Why Invest in Asia

ASIA IN A STATE OF TRANSITION: 2016 OUTLOOK



Click here to check out the Power of Consumption infographics.



ASIA AT A GLANCE

A Substantial Middle Class
Substantial Middle Class in Asia


Global Growth Leader
Contribution to Global GDP

Consumption Potential
Middle Class Spending

Top Region for FDI
2013 FDI Inflows

Strong Balance Sheets
Debt as a percentage of GDP

Contribution to Global GDP Middle Class Spending 2013 FDI Flows Debt as percentage of GDP

Sources & Disclaimers

Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Foreign Direct Investment (FDI) refers to an investment made to acquire lasting or long-term interest in enterprises operating outside of the economy of the investor.

1US Census Bureau, The Brookings Institution, Reuters 2012
525 million represents the middle class of the Asia-Pacific Region. 1.1 billion represents China, India, and the rest of Asia (ex-Japan).
2IMF World Economic Outlook, Citi Investment Research and Analysis, February 2012
3OECD, The Brookings Institution, The Emerging Middle Class in Developing Countries, March 2010
4UNCTAD, World Investment Report 2014, June 2014
5IMF, World Economic Outlook Database, April 2014



MAJORITY SLICE OF POPULATION PIE & FAVORABLE DEMOGRAPHIC

World Population Breakdown
  • Over half of the world resides within the confines of Asia, with an increasingly educated labor force
  • Asia boasts preferential demographics and is set to reap the "demographic dividends" in the form of young & skilled labor
  • While developed markets age in decades to come, Asia is poised to see catalysts to its growth prospects with a larger workforce coupled to a lower dependency ratio



EXPANDING ASIA VS. THE REST OF THE WORLD

  • Emerging markets have been converging with developed markets during the past several decades
  • EM Asia is outpacing the world in growth and has been an engine benefiting emerging and developed countries alike
  • Within this context, the merit for Asia's compelling potential comes to the fore against the backdrop of Developed Markets and Emerging Markets ex-Asia
World Output Share

GROWTH IN A HIGHER GEAR UNDERPINS CONSUMPTION

  • China is the driver of the world economy and weathered the Financial Crisis of 2007-08 relatively well through stimulus measures and concerted fiscal and monetary policy
  • China's rebalancing away from investment-driven to consumer-led growth is widely viewed by analysts as more sustainable over the course of the long-term
  • "New normal" of low economic growth, low inflation, and low interest rates remains asynchronous across regions, with pockets of value and growth in Asia
DM & EDP Growth

BIGGER MIDDLE CLASS WITH GREATER PROPENSITY TO SPEND

  • The traditional DM-led investment cycle into EM for production and savings has been superseded by a rising EM middle class that is characterized by an increasing level of consumption
  • The multi-decade theme of the expanding middle class is just commencing and is expected to continue into the years ahead, particularly within Asia
  • The high-conviction consumer story is a viable entry into capturing Asia's rising growth and clout
Share of Global Middle Class Consumption

UNDERREPRESENTED ASIA IN EQUITY BENCHMARKS

MSCI Classification vs. Market Capitalization
  • A discrepancy is apparent between the weighting of global market size and appearance in global indices
  • Asia's actual market capitalization is not yet accounted for in the MSCI AC World index, suggesting room for further upside
  • This disparity implies that there is room for future market capitalization appreciation in the years ahead

  • GOOD DEMOGRAPHICS VIEW
  • IMPROVING GOVERNANCE VIEW
  • LOW CONSUMER DEBT VIEW
  • HIGHER GROWTH VIEW
  • UNDEROWNED
    CAPITAL MARKETS
    VIEW