Mark Hansen, Head of Asia Governance and Strategic Initiatives, Standard Chartered Bank, talked at London Business School's Asia Business Forum about Asia in 2025 and answered the crucial question: "Will Asia still be relevant in the coming decades?"
The Asia Business Forum is organised by London Business School's Asia club.
2. 2
Asia: A Continent of Contrasts
Standard Chartered’s Asia
Northeast Asia
• Japan
• South Korea
• Mongolia
Greater China
• China
• Taiwan
• Hong Kong / Macau
ASEAN
• Singapore
• Malaysia
• Thailand
• Indonesia
• Philippines
• Vietnam
• Cambodia
• Laos
• Myanmar
• Brunei
• Australia / NZ
South Asia
• India
• Bangladesh
• Sri Lanka
• Nepal
• Bhutan
Notes:
Pakistan is grouped with MENAP and is not a part of Asia
There is no SCB business presence in North Korea or Timor Leste
Asia is a core market for Standard Chartered. We subdivide the continent into four
regions based primarily on economic, business, and cultural links
3. 3
Asia: A Continent of Contrasts
Enormous Demographic Shifts Underway
Median Age in
Countries with Fertility Rate > 2.1
• Laos: 19.5
• Pakistan: 21.2
• Nepal: 21.2
• Cambodia: 22.5
• Philippines: 22.7
• Bangladesh:
23.5
• Bhutan: 24.3
• Mongolia: 25.8
• India: 25.9
• Indonesia: 27.9
• Japan: 44.6
• Hong Kong: 42.8
• Singapore: 39.6
• South Korea: 37.9
• Taiwan: 37.0
• China: 35.2
• Thailand: 33.7
• Vietnam: 27.4
• Myanmar: 26.5
• Malaysia: 25.1
Source: CIA World Factbook
Asia’s demographics are undergoing a major shift, threatening to make many
economies “old before they get rich”
Median Age in
Countries with Fertility Rate < 2.1
4. 4
Asia: A Continent of Contrasts
Extremes of Economic Development
Global Hub City-States
Bangladesh
Bhutan
Brunei
Cambodia
China
Hong Kong
India
Indonesia
Japan
Laos
Malaysia
Mongolia
Myanmar
Nepal
Philippines
Singapore
Korea
Sri Lanka
Taiwan
Thailand
Vietnam
-2%
0%
2%
4%
6%
8%
10%
12%
(5,000) 5,000 15,000 25,000 35,000 45,000 55,000
2013 GDP
growth (%)
FASTER
GROWING
MORE DEVELOPED
Mature Industrial
Economies
Emerging
Economies
Frontier
Markets
2013 GDP
per capita
(USD)
Source: World Bank and IMF, bubble sizes correspond to size of 2013 nominal GDP
Asia is not a monolithic and uniform region, but instead contains countries that span
the entire range of economic and social development
5. 5
Asia: A Continent of Contrasts
Credit Quality Has Improved
Investment Grade Countries
• Singapore: Aaa
• Hong Kong: Aa1
• China: Aa3
• Taiwan: Aa3
• South Korea: Aa3
• Japan: A1
Sub-Investment Grade Countries
• Malaysia: A3
• Thailand: Baa1
• Philippines: Baa2
• India: Baa3
• Indonesia: Baa3
• Bangladesh: Ba3
• Sri Lanka: B1
• Vietnam: B1
• Mongolia: B1
• Cambodia: B2
• Pakistan: Caa1
The sovereign credit environment in Asia has changed dramatically, with many
emerging economies graduating to investment grade in the past five years
Source: Moody’s, as of 20 January 2015. Reflects long-term foreign currency ratings
6. 6
21.5
19.1
16.2
10.9
7.2 7.2 7.0 6.8 6.7 6.7 6.3 6.3 6.0 5.8
3.6 3.1 2.9 2.1 2.0
0
5
10
15
20
25
Foreign
Exchange
Reserves as
a % of GDP
Latest vs.
