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ASEAN Markets in the Age of Differentiation

ASEAN Markets in the Age of Differentiation. Marc P. Mealy US-ASEAN Business Council HSBC Emerging Markets Conference New York November 6, 2013. Three concentric circles ( global, Asia and ASEAN) shaping growth trends and investment opportunities .

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ASEAN Markets in the Age of Differentiation

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  1. ASEAN Markets in the Age of Differentiation Marc P. Mealy US-ASEAN Business Council HSBC Emerging Markets Conference New York November 6, 2013

  2. 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).

  3. 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.

  4. 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.

  5. 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.

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