CNBC Transcript: Chris Wei, Chairman, Aviva

Following is the transcript of a CNBC interview with Chris Wei, Chairman of Aviva. The interview was broadcast on CNBC on 24 April 2017 at 10:00AM SG/HK Time, during CNBC's "Hong Kong versus Singapore" theme week.

All references must be sourced to a "CNBC Interview".

Interviewed by Oriel Morrison, Anchor, CNBC and Sri Jegarajah, Senior Correspondent, CNBC.

Oriel Morrison: Now I know you watch the markets very closely. Are you surprised by the, I guess, the positive sentiment that has come out as a result of the French elections?

Chris Wei: No I don't think we're surprised by the positive sentiment. I think this time round, anyway, I think the polls pretty much nailed it. So in terms of the outcome of the first round I think they got it right. Hopefully they're equally as accurate for the second round.

I think no matter I think Sri put it really well, we're entering into rather unprecedented waters. There's enough volatility just in the Eurozone with Brexit and everything else happening. If there's some stability in a major economy like France it would be helpful.

Sri Jegarajah: But it's remarkable, I mean if you look at markets, discounting mechanisms, you look at investment flows as well. They've been... Massive. Into the Eurozone, I think it's the biggest since almost 1999. So the investment case clearly - let me put this question to you Chris, for European assets still remain strong despite the political risks, and a lot of folks are saying once we get through France, that's Italy to navigate too.

Wei: We've been talking about that as a firm a little bit. And actually if you see some of the projected growth numbers out of Europe, it's not that far off from the slower growing Asian markets. I mean frankly, if you look at the projected GDP growth for Hong Kong and Singapore, which is one of the topics today, actually it's low, low, low single digits. So if you think about sort of maybe an extended duration of rather compressed or depressed valuations, maybe it's not a bad time to get back in as things sort of pick up again.

Oriel: That's definitely the method we've had from a number of guests that, you know, experts in the region that have come here on the program, saying now is not a bad time to start looking about that region.

Sri: Hate to be a naysayer but let me present the counter argument here, Chris. And that is the conversation that seems to be going on within the hallowed portals of the ECB about tapering. Number one, are the markets ready if they do go in September. Number two, how do you approach the European banks that got us into this mess in the first place, because I just feel that from a capitalization point of view, a lot of the issues have not been laid to rest. And also, let's remind ourselves that a lot of these names are big index heavyweights.

Wei: Well, I would definitely agree with you on that. I don't think that the major macro issues haven't solved. I think there's still a lot of volatility. If you look at, I think, at least a nascent period of interest rates rising in the U.S., but then you've got to look at the shape of the curve and where the risk premiums are, which are still rather dysfunctional.

So it'll be interesting to the next moves of the Fed and how the global currencies rebalance. Then you've got frankly a lot of volatility in this part of the world, not least of which is geopolitical sensitivities which then add just jittery markets. So it's really hard to predict. We're just taking a more, I would say, it's more of a macro view in terms of these are big markets.

The European Union is still holding on. I think the early indications of Brexit is that the European Union as a body still has a negotiation power. If you look at some of the indications certainly the discussions with the U.S., so I think therein lies the challenge with France - is if they continue on the predicted trend and the European Union can remain on track to stick with their guns. Then we'll see. Personally I think we may be seeing a little bit of pickup in Europe.

Oriel: Chris we were talking earlier on about the volatility in the markets and you were talking about the opportunities when it comes to the European region. You're fairly evenly split right now in terms of timing between, I guess, the European region encompassing Britain in that, and also what's happening out here in Asia. When you look at opportunities, you see Europe is growing as fast as some of the slower growing Asian countries. Is that the preference in investing there over Asia?

Wei: No I think certainly for Aviva, we take a balanced approach. And I think if we look at our core market where we are the market leader in the UK, we see a huge amount of opportunity there. I mean clearly the world seems to be trending a little bit towards globalization towards bilateral agreements. So we're going to see I think a phase of Britain working with countries directly and we're there to support that. But domestically we see a lot of opportunity. I mean Aviva has 15 and a half million customers in the UK on average. We only have a couple of policies with each and there's a lot of opportunity just to help the domestic population save more and protect themselves more etc.

But if we look at you know other markets I think certainly we see Asia still a very attractive area. Put aside GDP for a couple of the financial hubs, there's a lot of growth coming out of Vietnam in Indonesia and China and India and those are massive populations with a growing middle class, still low penetration of insurance. So we are continuing to invest here and we just announced last week that we took out the balance of our shareholdings in Vietnam. So Aviva Vietnam is now subsidiary. So there's lots going on everywhere and Europe is no different we'll balance our investment where we see good return on capital.

Oriel: Let's talk about Britain first of all because as you said it is your biggest market the biggest client base at the moment. How do you view Brexit then, from a business perspective?

Wei: Well I think there's an upcoming election June 8th. I think that will hopefully set a clearer path to Brexit because that's a long, long duration exercise right; it's not going to happen overnight, and there's going to be a lot happening up until that point.

So at the moment we actually are quite positive about it because I think the early indications are that Britain is holding its own and you know I think again regardless you know people need what we offer as a solution. So people do need to save for a better future, we have not yet felt any macro-economic impact of substance, certainly not to our business, and we hope the UK manages its way out really seems.

Oriel: Do you think that there will be a bigger macroeconomic impact if there is a hard break; I mean we have two years as you said it's a long process and many in the market are saying well two years simply isn't going to be enough. So there is going to be no choice but to have a hard Brexit because there will be no enough time for negotiation.

Wei: Well I think it is a fairly complex negotiation to take place so I think there's a lot of volatility in the underlying European Union as we earlier spoke about. But I think everyone needs each other, so there's going to be positioning but I think you know certainly I hope that the UK will be just fine.