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1、Asia 2.0Investing in an era ofnew opportunities in insightsForewordAsias significant economic potential and rising importance within global supply chains are well acknowledged.Yet its economic prominence often contrasts with the more modest role it plays in global investor portfolios.Through a combi
2、nation of a survey,interviews and in-depth research,Eastspring Investments and PwC Singapore have developed this whitepaper that examines the different dimensions of Asias next transformation and the opportunities forinvestors.As global business leaders look to leverage on the regions expanding digi
3、tal infrastructure,improving supportive business environment and increasing connectivity,we believe that Asias next economic transformation will present investors with differentiated alpha opportunities.This transformation will be different from the last it will be more innovative,more technological
4、ly advanced,higher value-added and greener.This will present new opportunities for investors in both traditional and new economy sectors,which can potentially translate into more sustainable and attractive earnings growth,and therefore returns.By presenting the diverse opportunities within Asia,the
5、whitepaper provides useful information for global investors seeking greater diversification and rebalancing strategies.It also highlights the opportunities for Asian investors beyond their home markets.As global growth slows,Asia remains a high growth region where the movement from traditional bank
6、lending to capital market financing continues.Asia offers deep and well-developed markets as well as less mature markets,each presenting its own set of unique opportunities.We hope that the insights from this whitepaper will create greater awareness and interest for investing in Asia.As experts in A
7、sia with investment teams in 11Asian markets,we look forward to exploring with you the role Asia can play in your portfolios and how you can participate in this era of new opportunities.Bill Maldonado Chief Investment Officer&Interim Chief Executive Officer Eastspring InvestmentsEastspring Investmen
8、ts:Asia 2.0 Investing in an era of new opportunities 2ContentsExecutive summary 5Asias transformation 8Three dimensions of change 14Economies 18Sectors 24Enablers 30Key considerations for investors 36Market perspectives 38China 40India 44Japan 48Taiwan 52South Korea 56Malaysia 60Thailand 66Indonesia
9、 68Vietnam 72Appendix 76Key sources 78Disclaimer 3Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsEastspring Investments:Asia 2.0 Investing in an era of new opportunities 4Executive summary5Market perspectivesAppendixExecutive
10、 SummaryThree dimensions of changeAsias transformationKey considerations for investorsThis whitepaper examines the different dimensions of Asias next transformation and the opportunities that will emerge for investors.Section 1 considers Asias development and the opportunities it presents,concluding
11、 with key considerations for investors to participate in Asias transformation.Section 2 provides a deep-dive into nine selected Asian markets detailing the key drivers of each markets transformation and their high opportunity sectors.As part of this whitepaper,we conducted a pulse survey among 100 C
12、-suite level executives across the United States,Europe and Asia and across multiple industries to seek their views on the opportunities they see in the region,the key challenges they face,as well as the initiatives they are prioritising to expand in Asia.We also interviewed several global business
13、leaders in the region on their take on the high opportunity sectors in Asia.As global growth slows,investors and businesses are renewing their focus on Asia for opportunities and risk diversification.The regions dynamism will provide investors with differentiated alpha opportunities that are unparal
14、leledelsewhere.Business leaders see India as having the most potential for transformation opportunitiesWe asked business leaders where they see the most potential for growth and transformation opportunities amongst the nine selected Asian markets.Singapore and Hong Kong were separately positioned as
15、 financial hubs.Most respondents believe India has the most potential,followed by China and Indonesia.Respondents mentioned Asias leading role in Electric Vehicles(EV)production,rising consumer wealth and the potential for e-commerce expansion as some of the factors behind this optimism.Eastspring I
16、nvestments:Asia 2.0 Investing in an era of new opportunities 617%28%24%57%67%7%28%20%38%IndiaJapanIndonesiaMalaysiaChinaSouth KoreaVietnamThailandTaiwanAsias transformation is generating new opportunities in traditional and new economysectorsAsias transformation has led to innovation across traditio
17、nal sectors,such as manufacturing,healthcare and financials,and also generated opportunities across new economy sectors,such as the digital economy,renewable energy and EVs.Asias next transformation will be supported by keyenablers.Investors require a tailored approach to capitalise on Asias differe
18、ntiated alphaopportunitiesIt is imperative that investors understand the nuances across different Asian equity markets before constructing their portfolios andstrategies.The choice between an active or passive strategy will depend on cost considerations and market maturity.Thematic investing can all
19、ow investors to benefit from structural trends,and quantitative solutions can exploit market inefficiencies to generate greater alpha.To help investors better understand Asias differentiated opportunities,we have provided deep-dive market perspectives on nine selected Asianmarkets.7Market perspectiv
20、esAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsManufacturingDigital economyHealthcareElectric vehiclesFinancialsExpanding physical and digitalinfrastructure Educated and skilled workforceSupportive government policies andincentivesImproving o
21、perating business environmentEnhanced tech capabilitiesConnectivity and access to marketsRenewable energy1 DevelopAn understanding of Asias complex anddiverse markets2 DefineNeeds and constraints3 DetermineImplementation and strategyAsias transformationEastspring Investments:Asia 2.0 Investing in an
22、 era of new opportunities 8There is a renewed focus towards Asia1 as businesses look to rebalance their footprint in view of geopolitical concerns,pandemic-related shocks,and slower globalgrowth.Asia has demonstrated strong economic growth over the last decade.Rebounding strongly from the pandemic,t
23、he region is set to see even faster growth going forward.Asia is expected to account for over 40%of the worlds GDP by 2030.It will be important not to neglect this potential and the opportunities itbrings.Asia is undergoing significant transformation demographic shifts,higher consumer spending,techn
24、ological advancements,and widespread innovation,alongside a vibrant start-up scene which positions it as an attractive region for investors.A combination of developed economies with advanced technology ecosystems and emerging high-growth economies offers possibilities that are unparalleled elsewhere