19961
Strong Fundamentals
Macroeconomic Buffers Have Improved Since 1997
Asian policymakers have learned the lessons of 1997, building up macroeconomic
defenses to guard against market shocks
Months of
Import Cover
(Reserves /
Imports)
Latest Data2
Notes:
(1) Latest reserve data range from Nov 2014 to Jan 2015, GDP is 2013 full-year data. Source: IMF, World Bank, national statistical websites
(2) Latest reserve data range from Nov 2014 to Jan 2015. Source: IMF, World Bank, national statistical websites
0%
20%
40%
60%
80%
100%
120%
1996 Latest
7. 7
51%
48% 48%
42% 40% 40%
35%
32% 32% 31% 30% 30% 30% 30%
27%
24% 22% 21%
18%
11%
0%
10%
20%
30%
40%
50%
60%
OECD
Average
61%
49% 47%
37% 34% 31% 30% 29% 29% 29% 29% 28% 27% 26% 24% 21% 20% 20% 19%
15%
0%
10%
20%
30%
40%
50%
60%
70%
OECD
Average
Strong Fundamentals
Savings and Investment Rates Still Very High
Asian economies still tend to be skewed toward high rates of savings and
investment
2012 Gross
Savings as a
% of GDP
2013 Gross
Investment
as a % of
GDP
Source: World Bank. Gross Investment is gross capital accumulation as defined by the World Bank.
8. 8
Strong Fundamentals
Current Accounts and Fiscal Balances
Twin deficits are still present in some emerging economies, but the recent fall in oil
prices presents a momentous opportunity to reform government budgets
2013 Current
Account as a
% of GDP
2013 Fiscal
Surplus /
Deficit as a
% of GDP
20.2%18.3%
11.6%
5.3% 4.8% 4.3% 3.4% 2.8% 2.2% 2.0% 1.9% 1.2%
-0.8%-1.0%-3.3%-3.7%-3.7%-4.8%-8.1%
-31.6%-40%
-30%
-20%
-10%
0%
10%
20%
30%
1.8% 1.3% 0.7%
-1.6%-1.8%-2.1%-2.4%-2.5%-2.7%-3.1%-3.3%
-4.0%-4.2%-4.4%-4.9%
-5.7%
-6.4%
-7.7%-8.1%-8.2%-10%
-8%
-6%
-4%
-2%
0%
2%
4%
Source: CIA World Factbook
9. 9
239
156145138134131124122115111105 95 89
72 71 71 70 67 66
0
50
100
150
200
250
HongKong
Singapore
Malaysia
Thailand
Cambodia
Vietnam
Mongolia
Indonesia
Japan
SouthKorea
Philippines
SriLanka
China
Bhutan
Nepal
India
Pakistan
Bangladesh
Laos
OECD
Averag
e
Strong Fundamentals
First-Class Digital Infrastructure
23.6
14.6 13.3
8.9 8.4
5.2
3.2 2.4 2.1 2.0 1.7
0
5
10
15
20
25
USA:
10.5UK: 9.9
Many Asian countries are quick to adopt new technologies, with many featuring
world-class technology infrastructure necessary for an innovation-based economy
-10
10
30
50
70
90
110
130
150
Y1
Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
Y10
Y11
Y12
Y13
Y14
Bangladesh
China
Indonesia
India
Cambodia
Lao PDR
Sri Lanka
Mongolia
Malaysia
Pakistan
Philippines
Thailand
Vietnam
OECD
2013 Mobile Subscriptions per 100 People
Average Internet Speed (mbit/second)
Mobile Subscription Growth Rates1
(1) Mobile subscription growth rates are for 2000-2013 for Asia countries and 1995-2008 for
OECD
Source: World Bank and Akamai
10. 10
Strong Fundamentals
Hope Springs Eternal
0% 20% 40% 60% 80% 100%
Russia
US
UK
Japan
South Korea
Thailand
Malaysia
Philippines
Indonesia
Bangladesh
India
Vietnam
China
Improve Remain the Same Worsen
0% 20% 40% 60% 80% 100%
US
UK
Russia
Thailand
South Korea
Japan
Indonesia
Philippines
India
Bangladesh
Malaysia
Vietnam
China
Good Bad
