Page 12 - CSA Speaker Bulletin September 2016 | CSA Celebrity Speakers
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China’s cities will be a key ingredient of its long-term economic success. If China can rise to that challenge, it will
be well positioned to clear the remaining hurdles in its path towards high-income status. Meanwhile in India, an
open-market economy is developing. This means the outlook is moderately positive due to a young population,
healthy savings and investment rates and increasing integration into the global economy.

We asked Sony Kapoor and Richard Duncan, two prominent Asian economic specialists and Pankaj Ghemawat,
a new generation management guru, specialising in global strategy, to give us their own opinions on the current
and future prospects for this region.

Tremendous Asian Growth
    Potential is Realised

 Sony Kapoor is a macroeconomist          of developed country bonds already        than half the global economy and
 and Director of international think      yield less than zero and stock and        contribute more than the rich world to
 tank Re-Define. Sony advises             real estate valuation is nearing record   global growth. This trend is likely to
 central banks, large investors and       levels depressing yields and creating     accelerate, partly because developed
 European governments on economic         huge black holes in the pension and       economies are in such a funk.
 strategy and financial policy.           insurance system.
                                                                                    Desperate for yield investors seeking
Most developed economies                  Fortunately, favourable demographics,     to plug pension fund black holes,
              are ageing rapidly, have    catch-up growth potential, low levels     increase returns and diversify
              record levels of debt and   of indebtedness, improving policy and     excessive risk exposure to developed
 face rising political risks. Out of      falling political risks in most emerging  economies will increasingly pile
 desperation, their central banks have    economies can help dispel this gloom.     into emerging market assets and
 lowered interest rates to rock bottom    They already account for more             look beyond just stocks and bonds
 levels, in some cases below zero and                                               to invest in infrastructure, private
 launched large-scale programmes                                                    markets and even SMEs. This done
 of quantitative easing. Despite this                                               properly will further boost both
 enormous stimulus, growth remains                                                  the near term growth in emerging
 depressed, productivity is low and                                                 economies such as India, as well as
 investment in many countries is falling                                            raise their long-term growth potential.
 below replacement levels. Moreover,
 the fiscal, monetary and political                                                 Despite concerns about its debt
 space to respond to any financial or                                               and demographics, China remains
 economic shocks has shrunk, thus                                                   promising and India, where
 increasing fragility.                                                              demographics, debt levels and policy
                                                                                    making all look robust, is finally
 Despite this poor outlook, more than                                               starting to deliver on its tremendous
 85% of the assets of global funds                                                  growth potential. The economic centre
 are invested in developed country                                                  of the world continues its Asia-wards
 assets, mostly stocks, bonds and                                                   drift, as India starts to support
 real estate. More than $15 trillion                                                China as one of the engines of global
                                                                                    growth. n

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