25、.Increased digitalisation,alignment with global ESG taxonomies,and deepening regional partnerships also bring forth an array of uniqueopportunities.Fig 1.Nominal GDPUSD trillion,2010-2030Driven by supply chain rebalancing,a growing consumer class and innovation 1 Asia includes economies as per Unite
26、d Nations Statistics Divisions geographical classification of Asia,including Taiwan.Source:Fitch Solutions201.233.465.0Asia1Global66.485.7153.99Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsAsia is already a very
27、important player within global and regional supply chains.In 2010,the region accounted for 37%of global exports,amounting to USD7 trillion which subsequently grew to USD8.9 trillion in 2020.Despite the recent trend of reshoring and nearshoring,exports from Asia are expected to increase further and r
28、each USD20.7 trillion by 2030,more than doubling in ten years.By 2030,Asia will account for 42%of globalexports.At the same time,Asia is amassing substantial wealth.Consumer expenditure increased by 6.7%p.a.from USD7.4 trillion in 2010 to USD14.1 trillion in 2020.As Asias population becomes wealthie
29、r,this trend is expected to continue with consumer spending growing at a faster rate,reaching USD30.4 trillion by 2030.Widespread innovation is also underpinning Asias long-term growth.The region accounts for more than half of the global patent applications filed under the Patent Cooperation Treaty(
30、PCT)in 2022.Asias financial markets provide a gateway to tap into the regions growing economies,exports and consumer wealth.In 2010,total capitalisation across 11 selected Asian markets was nearly USD15 trillion,which doubled to USD30 trillion by 2022.In 2022,proceeds from Asia Pacifics Initial Publ
31、ic Offerings(IPOs)exceeded the Americas for the first time since 2018,with 802 IPOs raising USD108 billion.China remains a key market for investors but there are growing opportunities from other markets that offer differentiated alpha drivers.Fig 2.Exports,consumer expenditure and total patent appli
32、cations across AsiaFig 3.Market capitalisation2USD billionSource:Fitch SolutionsSource:CEIC,NSESource:EuromonitorSource:WIPO1 Total PCT applications within the calendar year by filing date originating from Asia.2 See Appendix for detailed information on market capitalisation.Exports of goods and ser
33、vicesUSD trillionConsumer expenditureUSD trillionPCT applications1Thousands,%Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 102.4%CAGR 2010 20208.9%CAGR 2020 203020.08.920.76.7%CAGR 2010 20208.0%CAGR 2020 203020.414.130.420102022AsiaGlobal58.735.7%Asia
34、s share of global164.4152.0277.354.8%Asias share of globalSouth KoreaJapanHong KongIndiaSouth KoreaTaiwanSingaporeIndonesiaMalaysiaThailandVietnam11,3035,2294,5703,3891,6101,44461709.12.94.512.13.45.1-0.34.56.4-0.615.2Market capitalisation(Dec 2022)Market capitalisation growth(%)CAGR 2010
35、-2022Market capitalisation(Dec 2022)Market capitalisation growth(%)CAGR 2010-2022Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investors11Asias uniqueness and potential stems from connectivity being at the heart of its transformation
36、.Over the years,Asia has strengthened intra-regional and global trade links,and is now well connected to major economies both within the region and outside.Trade facilitation has been a key instrument in lowering transaction costs,allowing Asia to benefit from greater regional and global supply chai
37、n integration.According to the Asian Development Bank(ADB),the Regional Comprehensive Economic Partnership3(RCEP)can add USD245 billion to the regional economy by 2030.Asias deepening connectivity also allows for the seamless integration of supply chains across borders.Historically,Asia has always b
38、een the linchpin of global manufacturing;but today,it is no longer just the traditional manufacturing hub it used to be.Technological development,knowledge transfer and accelerating innovation are reshaping the region as a critical exporter of higher-end,hi-tech goods and services.Moreover,Foreign D
39、irect Investment(FDI)inflows to Asia have been on the rise.In 2010,FDI flows to Asia was about USD471 billion.Over a decade,this increased by 3.5%CAGR to USD691 billion in 2021.As Asian economies open up further to foreign investors and continue to mature,businesses pivoting towards Asia will stand
40、to benefit from the regions increased trade liberalisation and activity.Asias deepening connectivitySeamless integration across value chains via regional and global networks3 The Regional Comprehensive Economic Partnership(RCEP)is a Free Trade Agreement among 15 countries:Australia,Brunei Darussalam
41、,Cambodia,China,Indonesia,Japan,Laos,Malaysia,Myanmar,New Zealand,the Philippines,Singapore,South Korea,Thailand,Vietnam.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 12Fig 4.Asias trade agreementsSource:Asia Regional Integration Centre,Government websites*non-exhaustive l
42、ist of trade agreements or economic partnerships:Bilateral agreements*Multilateral agreements*Bilateral and Multilateral agreements*Key:13Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsSingaporeIndiaChinaJapanASEANMercosurCen
43、tral AmericaEuropean Free Trade AssociationEuropean UnionEurasian Economic UnionGolf CooperationMexicoAustraliaNew ZealandUnited KingdomUnited StatesCanadaTaiwanHong KongMalaysiaVietnamThailandIndonesiaSouth KoreaThree dimensions of changeContents18 Economies24 Sectors30 EnablersEastspring Investmen
44、ts:Asia 2.0 Investing in an era of new opportunities 14Asias transformation is happening across three key dimensions.First,the different stages of economic development within the region can support businesses in rebalancing and building new growth models.Next,there are also opportunities across mult
45、iple industries both in traditional and new economy sectors.Finally,improving infrastructure,government initiatives,and a growing skilled talent pool are some of the enablers facilitating theseopportunities.Across different economies and sectors,supported by key enablers EconomiesAsia is undergoing
46、a fundamental transformation.In view of geopolitical developments and supply chain disruptions,businesses are looking towards the region to diversify their footprint.The economies we have identified in this whitepaper show immense potential to fulfil businesses needs forrebalancing.SectorsTechnologi
47、cal advancement,innovation and the regions green transition are creating opportunities in traditional sectors,such as manufacturing,healthcare and financials,as well as in new economy sectors,including digital economy,EVs andrenewableenergy.EnablersImproved digital infrastructure and technological c
48、apabilities,supportive government policies and incentives,and an increasingly friendlier business environment supported by Asias growing skilled talent pool will serve to accelerate the regionstransformation.Outside of Taiwan,China and India are the two largest markets in Asia for us.We already have
