The Rise of Asian Capital Markets JC de Swaan. Renmin University June 10 th, 2009

Transcription

1 The Rise of Asian Capital Markets JC de Swaan Renmin University June 10 th, 2009

2 Overview of Lectures 1. Introduction to Asian Capital Markets 2. China 3. India 4. Japan 5. Corporate Governance in Asia 6. Investments in Asia 7. Investment Case Study: Daphne 8. Prospects for Asian Capital Markets 1

3 AGENDA Asian Capital Markets in Context The Decoupling Debate An Inflection Point? 2

4 New Capital Raised by IPOs In US$ Billions NYSE/ Nasdaq London Euronext HK/ Shanghai/ Shenzhen India Nasdaq Dubai Note: India comprises Bombay SE and National Stock Exchange World Federation of Exchanges Members, Nasdaq Dubai 3

5 Share of Top IPOs Number of IPOs in top HK/ Shanghai 5 4 Saudi 0 4 NYSE/ Nasdaq 2 3 London 1 0 Mumbai/ NSE 1 1 Dealogic, Thomson Financial, Ernst & Young 4

6 IPOs by Foreign Companies Percent of Total IPO Value 100% NYSE/Nasdaq London HK 80% 60% 40% 20% 0% McKinsey Global Institute, Dealogic 5

7 Net Capital Flows to Asia ex-japan Public and Private Capital Flows In USD Billions Private flows Official flows IMF 6

8 Net Private Capital Flows to Asia ex-japan Private Capital Flows Decomposed In USD Billions Other FDI FII IMF 7

9 Global Financial Assets In US$ trillions 196 CAGR = 10.9% 65 Equity securities Private debt securities Govt debt securities Deposits McKinsey Global Institute 8

10 Contribution to Global Financial Assets Growth In % 100% = $4.3T $8.8T $9.0T $20.4T Other developing markets China Developed markets Note: data shows average for each 5-year period. McKinsey Global Institute 9

11 Capitalization of Global Capital Markets Equity Market Capitalization Other Asia UK Japan Euro US 11% 8% 8% 8% 16% 50% 20% 21% 6% 7% 15% 31% Bond Market Capitalization Other Asia UK Japan Euro % 12% 3% 4% 5% 6% 15% 11% 22% 29% US 45% 38% Federal Reserve Board, IMF

12 Capital Markets Penetration by Region 2006 Equity and private debt as % of GDP US UK Eurozone Japan China India McKinsey Global Institute 11

13 Financial Assets by Region 2006 As % of total financial assets Equity securities Private debt Govt debt Bank deposits US UK Eurozone China India Japan McKinsey Global Institute 12

14 Market Capitalization of Stock Markets 2008 Year-End In US$ Trillions NYSE/ Nasdaq London Euronext HK/ Shanghai/ Shenzhen India Tokyo/ Osaka Nasdaq Dubai Note: India comprises Bombay SE and National Stock Exchange World Federation of Exchanges Members, Nasdaq Dubai 13

15 GDP Comparison 2008 GDP In $ Billions GDP per Capita In $ 14,265 46,859 38,559 30,755 4,924 4, ,210 3,315 1,016 US Japan HK China India US Japan HK China India Note: Based on market exchange rates. IMF 14

16 GDP Comparison on PPP Basis 2008 GDP In $ Billions GDP per Capita In $ 14,265 46,859 43,811 7,916 34,100 4, ,288 5,963 2,762 US Japan HK China India US Japan HK China India Note: On PPP basis IMF 15

17 AGENDA Asian Capital Markets in Context The Decoupling Debate An Inflection Point? 16

18 Asian Earnings Growth Forecasts Pre-Crisis 2009 EPS Growth Consensus Estimates In % As of August 29, 2008 Asia ex- Japan 13.1 China 21.5 HK 6.3 India 5.0 Goldman Sachs, FactSet, IBES, MSCI 17

19 Asian Earnings Growth Changes in Forecast 2009 EPS Growth Consensus Estimates In % As of August 29, 2008 Asia ex- Japan As of June 5, 2009 China HK India Goldman Sachs, FactSet, IBES, MSCI 18

20 China Monthly Trade Balance In $ Billions Bloomberg 19

21 Asia ex-japan and US Performance Since Peak S&P 500 and MXASJ Index 0% -10% S&P % -30% 10/07 11/07 12/07 1/08 2/08 3/08 4/08 5/08 6/08 7/08 8/08 9/08 10/08-40% -50% 11/08 12/08 1/09 2/09 3/09 4/09 5/09-60% -70% 20 Bloomberg MXASJ

22 China Aggregate New Lending In Rmb Billions 2,000 1,750 1,500 1,250 1, Bloomberg 21

23 Asia ex-japan Historical Performance MXASJ Index Asian Financial Crisis SARS Bloomberg 22

24 Net Equity Inflows to Selected Emerging Asia In US$ Billions Note: Includes South Korea, India, Taiwan, and India Bloomberg 23

25 Major Index Performance YTD % 2009 YTD 39.3% 30.6% 54.7% 54.7% 57.7% 3.5% 4.3% 3.8% 0.9% -38.5% -31.3% -48.2% -65.4% -51.8% S&P 500 FTSE 100 Hang Seng Shanghai Composite NSE Nifty Note: 2009 YTD as of June 10 th Bloomberg 24

26 Asian Corporate Bond Spreads Credit Suisse Asian Corporate Bond Index Spread in bps over US Treasuries Bloomberg 1/07 3/07 5/07 7/07 9/07 11/07 1/08 3/08 5/08 7/08 9/08 11/08 1/09 3/09 5/09 25

27 1/09 7/08 1/08 7/07 1/07 7/06 Hong Kong Small Caps HK GEM Index /03 7/03 1/04 7/04 1/05 7/05 1/06 Bloomberg Down 63% from peak 26

28 Asia ex-japan Valuation MXASJ Trailing PE x x 8.6x Hit 7.3x on October 24 th Note: Adjusted for positive earnings Bloomberg 27

29 Asia ex-japan Valuation MXASJ Forward PE x 1/06 7/06 1/07 7/07 1/08 7/08 12/ x Note: Adjusted for positive earnings Bloomberg 28

30 Asia ex-japan Valuation Adjusted MXASJ PB x x x 1.0x Bloomberg 29

31 AGENDA Asian Capital Markets in Context The Decoupling Debate An Inflection Point? 30

32 Major China Themes to be Discussed Decoupling Real economies Markets Institutional development of capital markets New products and markets Rmb convertibility and dismantlement of capital controls Greater opening up of capital markets to foreign investors Shift in geoeconomic standing Acceleration of pre-existing trends More assertive voice 31