Capital markets in Asia are set to rise in prominence as the global financial crisis of 2008-09 has turned future world economic development into a tale of two halves.

The half of the advanced markets is set to grow much more slowly, with the half of the emerging markets enjoying substantially faster expansion. This will open up opportunities for Asian capital markets to take away some of the business and roles of advanced markets.

The slow but calculated move to raise the international usage of the Chinese yuan is a case in point. It will define the future of Hong Kong and other centres. In the long run, the yuan could even become the core currency around which other Asian currencies revolve. The more Asian countries become part of the same supply chain with China, the stronger the role of the yuan.

Beyond currency, there are other key drivers for more rapid capital market development in Asean. What are they?

First, the move toward the Asean Economic Community will lead to more intra-regional trade in goods and services. A lot of financing will be required, and it will have to expand beyond the banking channel into the capital market channel.

Second, we must encourage Asean economies to invest more in each other. In the past, countries invested surplus savings in advanced markets only to see them recycled into countries with deficits. Asean investors need to get more comfortable with Asean financial products.

Third, the Asian Crisis of 1997-98 showed that capital markets can be much better than banks in allocating scarce imported capital to deserving projects. Because bank lending is a secret between a bank and its customer, it can easily lead to overinvestment and overcapacity.

via Bangkok Post : Asia’s capital markets get ready to rise.

About the author

Thirachai Phuvanatnaranubala (born 21 December 1951) is a Thai economist, the Secretary-General of the Securities and Exchange Commission of Thailand (a post he has held since December 2003) and Chairman of the ASEAN Capital Markets Forum (ACMF). Prior to this, he was a Deputy Governor of the Bank of Thailand.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

SET and TFEX welcome LIB as a member brokerage company

LIB is a member of Thailand Clearing House Co., Ltd. (TCH) and Thailand Securities Depository Co., Ltd. (TSD), enabling the company to offer a full array of services.

Thai listed firms report 9-month sales & profit growth

In the nine months through September 2022, SET-listed companies’ core operating profits rose by 25.6 percent year-on-year to THB 1.49 trillion, though production costs increased by 46.9 percent to THB 10.30 trillion

SET and KTB to launch the first DRx based on Apple and Tesla stocks

The two DRx, namely AAPL80X (Apple DRx) and TSLA80X (Tesla DRx), will become available to investors through the Stock Exchange of Thailand at the same time.