49、 operations in China and are looking to expand in India,to be closer to where our largest customer segments are.Senior executive of one of the worlds largest fabless semiconductor companies15Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations
50、for investorsGlobal business leaders are looking to Asia for opportunities with India in the lead Markets which business leaders believe hold the most potential1Based on our survey,67%of business leaders believe that India holds the most potential for expansion or transformation opportunities,follow
51、ed by China(57%)and Indonesia(38%).According to the United Nations,India is the worlds most populous nation.As the expanding population and rising income levels fuel increased demand,Indias total consumer expenditure is expected to reach USD4.8 trillion by 2030,from USD2.1 trillion in 2022.In additi
52、on,China has been a longstanding global power and by 2030,the country is expected to account for 20%of the worlds GDP and 12%of global exports.Chinas large consumer market will be the main driver of economic growth going forward.Consumer expenditure is expected to increase from USD6.7 trillion in 20
53、22 to USD11.2 trillion in 2030.Moreover,Chinas leading role in EV manufacturing and renewable energy presents an opportunity for investors to leverage Asias green transition.Indonesia offers tremendous potential from its growing population and middle class.According to Euromonitor,the countrys middl
54、e class will expand to 23 million households by 2030,which will drive demand and spending.Total disposable income in Indonesia is expected to increase from USD731 billion in 2022 to nearly USD1.4 trillion in 2030.Consumer expenditure is also expected to rise from USD683 billion in 2022 to USD1.3 tri
55、llion by 2030.With its vast natural resources in transition metals,alongside its ambitions to establish an integrated EV supply chain and a greener economy,there will be diverse opportunities across multiple sectors in Indonesia.1 We asked survey respondents in which markets they see the most potent
56、ial for growth/transformation opportunities.Values indicate the percentage of respondents who indicated the option as one of their top three choices.Singapore and Hong Kong are not included in this question as we focused on their position as financial hubs in the Asia Pacific region.See pages 20 and
57、 22.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 167%Taiwan17%Thailand20%Malaysia24%South Korea28%Vietnam28%Japan38%Indonesia57%China67%India17Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsEconomi
58、esThe unique opportunities across the region through a thematic lensWe have categorised 11 selected Asian economies,based on their profiles as well as size and liquidity/market accessibility,to showcase the unique and diverse opportunities across the region.Economic powerhousesChina,India,JapanThese
59、 economies have the largest GDP in absolute terms.Both China and Japan have well-established,liquid and accessible financial markets.Indias fast-growing market is becoming too big toignore.Financial hubsHong Kong,SingaporeBoth economies are renowned financial hubs.Hong Kong has a higher market capit
60、alisation and provides access to China.Singapores geographical advantage allows it to be well integrated across the ASEANregion.East Asia cornerstonesSouth Korea,TaiwanThese are economies with a strong tech bias.South Korea and Taiwan are the largest semiconductor players in Asia Pacific,and deeply
61、embedded in global supply chains.Both also have deep,liquid financial markets.Regional contendersMalaysia,ThailandThese are relatively smaller economies in absolute GDP terms,but market capitalisation as a percentage of GDP is relatively high.As these economies continue to grow,their financial marke
62、ts will grow in tandem and present moreopportunities.Emerging playersVietnam,IndonesiaThese economies are expected to enjoy rapid GDP growth,but market capitalisation as a percentage of GDP is currently low.This leaves significant room for financial markets to mature,although accessibility may be a
63、challenge in the short term.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 181 See Appendix for more details on market capitalisation.Fig 5.Market capitalisation and GDP1ChinaUSD17,768 bnUSD11,303 bn63.6%of GDPTaiwanUSD761 bnUSD1,444 bn189.6%of GDPHong KongUSD361 bnUSD4,570
64、 bn1,266.1%of GDPMalaysiaUSD406 bnUSD370 bn91.2%of GDPIndonesiaUSD1,319 bnUSD608 bn46.1%of GDPIndiaUSD3,391 bnUSD3,389 bn100.0%of GDPSouth KoreaUSD1,726 bnUSD1,610 bn93.3%of GDPSingaporeUSD426 bnUSD614 bn144.0%of GDPThailandUSD487 bnUSD587 bn120.6%of GDPVietnamUSD404 bnUSD170 bn42.1%of GDPJapanUSD4,
65、232 bnUSD5,229 bn123.5%of GDP19Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsTaiwanSingaporeVietnamIndonesiaJapanSouth KoreaThailandIndiaChinaMalaysiaHong KongBubble size indicative of market capitalisation in USD in 2022GDP
66、,2022Market cap.,2022Market cap.as%of GDPSingaporeIn 2022,Singapore was ranked Asias top financial centre(and 3rd in the world),according to the Global Financial Centres Index.The city-states stable government and business-friendly environment are key to cultivating foreign investments and domestic
67、growth.FDI inflows to Singapore grew from USD57 billion in 2010 to USD75 billion in 2020,and GDP grew from USD236 billion to USD345 billion over the same period.By 2030,nominal GDP is expected to hit USD710 billion with real GDP growth per annum at 3.3%.Singapore also has a liquid financial market.M
68、arket capitalisation stood at USD614 billion in 2022,amounting to 144%of GDP.The population is also becoming wealthier,presenting a growing consumer base with higher spending power.Annual disposable income per capita in Singapore rose from USD23,000 in 2010 to USD28,000 in 2020,and is expected to re
69、ach USD47,000 by 2030.Consumer expenditure is forecasted to grow at 5%p.a.from USD112 billion in 2020 to USD190 billion by 2030.Singapore remains a leading trade centre.47%of business leaders surveyed have their regional or international corporate headquarters in the city,while 29%of them have a reg
70、ional logistics hub based inSingapore.With its advanced technological and digital infrastructure,Singapore also serves as a hub for innovation.Many Fortune 500 companies Research&Development(R&D)labs and start-ups are located in Singapore.In line with efforts to grow Asias carbon offset ecosystem,Si
71、ngapore also intends to establish itself as a carbon trading hub.Singapore is well-positioned for both companies and investors to leverage its geographical advantage,developed infrastructure and economic connections for growth and investment opportunities.1 Values indicate the percentage of responde
72、nts that indicated their company has a presence in Singapore and selected the corresponding option.How global business leaders view Singapores role in the region:1Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 20Financial hubRegional or international corporate headquarters4
