“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.”
Today Europe and the US account for just under half of the world economy while (non-Japan) Asia represents just 20 per cent. By 2050, Asia is expected to account for around half of the global economy and the US and Europe will fall towards 20 per cent.
We estimate that the region’s financial system could be as large as $US200 trillion by 2030. This would make it about four times the current size of the Asian financial system and more than twice as big as we project the US financial system to be in 2030.
The area with the most significant growth potential is the debt markets. Asia currently has a relatively small bond market, but a viable alternative to bank finance needs to be developed. ANZ projects that the Asian domestic debt (excluding Japan) could be worth around $US80 trillion by 2030 (with China accounting for over half).
Asian equity markets could represent over 40% of global market capitalisation by 2030.
The growth in the size of the Asian financial system will have a wide range of other implications for the global financial system. Some of these include:
- The development of massive domestic funds management and financial market industries;
- Shanghai becoming a global financial centre, and the implications for other major financial centres (London, New York, Singapore and Hong Kong); and
- The intra-Asian impact of a substantially larger Chinese financial sector.