, analyst days, roadshows, social media or something else, the channels being used to reach investors have increased significantly. It’s no longer just working with brokers and them setting up meetings – so be open to embracing new things.