73、7%Regional holding company or investment vehicle29%Regional R&D or innovation hub16%Regional logistics hub29%Regional treasury centre14%21Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsHong KongThe Global Financial Centres In
74、dex ranked Hong Kong the 2nd top financial centre in Asia,and 4th in the world.As one of the worlds leading financial centres,the city is a prime location for financial services and home to many financial institutions.Market capitalisation in Hong Kong in 2022 was USD4,570 billion 1,266%of its GDP;t
75、he highest market capitalisation as a percentage of GDP in the region.Moreover,Hong Kongs financial integration with China allows it to function as a dominant gateway to the latter and a global hub for offshore renminbi(RMB)businesses.The citys robust financial infrastructure remains essential in fa
76、cilitating portfolio and investment flows between China and Hong Kong.28%of businesses with a presence in Hong Kong indicated that the city functions as a regional or international corporate headquarters,while 15%see Hong Kong as their regional holding company or investment vehicle.The citys busines
77、s-friendly environment has also attracted significant FDI inflows.Among the 11 selected Asian economies,Hong Kong was the 2nd largest recipient of FDI,receiving USD135 billion in 2020,having grown at 7%CAGR from USD71 billion in 2010.Nominal GDP is forecasted to reach USD505 billion by 2030,with rea
78、l GDP growth at 2.1%p.a.from USD361 billion in 2022.More recently,Hong Kong has announced new tax concessions among other measures to attract wealthy family offices and maintain its appeal as a premier financial hub.1 Values indicate the percentage of respondents that indicated their company has a p
79、resence in Hong Kong and selected the corresponding option.How global business leaders view Hong Kongs role in the region:1Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 22Regional or international corporate headquarters28%Regional holding company or investment vehicle15%Re
80、gional R&D or innovation hub7%Regional logistics hub15%Regional treasury centre6%Financial hub23Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsSectorsAsias evolving consumer base and green transition will pave the way for new
81、 investment opportunities From our survey,most business leaders(77%)noted that they are looking to Asia for expansion or transformation opportunities primarily because of the regions expanding and evolving consumer base.Consumer expenditure across the 11 selected Asian economies has grown from USD6.
82、4 trillion in 2010 to USD12 trillion in 2020.An expanding middle-income class is expected to almost double consumer expenditure to USD23.2 trillion by 2030.Meanwhile,69%of business leaders are confident that Asia will see sustained economic growth in the future.Indeed,as mentioned earlier,Asia is ex
83、pected to account for 40%of the worlds GDP by 2030.25%of business leaders are looking to expand in Asia because of its connected and integrated supply chains.Favourable demographics,new manufacturing capabilities,digitalisation and supportive policies have helped Asia expand its share of global manu
84、facturing over the years.Businesses also highlighted the unique opportunities they see in the region.Given Asias rapidly increasing internet penetration,the rise in mobile and live streaming e-commerce is expected to generate new channels of consumption and opportunities.Across the 11 selected econo
85、mies,internet users grew from 750 million in 2010 to 1.9 billion in 2020 and is projected to reach almost 3 billion by 2030.Others see Asia playing a leading role in the worlds transition to net zero,especially given the regions manufacturing expertise in EVs.By 2030,the same 11economies are expecte
86、d to account for 52%of global passenger EV sales.2Beyond EVs,increased investments in green infrastructure and technology will likely lead to new opportunities.Renewable energy capacity among the 11 selected Asian economies is expected to reach 2.3TW by 2030,up from 1.1TW in 2022,accounting for 54%o
87、f global renewable energy capacity.Why businesses are looking to Asia for expansion or transformation opportunities11 Values indicate the percentage of respondents who indicated the option as one of their top two choices.2 Refers to passenger electric vehicles sales.Data for Taiwan and Vietnam not a
88、vailable.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 2477%69%25%7%22%Expanding and evolving consumer base Optimism towards sustained economic growth Connected and integrated supply chainsNew opportunities unique to the region Risk diversificationBusiness leaders were ask
89、ed to elaborate on the unique opportunities they see in Asia25Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsIncreasing number of global customers with Asia presencePartnership opportunities with local stakeholdersAsias leadi
90、ng role in EVsRise in mobile and live streaming e-commerce in AsiaAsias growing high-net-worth consumer market Asias transformation is creating opportunities in traditional and new economy sectors ManufacturingThe presence of established sectors,such as semiconductor manufacturing and industrial mac
91、hinery,supported by innovative developments in advanced manufacturing,will make Asia a major supplier for industrial goods and services.Both Japan and Taiwan are key exporters of industrial machinery and are heavily investing in R&D to increase automation and productivity to mitigate the effects of
92、their ageing populations.Separately,Malaysia has prioritised digital adoption to enhance its manufacturing sophistication in producing advanced semiconductor equipment.FinancialsThe financials sector has been and will remain a cornerstone in Asias transformation.Accelerated digitalisation has facili
93、tated the growth of digital banking and fintech.In Japan the major shift towards cashless transactions,especially in government and financial services will generate investment opportunities.Thailand and Indonesias active fintech start-up scene and growing consumer demand will also create opportuniti
94、es across the industry,from digital payments to insurance and mutual funds.HealthcareAsia is primed for a transformation in healthcare,given shifting demographics,rising consumer expectations and technological innovation.Collectively these factors will redefine healthcare delivery and management.Hea
95、lthcare expenditure across the 11 selected Asian economies is expected to reach USD4.3 trillion by 2030,growing at 9%CAGR from 2022.The regions digital healthcare market is also expanding with increased demand for tele-healthcare and wearables.Asias evolving healthcare industry will thus open doors
96、to diverse opportunities going forward.TRADITIONALEastspring Investments:Asia 2.0 Investing in an era of new opportunities 26Electric vehiclesAccording to the International Energy Agency,EVs are expected to account for 60%of global vehicle sales by 2030.EV manufacturing thus signals a paradigm shift