2014 Economic Optimism Survey 2014 Current Economic Situation Survey
Despite the headwinds facing the global economy, Asian countries continue to show
unbridled economic optimism
Source: Pew Research Global Attitudes Project
11. 11
2030Today
Key Opportunities
Changing Paradigms: Growing South-South Trade
25%
30%
35%
40%
45%
50%
55%
60%
65%
1995 2005 2012
China India Indonesia
Malaysia Philippines Thailand
South-South trade has become increasingly robust, changing global trade dynamics
with knock-on effects on established economic and political paradigms
Trade With Developing Countries (%) Potential Changes in Global Trade Patterns
Source: UNCTAD and Standard Chartered Research
12. 12
Asia’s financial markets have just begun to mature, with capital market development
and the diversity of financial products only beginning to flourish
2012 Equity
Market
Capitalization
as a % of
GDP
2014 Bond
Market
Capitalization
as a % of
GDP
422%
156% 144% 140% 116% 106% 105% 97%
68% 62% 45% 45% 29% 22% 21% 13% 13%
0%
100%
200%
300%
400%
500%
229% 220%
123%
102%
85% 76%
52%
37%
21% 15%
0%
50%
100%
150%
200%
250%
Source: World Bank, ADB, and Sifma. Bond market capitalization for Asian countries reflects local currency debt securities
US
US
Key Opportunities
Deepening Financial Markets
13. 13
Key Opportunities
A New World Financial Order?
0
500
1000
1500
2000
2500
[5]
Index as of
Dec’13:
1,359
[6]
Index as of
Aug’14:
1,949
Index as of Nov = 2,048
Our measure of internationalization
has risen more than nineteen-fold
since end-2010
HK
HK + SG + LDN
[1]
Base:
Dec’10:
100
[2]
Index
as of
Aug’11:
400
[3]
Index as of
Dec’11:498
[4]
Index as of
Jul’13: 1,112
HK+SG+LD+TWN
RGI’s persistent upward trend
HK+SG+LD+TWN+NY
HK+SG+LD+TWN+NY+FR
+KR
-
500
1,000
1,500
2,000
2,500
1Q99 1Q02 1Q05 1Q08 1Q11 1Q14
Claims in USD
Claims in GBP
Claims in JPY
Claims in CHF
Claims in EUR
Claims in Other
Currencies
Indexed Growth of “Other Currencies” in Global
Foreign Exchange Reserve Holdings since 1999
Standard Chartered’s RMB Globalization Index
(Indexed to December 2010)
The internationalization of the RMB can fundamentally alter the paradigm of the
global financial system, creating a multi-polar financial world
Source: IMF COFER database, Standard Chartered Research
15. 15
Korean
Peninsula
Diaoyu /
Senkaku
Islands
Taiwan
Straits
South
China Sea
Rakhine
India-
Pakista
n
Tibet
Xinjiang
China’s “Nine-Dash Line”
US “First Island Chain”
Key Challenges
Potential Geopolitical Conflicts
0 50 100
China
Japan
India
South Korea
Myanmar
Taiwan
Singapore
Thailand
Malaysia
Philippines
Indonesia
Vietnam
2000 2012
Defense Spending
2000 vs. 2012 (USD bn)
+172%
+268%
+29%
+91%
+68%
+27%
+1%
+331%
+57%
+77%
-2%
+325%
Source: Defense spending data from the Stockholm International Peace Research Institute
16. 16
Will Asia Still Be Relevant in the Coming Decades?
24%
19%
13%
3%
7%
7%
27%
17%
14%
24%
10%
3%
9%
23%US
ROW
EU
China
India
Japan
Asia ex-
CIJ
USROW
EU
China
India
Japan
Asia ex-
CIJ
Shares of Global Nominal GDP 2013 Shares of Global Nominal GDP 2030E
Source: Standard Chartered Research, IMF
Singapore Tokyo Shanghai