IOSCO Asia Pacific Regional Committee Meeting Mr Andrew Sheng - PowerPoint PPT Presentation

IOSCO Asia Pacific Regional Committee Meeting Mr Andrew Sheng Chairman Securities and Futures Commission 12-13 March 2001

Recovery and Outlook for Asia Pacific  Asia - V-shaped recovery with markets dependent on major market outlook  Consolidation in financial sector e.g. insurance, fund management, syndicated loans, M&As, ...  Investment continues to flow into Asia  Technology sector affected by burst of the tech bubble  New Economy-led structural change

Asia in Global Economy I (GDP, % of world) Market Exchange PPP Weights Rate Weights Japan 15.1 7.6 4 Tigers 3.3 3.3 China 3.3 11.2 India 1.5 4.6 Other Asia 2.9 5.4 Total ASIA 26.1 32.1 US 30.2 21.9 EU 26.3 20.3 Others 17.4 25.7 TOTAL 100.0 100.0 Source: IMF, World Economic Outlook , May 2000. 3

Asia in Global Economy II (GDP, % of world) MSCI PPP-GDP Exports Population Weighting Japan 7.6 6.7 2.1 10.75 4 Tigers 3.3 9.5 1.3 2.77 China 11.2 3.1 21.1 0.37 India 4.6 0.7 16.6 0.37 Other Asia 5.4 4.5 14.4 2.22 Total ASIA 32.1 24.5 55.5 16.48 US 21.9 14.0 4.6 49.36 EU 20.3 39.3 6.3 29.21 Others 25.7 22.2 33.6 4.95 TOTAL 100.0 100.0 100.0 100.00 Source: IMF, World Economic Outlook , May 2000. 4

Asian V-shaped Recovery Real GDP Growth Rate (%) IN LOCAL CURRENCY IN USD 1997 1998 1999 2000 2000 over 1997 China 8.8 7.8 7.1 8.0 25.3 Hong Kong 5.3 -5.1 3.1 10.0 6.7 India 5.0 6.8 6.4 7.0 -1.8 Indonesia 4.5 -13.7 0.2 4.0 -70.6 Japan 1.8 -1.1 0.8 1.9 11.2 Korea 5.0 -5.8 10.7 8.5 -6.8 Malaysia 7.5 -7.5 5.6 8.0 -23.3 Philippines 5.2 -0.4 3.3 4.0 -29.6 Singapore 9.0 0.3 5.4 8.1 -1.8 Taiwan 6.8 4.8 5.4 6.6 8.2 Thailand -1.4 -10.0 4.2 4.5 -27.1 Remarks: figures for 2000 are World Bank forecasts in Sep 2000 (forecast for India is ADB forecast and HK is government forecast)

More Sustainable and Balanced Growth in Asia GDP Growth Inflation Current A/C Savings (annual % change) (as % of GDP) 1992-98 1999 1992-98 1999 1992-98 1999 1993-98 1999 China 11.0 7.1 11.3 -1.4 1.3 1.5 41.3 41.0 Hong Kong 3.7 2.9 7.1 -4.0 0.2 4.4 31.9 31.0 India 6.3 6.3 8.2 3.5 -1.2 -0.8 22.7 23.7 Indonesia 3.5 0.2 16.6 20.5 -1.3 3.8 26.9 18.5 Japan 1.2 0.8 0.9 -0.3 2.5 2.3 33.0* 30.0 Korea 4.9 10.7 5.5 0.8 0.3 6.0 35.8 34.1 Malaysia 6.8 5.4 3.8 2.7 -2.9 16.9 41.7 47.1 Philippines 3.1 3.2 8.1 6.7 -3.2 9.2 18.0 20.2 Singapore 7.7 5.4 1.7 0.5 16.5 25.3 50.2 50.0 Taiwan 6.3 5.7 3.0 0.2 2.8 2.0 25.6 24.8 Thailand 3.7 4.1 5.5 0.3 -2.8 8.9 34.3 33.2 Selected Asia 3.1 0.3 2.9 36.6 Remarks: *1990 figure Source: BIS 70th Annual Report, Bloomberg 6

High Savings = Large Financial Sector Hong Kong Singapore Malaysia Thailand Bank assets (US$ bn) 344 196 174 167 Insurance assets (US$ bn) 50 24 12 2 Assets under mgt (US$ bn) 450 148 11 2 FX reserves (US$ bn) 108 80 30 33 Equity (US$ bn) 623 153 113 29 Bond (US$ bn) 54 54 62 22 Total (US$ bn) 1,629 655 402 255 Bank assets (% of GDP) 218 231 220 150 Insurance assets (% of GDP) 32 28 15 2 Assets under mgt (% of GDP) 285 174 14 2 FX reserves (% of GDP) 68 94 38 30 Equity (% of GDP) 394 180 143 26 Bond (% of GDP) 34 63 79 20 Total (% of GDP) 1,031 771 509 230 Sources: World Bank, Bloomberg, HKMA, CEIC, BIS, IFS and MSDW