97、 in the automotive industry.From Indonesias vast resources in transition metals to South Koreas advanced technology in automotive manufacturing and Chinas leading position in the EV battery supply chain Asia is well-positioned to capitalise on the opportunities along the EV value chain.Digital econo
98、myFast-growing internet penetration,higher purchasing power,and changing consumer behaviour are enabling Asias digital economy to flourish.While COVID-19 accelerated digital adoption,not all of the regions economies have captured their full digital potential.There is an estimated USD2.2trillion upsi
99、de if Asia fully captures the benefits of its digital economy by 2030.1 With high population growth in economies such as India,alongside widespread digital adoption,Asias financial and information technology sectors are likely tobenefit.Renewable energyIn view of Asias sustainability targets over th
100、e next few decades,there will be notable opportunities in energy and infrastructure.The regions growing population will fuel higher energy demand,which is expected to drive large-scale investments in green infrastructure and technology.China remains a leader in solar and wind energy while South Kore
101、a is building capabilities in hydrogen fuel cell technology,and India is looking to buttress its manufacturing capabilities in solarequipment.1 See Access Partnerships Prosperous APAC:Digital economy enablers.The 11 APAC economies included in the study were:Australia,India,Indonesia,Japan,Malaysia,P
102、akistan,the Philippines,Singapore,South Korea,Thailand,andVietnam.NEW ECONOMY27Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsGrowing ESG focus across AsiaAs Asian governments commit to sustainability targets over the next fe
103、w decades,the business leaders in our survey say that their companies have an increased focus on sustainability.There is growing awareness of the need to align their company operations with these targets to stay relevant in the long run.64%of them have prioritised the setting of ESG standards across
104、 their supply chain ecosystem with 57%indicating that their choice of suppliers will be determined by ESG-related considerations.30%of business leaders considered ESG risks as a key challenge to grow and transform in Asia.Over two-thirds considered limited awareness about current ESG exposure across
105、 the supply chain as the topmost ESG risk for their expansion in Asia.This is not necessarily an Asia-centric issue;carbon emissions that are in a companys value chain come from upstream(suppliers)and downstream(customers)and is always the hardest to measure.Just over 60%indicated that possibly disr
106、uptive new legislation would be a key risk.1 Respondents were asked which ESG initiatives they implemented or are planning to implement to stay relevant/profitable in the long run.Values reflect the percentage of respondents who ranked the option within their top three choices.2 Respondents were ask
107、ed to rank up to three key challenges with respect to their growth and transformation in Asia.Values reflect those who ranked ESG risks within their top three choices.3 Respondents were asked to select the top two most important ESG-related risks for their companys operations in Asia.Values reflect
108、the percentage of respondents who selected this option as among their top two choices.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 2864%ESG standard setting58%ESG monitoring and reporting57%Supplier selection with ESG in mind69%Limited awareness about current ESG exposure
109、 across the supplychain61%New regulations that could disrupt existing businessmodels30%ESG-specific focus areas for companies in the next two to three years1Of business leaders indicated ESG risks as a key challenge to their growth and transformation in Asia2Specific ESG risks that business leadersi
110、dentified3We recognise that responsible investing requires a patient approach and an understanding that improvement in corporate behaviour can support investor value over time.We believe that companies that adopt sustainable business practices are more likely to deliver better value in the long term
111、.Joanne Khew,Director-ESG Specialist,Eastspring Investments29Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsEnablersAsias transformation will be supported by key enablersAsia is developing new capabilities and skill sets,buil
112、t upon a foundation of improved physical and digital infrastructure.Its vibrant start-up scene,coupled with the presence of leading multinational companies,is facilitating the regions significant headway in developing emerging technologies that will shape itstransformation.Government policies and in
113、centives to develop targeted sectors,initiatives to establish a friendlier business environment,and the regions deepening connectivity will facilitate foreign direct investment inflows.Finally,Asia is a melting pot of global talent;its increasingly educated and skilled workforce underpins the region
114、s innovation and growth.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 30Key enablers that business leaders expect will drive Asias transformation in the future1Expanding physical and digital infrastructureImproved operating business environmentEnhanced technological capabi
115、litiesEducated and skilled workforceSupportive government policies and incentivesGreater connectivity and access tomarkets1 Respondents were asked what they thought would be the key enablers for Asias transformation now and in the future.Values reflect the percentage of respondents that selected the
116、 option as one of their top three choices.62%52%41%56%50%37%31Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investors1 The 11 markets are:China,Hong Kong,India,Indonesia,Japan,Malaysia,Singapore,South Korea,Taiwan,Thailand,and Vietna
117、m.2 Total PCT applications within the calendar year by filing date originating from Asia.Better physical and digitalinfrastructureRecognising the critical role that connectivity plays in driving economic growth and innovation,Asia has made vast improvements in its physical and digital infrastructure
118、.By 2030,45%of global internet users will be from the 11 selected economies in Asia.1 To sustain this momentum,governments and private companies have committed resources to expand and upgrade Asias transport and technology infrastructure(roads,wireless networks,data centres,etc).Between 2022 and 202
119、5,mobile operators in the Asia Pacific region are set to invest around USD227 billion in 5G deployments.Enhanced physical and digital infrastructure will complement Asias growing manufacturing sophistication and generate opportunities in the EV,digital economy,and renewable energysectors.Enhanced te
120、chnological capabilitiesThe region is increasingly becoming a hotbed for innovation and is driving development in emerging technologies such as Artificial Intelligence(AI)and Cloud Computing.Asias PCT applications2 rose from 58,714 in 2010 to 152,010 in 2022.Japan,Singapore and South Korea are well-
