2. www.businessmonitor.com
1. 2014: Review of Key Macro & Political Themes
2. 2015: Key Macro & Political Themes
3. Power: Asia To Outperform
4. Agribusiness: Structural Changes Ahead
5. Telecoms: Revenue Diversification Will Accelerate
6. Autos: A More Positive Year Ahead
7. Oil & Gas: Fundamentals To Remain Weak
8. Pharma: Large Opportunities In EM
Outline
3. www.businessmonitor.com
2014: Themes In Review
Last December, we highlighted several key macroeconomic themes.
Theme Result
China: Reform progress leads to renewed
growth weakness.
Growth averaged 7.3% in the first three quarters, below the
government's growth target of 7.5%.
Japan: 'Abenomics' could come apart at the
seams.
Japan entered recession, with the economy contracting by
7.1% in Q2 and 1.9% in Q3.
Thailand: Multiple headwinds could lead to an
investment downturn.
Thailand saw a military coup, which resulted in a huge
slowdown in growth.
Indonesia: Short-term pain for long-term gain.
The election of pro-business Joko Widodo, combined with a
hawkish central bank, restored confidence in the economy.
Regional Property: From driver to drag.
Property prices have started to decline in several countries with
China and Singapore seeing the broadest declines.
India: Rehabilitation complete, recovery ahead.
The election of business-friendly Narendra Modi, combined with
a rebalancing of the country's external accounts, has seen
confidence in the country soar.
Vietnam: Further signs that the recovery is for
real.
Growth remains strong and the government continues to
amend the business environment to attract more foreign
investment.
4. www.businessmonitor.com
2015: Key Macro & Political Themes
We see a broad range of themes for
2015, some, a continuation from 2014.
• China’s economy slows below
7.0% as financial market reform
picks up.
• India & Indonesia to see reforms
spur an acceleration in economic
activity.
• Japan risks falling into a
stagflationary spiral.
• South Korea to face deflationary
slowdown.
• Regional property markets to
cause a policy headache.
• Myanmar elections to pose biggest
test yet.
2012 2013 2014 2015 2016 2017
China 7.7 7.7 7.3 6.7 5.8 5.8
Japan 1.4 1.6 0.3 0.7 0.7 0.7
India 4.5 4.7 5.6 6.3 6.6 6.6
Indonesia 6.3 5.8 5.1 5.5 6.3 6.5
Table: Growth Forecasts (% chg)
2014-2017 = BMI Forecasts
Regional Growth To Slow (%)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2013 2014e 2015f 2016f 2017f 2018f
Emerging Asia APAC
6. www.businessmonitor.com
Power: Asia To Outperform
2014-2017 = BMI Forecasts ,NA/WE = North America, Western Europe
Asia Leads Power Capacity Additions in 2015 (GW)
Table: Electricity Generation (% chg)
2012 2013 2014 2015 2016 2017
China 3.7 6.7 7.1 6.0 5.9 5.9
India 5.3 4.9 5.2 5.6 5.7 6.3
Japan -6.6 -0.4 0.2 0.8 0.5 1.1
Australia 1.1 2.0 2.0 2.0 1.9 2.0
Asia will remain the fastest growing
market for power and renewable
generation capacity in 2015.
• There will be policy slippage and
fatigue towards renewable energy on
the back of fiscal consolidation and
the cheaper cost of traditional fuels.
• Price of renewable energy
equipment will stabilise following
sharp declines in recent years.
• Reform in the power sector to
increase private participation in India
and Indonesia.
• Greater regional grid integration
and cooperation in the power sector
with more partnerships in 2015.
0
20
40
60
80
100
120
140
Asia NA/WE Lat Am MENA SSA CEE
7. www.businessmonitor.com
Agribusiness: Structural Change Ahead
2014-2017 = BMI Forecasts, *Whole Milk Powder Production Balance ('000 tonnes)
The Dairy Deficit To Rise*Agribusiness markets will continue to see
structural changes in Asia.
• We expect continued agricultural
reform in India, Indonesia and Japan.
• Asia’s imports will remain on an
uptrend as prices fall and production
deficits rise.
• Larger imports of higher-value
goods such as dairy, cattle and meat.
• Thailand and Vietnam will emerge as
new suppliers within the region,
although Australia and New Zealand
will remain the dominant players.
• Profitability in the palm oil sector will
remain low on price weakness and
overcapacity in the refining segment.
