May 20 2015 UTS Corporate Governance Service Program presentation at the ASX
Emerging Markets & Disruptive Technology: New Horizons in Corporate Governance
Dr chioatto emerging markets uts governance services at asx
1. UTS BUSINESS SCHOOL
UTS CRICOS PROVIDER CODE: 00099F business.uts.edu.au
How Well Is Corporate
Governance In Australia
Prepared For Imminent
Challenges?
Dr. Ulysses Chioatto
Governance
Services Program
Centre for Corporate
Governance
2. GOVERNANCE CHALLENGES 2025
Investor Challenge – engagement
Investment Narrative – we are in the
right part of the world
Disclosure
Why Emerging Markets (EM)
Oz share of FDI
Challenge 9% operating in Asia
65% no intention to change
business.uts.edu.au
3. GLOBAL INVESTORS CHALLENGE
Northern hemisphere investors hold up to 25 to 30%
on ASX 300 shareholder registers
Seek long term positions on well managed companies
good governance practices
skills matrix
Diversity – Asian directors
Seek sustainable growth and ROI
Engagement is problematic
business.uts.edu.au
4. INVESTMENT NARRATIVE
Governance steering – do we have the best
mechanism to communicate corporate strategy to
investors – self or external investment?
Essentially investment vehicles
Better – quality - disclosure is the governance
challenge
sustainable growth includes environmental
and social factors
Global focus on financing energy – creating
energy – managing energy
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5. GOVERNANCE DISCLOSURE
General & Continuous – impact on
securities
Fundraising – risks in making an
investment decision – should know - ought
Financial Reporting – management of the
listed entity
Operating and Financial Review - ‘material
business risks, ‘future prospects’, and
‘strategy’
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6. EMERGING MARKETS
Powerhouses are China and India
40% of world's labour force and population
Combined economic output $15.9 trillion USD
point 3 and point 6 > either EU or the U.S.
(Source: CIA World Factbook, 2011 statistics)
Besides 21 countries in MSCI Emerging Market
Index there are also Argentina, Hong Kong,
Jordan, Kuwait, Saudi Arabia, Singapore, UAE
and Vietnam.
(Source: Tarun Khanna, Harvard Business School,
How Companies Break Into Emerging Markets)
business.uts.edu.au
7. 5 CHARACTERISTICS
1.lower-than-average per capita income < $4,034
(See World Bank list)
2.rapid growth.
3.high volatility.
4.No solid track record of foreign direct investment.
5. higher-than-average return for investors.
Not all EM are equally good investments.
Breakout nations invested revenue in infrastructure
and education for their workforce.
In 2014 Crisis they were ready.
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8. AUSTRALIAN FDI BY 2014
$472 billion USD of global outwards FDI, 1.8 % of
global outwards FDI (ranked 18th) - behind
Singapore and ahead of Sweden. (US = 24% No. 1
@ $ 6.3 trillion)
Double that of prior decade
10 times more than decade before that
US$592 billion of global inwards FDI, 2.3 % of global
inwards FDI (ranked 14th).
global trend of FDI towards Asian economies
(significantly China and Singapore)
business.uts.edu.au