121、established technological hubs,but other economies are also making strides in technologicaldevelopment.Improved operating businessenvironmentBesides supporting targeted sectors,governments are looking to improve the overall business environment to encourage expansion in Asia.For example,India is ref
122、orming its labour market,enhancing insolvency and bankruptcy resolution,and simplifying its tax regime;Indonesia has relaxed regulations regarding foreign investments and business permits,while Vietnam is trying to streamline administrative procedures to reduce compliance costs for businesses.In add
123、ition,emerging equity markets such as Thailand and Indonesia are relaxing requirements for IPO listings,to encourage companies especially high-growth start-ups in the technology sector to list on the stock exchange,making it easier for such companies to raisecapital.Eastspring Investments:Asia 2.0 I
124、nvesting in an era of new opportunities 32Supportive government policies and incentivesGovernments in Asia have introduced several policies to encourage domestic expansion and FDI across the region.An example is Indias USD2.3 billion Production-Linked Incentive(PLI)scheme which aims to increase dome
125、stic and foreign investments in local manufacturing.Inter-governmental partnerships are also increasingly common,such as Thailands Memorandum of Understanding(MoU)with Japan to increase industrialcooperation.Educated and skilledworkforceHistorically,Asias sizeable population and competitive wages ma
126、de it an attractive destination for low-tech manufacturing jobs.However,with more of Asias eligible workforce gaining higher educational qualifications and a growing emphasis on R&D,the regions labour market is changing.According to the 2021 Times Higher Education World University Rankings,nearly on
127、e-third of the top 200 universities are based in Asia,compared to 26%in 2016.Moreover,public-private partnerships between multinational corporations and government agencies to promote digital skills,can pave the way for Asia to become a regional hub for skilled talent to support growth in new and ex
128、isting sectors.With greater intra-regional connectivity,many markets in Asia are easing foreign immigration rules to attract skilled professionals.For example,Taiwan,Hong Kong and Singapore have all introduced new visas or relaxed regulations to attract highly skilled global talent.Greater connectiv
129、ity and access to marketsBroadly,Asia has forged closer trade ties through trade agreements,such as RCEP,to strengthen intra-regional trade and supply chain networks.Asian manufacturers stand to become more competitive with increasingly integrated supply chains,while lowered barriers or tariffs redu
130、ce logistics costs,and encourage greater trade and FDI flows.33Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsBusiness leaders see the need to evolve to succeed in AsiaAccording to PwCs 26th Global CEO survey,53%of CEOs in As
131、ia Pacific(14%more than global CEOs)believe their current business models need to evolve in order to stay relevant.As Asia transforms,so must business models,to succeed in Asia.From our survey and interviews of business leaders,most noted that forging new local partnerships will be key for their bus
132、inesses to participate in Asias transformation.They see geopolitical uncertainty as a key challenge for the region.1 Values indicate the percentage of respondents who ranked this key focus area among their top three choices2 Values indicate the percentage of respondents who ranked this key challenge
133、 among their top three choices.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 3464%Forge new partnerships53%Launch new products and services44%Invest in talent development40%Expand capacity39%Digitalise and automate operations31%Invest in Research and Development26%Drive su
134、stainability and ESG56%Geopolitical uncertainty55%Regulatory constraints49%Economic turbulence43%Cybersecurity and IP35%Disruptions30%Unfamiliarity with local market30%ESGKey focus areas1Key challenges2We need to build skills among our talent to support the growth of local small and medium enterpris
135、es(SMEs).President&CEO of a major Malaysian manufacturing company with an extensive global customer base35Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsKey considerations for investorsEastspring Investments:Asia 2.0 Investin
136、g in an era of new opportunities 36For global investors,a direct allocation to Asia as a region allows investors to take advantage of Asias dynamism and diversification benefits to reap significant alpha.For Asian investors,diversifying away from domestic markets reduces home bias and capitalises on
137、 the unique strengths in the different Asian markets.Investing in regional blocs such as Greater China with its technology bias or ASEAN with its growing middle-class population provides investors with exposures playing to specific sector strengths.At the same time,long-term investors with higher ri
138、sk thresholds can invest in less mature Asian markets and benefit as these markets achieve their full potential.Alternatively,thematic investing allows investors to benefit from structural growth trends such as the ongoing supply chain reconfiguration,changing demographics and the increasing focus o
139、n ESG.Investors can adopt a differentiated approach across Asia.Cost considerations and market maturity will influence the choice between a passive and active strategy.For active strategies,asset managers with on the ground investment teams can help navigate the local nuances in Asia and provide mor
140、e optimal investment outcomes.Beyond traditional strategies,the availability of good quality data gives investors the option to leverage on quantitative solutions to exploit market inefficiencies.Asias diverse equity markets and its growing bond universe provide significant room to create bespoke mu
141、lti asset solutions that can meet the needs of different investors.Craig Bell,Head of Multi Asset Portfolio Solutions,Eastspring Investments37Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investors1DEVELOPAn understanding of Asias co
142、mplex and diverse markets2DEFINENeeds and constraints3DETERMINEImplementation and strategyDivergent governance and policy standardsCost effectivenessPortfolio goalsVaried investor mixDesired exposure tospecific trendsLiquidity requirementsDifferent liquidity profilesMarket maturityRisk targets Multi
143、ple currenciesData accessibility and qualityDiversification needsDiverse macro drivers and complex geopoliticsMarket perspectivesContents40 China44 India48 Japan52 Taiwan56 South Korea60 Malaysia52 Thailand68 Indonesia72 VietnamEastspring Investments:Asia 2.0 Investing in an era of new opportunities
144、 38Financials1 The nine markets are:China,India,Indonesia,Japan,Malaysia,South Korea,Taiwan,Thailand,and Vietnam.Infrastructure developmentDigital economyImproved technological capabilitiesRenewable energySupportive government policiesElectric vehiclesFriendly business environmentGrowing educated an