Great development potential for bond market (% of GDP, 1999) Bank Assets Equity Market Bond Market China 126 33 11 Hong Kong 218 384 34 India 8* 26 26 Japan 172 102 203 Singapore 231 227 63 S. Korea 122 98 80 Taiwan 170 127 14 Thailand 150 47 20 Germany # 273 51 97 US 61 180 187 Remark: # 1998 figure, *2000 figure and commercial banks only Sources: FIBV, IFC, World Bank, CEIC, various central banks and websites

FDI flows to main markets … including Asia (% of total) 35% EU 41% 32% US 24% 12% Asia top 10 Asia top 10 13% 1999 11% Asia top 5 Asia top 5 1988-1993 avg 10% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Source: United Nations, World Investment Report 2000

and the major beneficiaries are … 40,400 China 8,852 23,068 Hong Kong 3,689 10,340 Korea 956 6,984 Singapore 3,982 6,078 Thailand 1,899 FDI in Asia top 3,532 Malaysia 10 (US$ mn) 3,320 2,926 Taiwan 1,160 1999 2,168 India 234 1,609 1988-1993 avg Vietnam 319 737 Philippines 770 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Source: United Nations, World Investment Report 2000

M&As opportunities are huge (1999, US$ mn) Korea 9,057 Hong Kong 3,152 China 2,155 Taiwan 2,070 Singapore 2,060 Thailand 1,812 Philippines 1,637 Malaysia 1,101 India 776 52 Vietnam 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Source: United Nations, World Investment Report 2000

Internet penetration still growing... Internet Users (mn) Internet Penet (%) PC Penet (%) 2000 2004 2000 2004 2000 2004 Korea 18.0 35.9 38 73 29 51 China 9.0 51.2 0.8 4.7 1.6 4.5 India 8.0 52.0 0.8 4.8 0.2 0.8 Taiwan 5.6 10.7 26 49 20 35 Malaysia 1.9 3.9 8.1 15.2 6.2 15.1 Hong Kong 1.4 3.4 21 49.7 30 56.2 Singapore 1.1 2.4 28.5 52.7 27.2 55.3 Thailand 0.9 3.7 1.5 5.6 3.7 6.6 Source: Merrill Lynch, October 2000

... so is IT Mobile Penet (%) B2B (US$ mn) B2C (US$ mn) 2000 2004 2000 2004 2000 2004 Korea 55 64 38 73 400 14,600 China 6.7 19 440 25,091 39 4,061 India 0.3 1.3 676 3,708 52 283 Taiwan 62 70 308 4,449 118 593 Malaysia 18.9 36.2 300 7,300 0 600 Hong Kong 61 81.5 351 4,801 109 2,728 Singapore 60 75 1,100 42,800 100 3,300 Thailand 5.1 9.2 400 11,800 0 900 Source: Merrill Lynch, October 2000

Losses in Market Cap of the Top 10 TMT Stocks from their peaks Loss Loss as % of (US$ bn) Total Market Cap Korea 83 56% Taiwan 108 44% Hong Kong 227 36% Japan 681 22% Singapore 24 16% Australia 47 13% US 1,865 12% Source: Bloomberg, FIBV 14

Performance of Major Markets (end 2000, US$ bn) Market change over Market change over P/E Cap end 99 Turnover 1999 ratio Australia 373 -12.9% 226 14.3% 21 Hong Kong 623 2.5% 402 59.1% 13 Indonesia 27 -58.1% 15 -24.6% n.a. India 163 -10.9% 290 85% 18 Japan 3,157 -29.1% 2,316 38.2% 165 Korea 48 -51.5% 556 -24.2% n.a. China 581 82.0% 735 94.4% 69 Malaysia 113 -19.1% 53 24.6% 16 Philippines 26 -46.0% 9 -56.7% 41 Singapore 153 -20.8% 95 -11.4% 21 Taiwan 248 -34.1% 986 8.0% 21 Thailand 29 -48.9% 21 -43.3% n.a. Germany 1,270 -11.3% 2,120 36.7% 56 UK 2,577 -12.8% 4,559 34.1% 30 US 15,021 -9.7% 30,859 59.0% 38 Turnover - for the 12 months ending Dec 2000 Sources: FIBV and websites of various exchanges

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