The ANZ insight report ‘Caged Tiger: The Transformation of the Asian Financial System’ argues the rapid development of financial markets in Asia will become increasingly critical to support high levels of economic growth in the region and to fulfil the potential of the Asian Century.
‘Caged Tiger’ Key Findings
- The Asian financial system is on track to be bigger than the US and Europe combined by 2030.
- Asian (excluding Japan) bond markets are projected to grow by six times their current size over the next 15 years to match the size of US debt markets.
- Equity market capitalisation across Asia (excluding Japan) is also expected to rise dramatically, from US$9 trillion to almost US$55 trillion by 2030.
- China will account for around half of Asia’s financial assets by 2050.
- The RMB will dominate in Asia and become a genuine rival to the US dollar as a global reserve currency.
- Financial liberalisation in China will see a significant increase in capital flows with Chinese outbound foreign direct investment rising to as much as US$9.5 trillion by 2030.
ANZ Chief Executive Officer Mike Smith said: “This report makes it clear that Asia now requires a financial revolution to accompany the economic revolution that has occurred in recent decades.
“Continued progress in financial reform, deregulation and opening up to global markets in Asia will be essential to support high levels of economic growth in the region. China is central to this Asian Century scenario. The direction and sequencing of reform envisaged following the Third Plenum will significantly influence the direction and growth of its financial system.
“The opportunities this will create across the region are enormous. Asia’s financial institutions will become increasingly important in global finance and Asia will become home to many of the world’s largest financial centres. Shanghai will grow to rival New York as a financial centre. Singapore will increase its importance as a south-east Asian hub. Hong Kong and Tokyo will remain large centres while Seoul, Mumbai and Sydney will all grow strongly,” Mr Smith said.