145、d skilled workforceIncreased connectivityIn the previous section,we looked at Asias transformation and identified the key drivers behind this:infrastructure,technological capabilities,government policies,business environment,regional connectivity,andtalent.We also considered how these enablers were
146、encouraging innovation across Asia in traditional mainstays,such as manufacturing,healthcare and financials,while also giving rise to opportunities in new economy sectors digital economy,renewable energy and EVs.To help investors appreciate Asias dynamism and the key opportunities across the region,
147、we will deep dive into each of the nine selected Asian markets,1 with each market perspective featuring the key enablers of its transformation.While this transformation creates opportunities across multiple sectors,we have cited two examples of high opportunity sectors for investors to consider.Manu
148、facturingHealthcare39Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsAs China transitions to higher quality growth,it will continue to boost innovation to facilitate domestic substitution in both software and hardware.Paul Cho
149、ng,Portfolio Manager,EastspringInvestmentsChinaA major economic powerhouse,focusing on innovation and decarbonisation to sustain long-term growth1 Total market capitalisation(market cap)of the Shanghai and Shenzhen stock exchanges.2 Refer to theshares of companies incorporated in Mainland China that
150、 are listed or traded on theHong Kong Stock Exchange.3 Value indicates the sum of the average daily turnovers for Shanghai and Shenzhen stock exchanges for the calendar year of 2022.4 Companies listed on either the Shanghai or Shenzhen stock exchanges.Overview and key enablersAs China recovers from
151、the pandemic,the government is accelerating the pivot towards domestic consumption to sustain long-term economic development.Under the Strategic Plan for Expanding Domestic Demand(2022-2035),China envisions that breakthroughs in core technologies will foster innovation and consumerdemand.Consumption
152、 and innovation are key defining features of Chinas transformation.From digital payments to online retail,China is seeing landmark changes in consumer habits,and its“hyper-adoptive”and“hyper-adaptive”consumer base enables it to be highly competitive on the global stage.The governments efforts toward
153、s Chinas decarbonisation will generate opportunities in the renewable energy sector forinvestors.EconomyNominal GDP:USD17,768 billion(2022)Real GDP growth:5.2%(CAGR 2022-2030)Financial MarketMarket capitalisation:1 USD11,303 billion(Dec2022)Market cap as%of GDP:63.6%(2022)H-shares market cap:2 USD75
154、5 billion(Dec 2022)ADRs market cap:USD459 billion(Jan 2023)Daily turnover:3 USD138 billion(Avg.2022)Listed companies:4 4,916(Dec 2022)Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 40Economic powerhouseAs China transitions to a new growth model,innovation will be a key focu
155、s.R&D expenditure rose from 1.4%of GDP in 2010 to 2.4%of GDP in 2020.This figure is expected to increase further,given the ambitions that the Chinese government outlined in its 14th Five-Year Plan(FYP)from 2021 to 2025.The government aims for an annual increase of R&D spending by 7%over those five y
156、ears.As China looks to enhance its capabilities in science and technology,manufacturing,and green development there will be potential opportunities across the EV and telehealthsectors.Technological innovation to spur opportunities across both traditional and new economysectorsThe move to develop a c
157、ommon ESG taxonomy will aid Chinas low-carbon transition and benefit greenindustries China has committed to achieving carbon neutrality by 2060;and the World Bank estimates that China will need USD14-17 trillion in additional investments for green infrastructure and technology in the power and trans
158、port sectors alone to support thistransition.China is working with the European Union(EU)on a common taxonomy to harmonise definitions of green activities and promote greater ESG disclosure among publicly-listed companies.5 This can encourage more global investments in Chinese companies.With more re
159、laxed policies towards foreign ownership(e.g.,Stock Connect and Bond Connect),6 there are more avenues for investors to participate in Chinas green transition.5 As of mid-2020,1,021 A-share companies(panies listed on the Shanghai and Shenzhen stock exchanges)had published annual ESG reports,up from
160、371 companies in 2009,according to the World Economic Forum.Of these,130 had dual listing in Hong Kong where ESG reports are required.6 Stock Connect is a trading platform that enables domestic mainland Chinese stock exchanges to accept shares from international investors and vice versa;Bond Connect
161、 is an investment channel that gives overseas investors access to fixed income markets in Mainland China41Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsChinaExpanding renewable energy capacity and an increased demand for hea
162、lthcare services to generate opportunitiesHigh opportunity sectorsInvestors can access China via onshore markets A-shares1 and offshore markets H-shares2 in Hong Kong and American Depository Receipts(ADRs).3 A-shares tend to be more influenced by domestic policy and offer greater diversification.It
163、also offers a larger opportunity set of Chinese companies,particularly in fast-growing sectors such as healthcare.Meanwhile H-shares provide different exposures such as the internet platforms.As China transitions toward a consumer-led growth model and greener economy,there are potential opportunitie
164、s for investors to participate in Chinas transformation across two key sectors:Renewable energy and Healthcare.1 China A-shares are the stock shares of mainland China-based companies that trade on the two Chinese stock exchanges,the Shanghai Stock Exchange(SSE)and the Shenzhen Stock Exchange(SZSE).F
165、oreign investors can access A shares via the Qualified Foreign Institutional Investor(QFII)or RMB Qualified Foreign Institutional Investor(RQFII)schemes.RQFII participants can invest in the same range of investment products as QFIIs,subject to the same restrictions,but RQFII uses RMB to purchase sec
166、urities,while QFII uses their foreign home currency.2 Refers to companies from the Chinese mainland that are listed on the Hong Kong Stock Exchange.Renewable energyChina is a current leader in renewable energy with a 38%share of the global renewable energy capacity in 2022;this is expected to increa
167、se further to 42%by 2030.Solar and wind energy will play a major role,accounting for a 43%share of Chinas total energy capacity in 2030(up from 29%in 2022).Chinas 2060 carbon neutrality target will create opportunities for local companies along the solar value chain,in the production of polysilicon,
