International Monetary Fund January 12, 2016 1 Capital Markets: - PowerPoint PPT Presentation

Min Zhu International Monetary Fund January 12, 2016 1

Capital Markets: Market Structure Share in World (in percent) Share in own economy (in percent of GDP) Stock Market Debt Bank Assets Total Stock Market Debt Bank Assets Total Cap Securities Cap Securities United States 2002 50 44 27 35 106 182 221 509 2013 36 35 13 25 133 206 95 434 Euro area 2002 16 23 30 26 52 151 388 591 2013 12 23 28 23 58 171 275 504 Japan 2002 9 16 18 16 52 175 384 612 2013 7 13 9 10 93 249 234 576 Asia (ex. JPN, AUS, NZ) 2002 9 3 6 5 52 36 129 216 2013 20 9 23 18 76 52 183 311 China 2002 2 1 3 2 27 25 148 200 2013 5 4 16 10 35 43 213 292 2

Foreign assets and liabilities Asia: International Investment Position 1 (In trillions of U.S. dollars) Assets Liabilities Position 30 20 10 0 -10 -20 -30 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sources: IMF, IFS database; and IMF staff calculations. 1/ End-year, except end Q2 in 2015. 3

Financial Spillovers Connectedness Index: AEs to EM Asia Equity Returns Equity Volatility 90 80 70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: IMF staff calculations.

2013 Taper Tantrum vs. August 11, 2015 Episode (%, Taper Tantrum = May to Jun 2013; August Episode= Aug 11 – 27) Currencies Equities Taper tantrum August Episode Taper tantrum August Episode

Asia's Demographic Change (In percent of total population, 2000-2030) 35 Japan Korea China 30 India Indonesia Vietnam Population above age 64 World 25 Countries with aging populations 20 15 2030 10 5 0 10 15 20 25 30 35 Population under age 15 6

Infrastructure needs Asia-Pacific: Investment Needs per Year (In billions of U.S. dollars) 800 718.1 700 600 500 400 323.1 300 200 96 100 0 MDG costs, 2010 Income gap to $2/day, 2011 Infrastructure needs, 2010 Source: Asia-Pacific Regional MDGs Report 2014/15. 7

Productivity 8

Inclusion: Rising, But Large Gaps Remain Share of Adults with Accounts 100 94 90 90 Year 2011 80 Year 2014 69 70 60 55 50 46 40 32 30 20 10 0 South Asia East Asia & Pacific High-income OECD 9

Key Policy Recommendations Enhancing financial deepening and integration a) Mobilizing financial resources for EM Asia b) Fostering consensus on roadmap to ASEAN financial integration Building resilience a) Maintaining sound macroeconomic policies b) Strengthening macro-prudential framework and toolkit c) Continuing with financial sector reforms Strengthening policy coordination in the region a) Data and information sharing b) Harmonizing market standards and rules c) Building market infrastructure 10

Thank You 11