2012 2013 2014 2015 2016 2017
China 9.5 -1.6 0.1 4.9 5.4 5.0
Indonesia 1.5 -5.5 2.9 8.6 7.3 6.5
India -5.6 0.6 -0.8 3.6 7.0 5.1
Australia 2.7 -15.9 1.3 -6.5 7.7 2.4
Table: Agribusiness Industry Value (% chg)
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
-140
-120
-100
-80
-60
-40
-20
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Indonesia Malaysia Vietnam China (RHS)
8. www.businessmonitor.com
Telcos: More Diversified Revenues
2014-2017 = BMI Forecasts, OTT = Over The Top
Data Volumes On The Rise
Table: Monthly Blended ARPUs (% chg)
2012 2013 2014 2015 2016 2017
China -5.7 3.0 0.0 -3.9 -3.1 -1.1
India -0.6 14.3 -8.5 4.3 -2.4 -0.6
Japan -4.7 -22.1 -9.2 -6.7 -4.5 -2.2
Thailand 4.2 -9.5 -10.4 0.0 3.3 1.6
Falling revenues due to increased
competition and OTT will see a trend
towards revenue diversification:
• Operators will increasingly enter
into partnerships with OTT*
platforms in order to offset the decline
in traditional voice and SMS revenues.
• The provision of banking services
to rural areas via messaging or apps
will continue to be in high demand.
• Operators will improve enterprise
market offerings, where profit
margins are higher.
• We expect tower sharing to grow in
prominence as operators divest assets
and as tower companies see an
increase in co-location.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2013 2014f 2015f 2016f 2017f 2018f
IP Traffic (PB per month)
9. www.businessmonitor.com
Autos: A More Positive Year Ahead
2014-2017 = BMI Forecasts
SUV Sales Have Room To Rise (% of Total)
Table: Vehicle Production (% chg)
2012 2013 2014 2015 2016 2017
China 4.6 14.8 8.0 7.5 7.4 6.4
India -0.2 -7.2 6.2 7.1 7.7 8.0
Japan 18.4 -3.1 3.0 1.2 1.9 2.0
Thailand 67.5 0.6 -25.0 4.2 4.8 4.6
2015 looks set to be a more positive
year for Asia's auto sector.
• Thailand, India and Indonesia will
see a rebound in sales on the back of
stronger growth and policy clarity.
• ASEAN to develop as a production
hub for fuel efficient cars as they
benefit from government support and
AEC integration.
• Manufacturers will continue to
localise production within the
existing hubs such as Thailand,
Indonesia and Malaysia.
• We expect strength in the SUV
segment, as earning power and
consumer preferences shift towards
larger cars.
0%
5%
10%
15%
20%
25%
30%
35%
Russia Australia US South
Korea
India Europe China Japan
Group Average
10. www.businessmonitor.com
O&G: Fundamentals To Remain Weak
2014-2017 = BMI Forecasts
Overcapacity At Refiners
The Oil & Gas sector will remain weak
globally, and we see four key trends in
Asia over the quarters.
• Capex will be hit, particularly in high-
cost unconventional exploration.
Malaysia is most at risk in the region.
• Increased oil consumption. Major
net importers India and Indonesia will
see an increase in demand.
• LNG market to slacken as weaker
demand growth in North East Asia and
growing supply will help loosen the
market.
• Refiners to remain under pressure.
Despite a short-term boost to margins
from lower crude prices, rising supply
to the market will narrow margins by
H2 2015.
2012 2013 2014 2015 2016 2017
China 4.8 4.1 1.7 2.0 1.7 1.5
India 0.0 7.1 2.0 5.0 5.0 5.0
Indonesia 5.0 3.0 1.5 -3.0 -2.0 0.8
Japan 6.0 -2.5 -4.3 -0.8 -0.4 -0.2
Table: Key Refined Consumption (%, chg)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2014e 2015f 2016f 2017f 2018f
Asia oil consumption, % y-o-y
Asia oil refinery capacity, % y-o-y
11. www.businessmonitor.com
Pharma: Large Opportunities In EM
2014-2017 = BMI Forecasts
Emerging & Frontier Markets Offer Fastest GrowthThe region will provide opportunities for
multinational pharmaceutical companies
and private healthcare providers:
• Universal healthcare will continue to
be rolled out in 2015 as governments
are incentivised by both the economic
and political benefits of strong medical
coverage.
• Cost containment will remain a key
trend in Asia Pacific, posing downside
risks to sales of patented medicines,
but upside risks for generics.
• Medical tourism will continue to
gain traction in the Asia Pacific
region, and in particular South East
Asia given ASEAN integration in 2015
and beyond.
2012 2013 2014 2015 2016 2017
Malaysia 67.1 70.5 74.7 84.6 93.8 102.1
China 52.2 62.5 72.1 80.6 89.8 99.1
Thailand 65.2 69.2 66.9 72.0 79.0 86.2
Vietnam 31.2 35.9 41.1 47.7 55.8 65.0
Table: Per Capita Pharmaceutical Sales (USD)
0.00 5.00 10.00 15.00 20.00
South Korea
Australia
Philippines
Thailand
Singapore
Japan
Hong Kong
Indonesia
Pakistan
Bangladesh
India
China
Vietnam
Myanmar
Pharmaceutical Sales (% chg)
