asean markets in the age of differentiation marc p. mealy us-asean business council hsbc emerging...
TRANSCRIPT
ASEAN Markets in the Age of Differentiation
Marc P. MealyUS-ASEAN Business Council
HSBC Emerging Markets ConferenceNew York
November 6, 2013
Three concentric circles ( global, Asia and ASEAN) shaping growth trends and investment opportunities
• ASEAN markets like Singapore, Malaysia and Thailand fit into various segments of global value chains of American, Asian and European MNC’s in sectors such as energy, electronics, and autos.
• ASEAN markets like Indonesia, Malaysia and Brunei are benefiting from China’s growth and $1.8 trillion import market. – 2013 ASEAN-China trade at $500 billion, $1 trillion in 2020?
• ASEAN markets Vietnam and Indonesia are benefiting from domestic demand led growth drivers (consumption and services) and intra-ASEAN trade and investment flows as part of the formation of the ASEAN Economic Community(AEC).
Diversity of growth drivers a source of investment strength
• In 2012 Southeast Asia did $12 billion in IPO’s led by $7 billion from Malaysia making it #4 in the global IPO ranking, taking advantage of both external inflows (QE) and ample domestic investor liquidity.• In 2013 first quarter SE Asia IPO’s reached $1.9 billion, surpassing north Asia for the first time since 1996 and represented 7.6% of global deal flow. • Five years ago SE Asia represented only 1.2% of global deal flow. • Malaysia also #1 in global $300 billion Islamic bond market.
Evolution of EM investment value proposition trends in ASEAN
• ASEAN has cheap labor/low cost manufacturing in Vietnam, Cambodia, eventually Myanmar.
• High skill/high value manufacturing activities in Singapore, Thailand and Malaysia.
• Two growing trends in large population economies in Indonesia, Vietnam and fast growing sectors in several markets include:– Private equity (TPG, KKR, General Atlantic) investments ($20-$200 million) in domestic consumption market share leaders.
– Investments in services (financial, health and education), energy and aerospace.
Trends to Watch
• Rise of the regional corporates in banking, aerospace, and energy should support continued growth in beyond China, beyond BRIC investing in ASEAN. CIMB, AirAsia X, and SapuraKencana Petroleum.
• Growing commercial use of ASEAN’s FTA network in Asia (China, Japan, Korea, India, Australia, New Zealand) and potential of the TPP and RCEP negotiations to unlock new opportunities.
• The integration of Myanmar into regional and international value chains.