Conference Presentation, Panel
Asia Summit 2015 - A World in Turmoil: Finding Opportunities Amid Volatility (II)
- The Milken Institute expects powerful ideas to emerge during the global summit over the next two days and plans to release three reports this week on China's best-performing cities, trade finance in Asia, and aging demographics reshaping the labor force.
- Projections indicate China's economy will grow between 6% and 7% with consumption growth of 10% to 12% and real wage growth of 8%, while the institute anticipates consumption will drive demand for environmental, health, and service sectors as the middle class expands.
- It is expected that within four to five years, Asia's share of the global economy will exceed 50%, with the fastest-growing ethnic group in the U.S. being people of Asian ancestry.
- Future expectations suggest that by 2050, no ice will remain at the Arctic cap, making shipping distances between Asia and Europe via the Arctic 50% shorter than canal routes, necessitating a transshipment port in the Aleutian Islands within 30 years.
- Demographic shifts project Sub-Saharan Africa's life expectancy to double from 40 to 75 years in a generation, with an average age of 19, and a growing expectation that outsourced service jobs may originate from Nigeria or Kenya rather than traditional hubs.
- Economic resilience is expected from China's ability to absorb a potential $500 billion to $700 billion system hole using $3.6 trillion in reserves, while also allowing companies to fail in specific sectors to move away from state-backed universal support.
- Capital markets in Asia are expected to deepen through the development of efficient mortgage markets to deploy capital currently trapped in physical assets, alongside expectations that savings pools in many Asian countries remain insufficient.
- Investment opportunities are identified in Brazil's broad market, which fell 80% from its high two years ago, and in Atlas Mara, a company created to modernize pan-African banking.
- Scott Minard anticipates that if the U.S. economy performs well, money may flow back to Asia after an initial outflow, though he also expects investors to eventually withdraw funds from the U.S. for safety and invest globally.
- Specific investment strategies include Scott Minard expecting to redeploy his $220 billion investment in Southeast Asia, while a three to five-year timeframe is considered the relevant long-term horizon for investors.
- Regional growth expectations include India's potential for better manufacturing performance given its young population, and Indonesia's fiscal capacity to execute significant spending if the government prioritizes it.
- Innovation expectations suggest Asian countries will move from imitation to innovation through high education investment, with Beijing and Shanghai showing increased student willingness to take risks, though socio-cultural challenges regarding risk-taking persist.
- The outlook includes the expectation that 50% of the global population will experience their best day in history due to health advances and mobile penetration, with middle-class children in China and Asia historically spending 15% of income on tutoring.
- Risk factors include the negative consequences expected for individuals betting on currency strengthening, challenges for countries based on natural resources compared to commodity-independent nations, and a potential venture capital readiness gap in Russia due to a lack of understanding regarding startup failure rates.
- The institute hopes to receive attendee ideas on increasing impact in Asia and expects more than 50% of the world's economy to eventually be located in developing countries, reducing the dominance of Japan, the U.S., and Western Europe.