WHY ASIA

ASIA AT A GLANCE

A Substantial Middle Class

0%

Asia makes up more than 57% of the world’s emerging markets middle class.1

Global Growth Leader Contribution to Global GDP
49% Contribution to
global GDP by 20502
Emerging Asia Row
0%
Top Region for FDI 2013 FDI Inflows
More than 25% of global
foreign direct flows4
Emerging Asia Row
0%
Consumption Potential Potential Middle Class Spending
Over $30 trillion in middle
spending by 2030(e)3
$0$20$40 Emerging Asia$30 N. America Europe ROW
Strong Balance Sheets Debt as a percentage of GDP
Less than 1/3 the debt of
developed markets
Emerging Asia Row
120%60%0% 1/3 2000 - 2018(e)5

GROWTH IN A HIGHER GEAR UNDERPINS CONSUMPTION

  • China is the driver of the world economy and weathered the Financial Crisis of 2007-08 relatively well through stimulus measures and concerted fiscal and monetary policy
  • China’s rebalancing away from investment-driven to consumer-led growth is widely viewed by analysts as more sustainable over the course of the long-term
  • "New normal" of low economic growth, low inflation, and low interest rates remains asynchronous across regions, with pockets of value and growth in Asia

DM & EM GDP GROWTH

Developed Markets Emerging Markets EM Asia China
16%12%8%4%0%-4% 20012002200320042005200620072008200920102011201220132016E

Source: IMF, World Economic Outlook Database, October (2016)

EXPANDING ASIA VS. THE REST OF THE WORLD

  • Emerging markets have been converging with developed markets during the past several decades
  • EM Asia is outpacing the world in growth and has been an engine benefiting emerging and developed countries alike
  • Within this context, the merit for Asia’s compelling potential comes to the fore against the backdrop of Developed Markets and Emerging Markets ex-Asia

World Output Share: EM Asia Leads the World (GDP)

Developed Markets EM Asia EM ex-Asia
  • 1980
  • 1990
  • 2000
  • 2010
  • 2016E

Source: IMF, World Economic Outlook Database, October (2016)

MAJORITY SLICE OF POPULATION PIE & FAVORABLE DEMOGRAPHICS

  • Over half of the world resides within the confines of Asia, with an increasingly educated labor force
  • Asia boasts preferential demographics and is set to reap the “demographic dividends” in the form of young & skilled labor
  • While developed markets age in decades to come, Asia is poised to see catalysts to its growth prospects with a larger workforce coupled to a lower dependency ratio

World Population Breakdown

Asia Africa Europe LatAm N.America Oceania
70%60%50%40%30%20%10%0% Asia 60% Africa 16% Europe 10% LatAm 9% N.America 5% Oceania 1%

Source: UN, Department of Social Economic and Social Affairs,
World Population Prospects (2015 Revisions); Accessed October 2016 & Mirae Asset Global Investments

BIGGER MIDDLE CLASS WITH GREATER PROPENSITY TO SPEND

  • The traditional DM-led investment cycle into EM for production and savings has been superseded by a rising EM middle class that is characterized by an increasing level of consumption
  • The multi-decade theme of the expanding middle class is just commencing and is expected to continue into the years ahead, particularly within Asia
  • The high-conviction consumer story is a viable entry into capturing Asia’s rising growth and clout

Share of Global Middle Class Consumption

EM Asia EU US Japan Others
0%50%100% 2000 2010E 2020E 2030E 2040E 2050E

Source: Kharas & Gertz (2010)

UNDERREPRESENTED ASIA IN EQUITY BENCHMARKS

  • A discrepancy is apparent between the weighting of global market size and appearance in global indices
  • Asia’s actual market capitalization is not yet accounted for in the MSCI AC World index, suggesting room for further upside
  • This disparity implies that there is room for future market Capitalization appreciation in the years ahead

MSCI Classification VS. Market Capitalization

Rest of World Asia ex-Jpan
MSCI AC WORLD
0%
WORLD MARKET CAPITALIZATION
0%

Source: Bloomberg, FactSet (as of December 30 2016)

SEEING ASIA LIKE WE DO (MIRAE ASSET GLOBAL INVESTMENTS)

SOURCES AND DISCLAIMERS

Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Foreign Direct Investment (FDI) refers to an investment made to acquire lasting or long-term interest in enterprises operating outside of the economy of the investor.

  • 1) US Census Bureau, The Brookings Institution, Reuters 2012
  • 2) IMF World Economic Outlook, Citi Investment Research and Analysis, February 2012
  • 3) OECD, The Brookings Institution, The Emerging Middle Class in Developing Countries, March 2010
  • 4) UNCTAD, World Investment Report 2014, June 2014
  • 5) IMF, World Economic Outlook Database, October 2016