Emerging Markets: Fad or New Reality?

Transcription

1 Emerging Markets: Fad or New Reality?

2 Agenda 1 2 Why emerging markets matter Medium- and long-term trends 1

3 Global Outlook Economic forecast summary GDP growth, % CPI inflation, % F 213F F 213F G US Japan Euroland EM Asia China India EMEA Russia Latam Brazil Advanced economies EM economies Global Source: DB 2

4 Emerging markets make up a large and growing share of the world economy EM share in world GDP (at PPP) % % % % 1 5.6% EM China Source: IMF; EM here includes the newly industrialised economies in Asia 3

5 More importantly, they contribute significantly to global growth World real GDP growth and EM contribution Percentage points EM: 52% e EM (incl. NIE) DM EM: 92% Source: IMF, DB 4

6 Global financial crisis accelerated the West-East shift Cumulative growth since the crisis Real GDP, 27= % 53% 37% 22% 15% 6.6%.% E 212F 213F USA Euro area Emerging Asia China LatAm CEE EM Source: 5

7 Decoupling yes or no? EMs will continue to outperform DMs Real GDP growth, % yoy EM stocks sensitive to global shocks MSCI Indices, Jan 2, 27= Lehman Greece Sep 11 sell-off E 212F 213F Latin America Emerging Asia Industrial countries CEE Source: EM (right) World (left) Sources: Bloomberg, DB 6

8 Economic fundamentals had a dramatic improvement... Public debt: A new world General government gross debt, % of GDP External debt less of a burden % of GDP, EM aggregate* EM* * Not including newly industrialised economies Source: IMF DM External debt (left) * Not including newly industrialised economies Source: IMF Interest payments on ext. debt (right).5 7

9 which in turn led to a large country risk realignment "Great risk shift" - Emerging markets trade inside several DMs 5Y CDS spreads, bp 1,2 1, Sovereign rating convergence L/t foreign currency ratings, weighted averages AAA A BBB PT IE ES IT BE TR PL FR RU ID BR CN DE BB DM EM Source: Bloomberg as of Apr 23, 212 Source: DB based on the average of S&P, Moody's, Fitch ratings 8

10 Agenda 1 2 Why emerging markets matter Medium- and long-term trends 9

11 Emerging markets: Poor but sexy Strong convergence under way GDP per capita, USD (PPP) 5, 3 Lots of new consumers Population living on USD 2 - USD 13 a day, million 1,2 4, 3, 2, , , 5 2 IN CN BR RU JP DE US 211 level (left) % change vs 2 (right) E. Asia S. Asia CEE Latin America MENA SSA Source: IMF Source: The Economist based on M. Ravallion 1

12 Demographic developments very uneven for EMs India is the demographic winner Old-age dependency ratio*, % Brazil Russia India China Germany * Ratio of population aged 65+ to population aged Projections correspond to the medium variant Source: UN 11

13 Urbanisation: The past Growth rates of urban agglomerations, Source: UN 12

14 Urbanisation: The future Growth rates of urban agglomerations, Source: UN 13

15 Emerging market companies: Climbing the ranks The new corporate world Ten largest companies in the world by market cap. Global rank Company Country Exxon Mobil US 2 1 PetroChina China 3 5 Apple US 4 4 ICBC China 5 1 Petrobras Brazil particularly in banking 3 largest banks worldwide, % of total market cap. China 26.4 Brazil 7.1 Russia 2.6 Other DM 25.9 US 25. UK BHP Billiton Australia/UK 7 11 CCB China 8 19 Royal Dutch Shell UK 9 25 Chevron US 1 3 Microsoft US Other DM 47.7 UK 12.5 US Source: FT Sources: IMF, BanksDaily.com, DB 14

16 Why not industrial countries yet? Low quality of institutions in many emerging markets Ranking out of 183 countries DE JP US KR SA TR ZA BR CN IN MX ID RU Corruption perceptions index 211* Ease of Doing Business 212** * Indicates the perceived level of public sector corruption. A country's rank indicates its position relative to the other countries in the index. ** A high ranking (i.e. lower number) means the regulatory environment is more conducive to the starting and operation of a local firm. Source: Transparency International, World Bank 15

17 More at or 16

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