168、to wafers,to photovoltaic modules.The International Energy Agency(IEA)estimates that Chinas share of global polysilicon,ingot and wafer production will reach 95%by 2025.Given Chinas low-cost advantages,wind turbine manufacturers will continue to benefit from the growth in domestic wind energy capaci
169、ty and wind turbineexports.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 42Economic powerhouseSource:Fitch Solutions6a.Renewable energy capacity4Gigawatt1,7742030f202166512%CAGR6b.Renewable energy capacity as percentage of total energy capacity5%44.1%27.2%2030f20213 Refers
170、 to companies that are registered outside the United States and are traded on American Stock Exchanges.4 Refers to the maximum output that grid-connected non-hydro renewables(solar,wind,biomass,marine,geothermal)generating equipment can supply to system load,adjusted for ambient conditions.5 Refers
171、to the maximum output that grid-connected generating equipment can supply to system load.We continue to focus on sectors that are in line with the governments strategic priorities the EV supply chain,renewables,healthcare,consumer and advanced manufacturing.Michelle Qi,Head of Equities,Eastspring Sh
172、anghaiHealthcareThis sector is poised for growth over the next few years,driven by an ageing population and increased demand for healthcare services.Healthcare expenditure as a percentage of GDP is expected to rise from 6.5%in 2022 to 7.5%in 2026.Within the sector,healthcare development projects can
173、 fuel growth for medical device players,with sales forecasted to increase from USD31.8 billion in 2022 to USD45.4 billion in 2026.Moreover,the governments push to enhance Chinas self-sufficiency in pharmaceuticals will support domestic pharma companies and drive overall sector sales up from USD204 b
174、illion in 2022 to USD274 billion in 2026.Finally,telemedicine or digital healthcare companies can benefit from Chinas accelerated digitalisation and changing consumerbehaviours.43Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investor
175、sSource:Fitch Solutions7a.Healthcare expenditureUSD trillion2.62030f20211.110%CAGR7b.Healthcare expenditure as a percentage of GDP%8.5%2030f20216.3%India has reached a stage where it is too big to ignore both economically and in terms of market opportunities forinvestors.Anand Gupta,Portfolio Manage
176、r,Eastspring InvestmentsIndiaA rising economic power,enhancing its infrastructure and upskilling talent to drivegrowth1 Total market capitalisation of the National Stock Exchange.2 Value indicates the average daily turnover for the National Stock Exchange in local currency unit(LCU)for the calendar
177、year of 2022.Value is converted in USD with exchange rate of INR1=USD0.0120849,as of 31 December 2022.3 Companies listed on the National Stock Exchange.Overview and key enablersIndia is the worlds most populous country with one of the largest percentage of working age population.To support the deman
178、ds of a growing and an increasingly affluent society,the government has committed to further developing Indias infrastructure and driving greater sustainability.This can generate opportunities for investors across Indias digital economy and greenindustries.The availability of skilled talent will be
179、a key driver for continued growth,especially in the Information Technology(IT)sector.India will remain a hotspot for technology talent.The government has undertaken several initiatives to further digitalise India and upskill the domestic talent pool in emerging technologies.Indias sizeable populatio
180、n and young workforce lay the foundations to further scale its digital capabilities.EconomyNominal GDP:USD3,391 billion(2022)Real GDP growth:6.7%(CAGR 2022-2030)Financial MarketMarket capitalisation:1 USD3,389 billion(Dec 2022)Market cap as%of GDP:100.0%(2022)Daily turnover:2 USD7 billion(Avg.2022)L
181、isted companies:3 2,168(Dec 2022)Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 44Economic powerhouseInfrastructure development will support increased consumption and growth Deepening technology talent pool to attract globalcompaniesWith the vision of a USD1 trillion digita
182、l economy by 2025,Indias expanding digital infrastructure will be a defining feature of its transformation.The government aims to connect all 600,000 villages in the country with high-speed broadband by 2025 and provide nationwide 5G coverage by 2024.Improved connectivity has facilitated digital ado
183、ption in India,creating a new growth engine for the economy,by tapping into the dormant potential of its increasingly affluent population.The World Economic Forum(WEF)estimates that by 2030,more than 40%of purchases in India will be digitally influenced,up from 20-22%in2019.India has become synonymo
184、us with technological innovation thanks to its vibrant start-up ecosystem and the governments push for digitalisation.In 2021,Indias technology talent pool was estimated at 3.8 million people,just behind China(4.2 million)and the United States(4.4 million).In addition,several government ministries p
185、artnered each other to launch a digital skills programme to train 10 million students in emerging digital technologies,such as AI,blockchain,big data,data analytics,cyber security and cloud computing.Given its deepening digital talent pool,India can bolster its position as a global hub for skilled,t
186、echnologytalent.45Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsIndiaInvestors next port of call with opportunities across the digital economy and solar supply chain High opportunity sectorsWith expanding opportunities acros
187、s sectors,India is becoming an attractive investment destination.Indias weight in the MSCI Emerging Markets Index has grown from 8.3%in August 2020 to 13.2%in February 2023,indicating the growing importance of Indias capital markets,globally.Indias ambitions to establish one of the largest digital e
188、conomies by 2025 and achieve net zero emissions by 2070 give rise to opportunities across two key sectors:Digital economy and Renewable energy.1 Refers to the total market size based on revenue opportunities for IT hardware,software and services.Also known as total addressable market(TAM).Digital ec
189、onomyWidespread internet and smartphone penetration has accelerated growth in Indias digital economy.With expanding infrastructure and coverage,mobile internet penetration in India is expected to reach 79.8%by 2030,offering growth potential for companies in the digital sector.The telecommunications
190、sector is at the heart of Indias digital transformation.Capital expenditure for the sector is projected to increase from USD15 billion in 2022 to USD16.8 billion in 2026,driving growth for telecom infrastructure players.Rising digital adoption and consumption will benefit e-commerce players and digi
191、tal start-ups/unicorns,as well as those in the fintech and digital payments space.Skilled digital talent will support IT players,with sector growth at 11%CAGR(2021-2027).Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 46Economic powerhouseSource:Euromonitor,Fitch Solutions8a
192、.E-commerce goods and services retail sales valueUSD billion182.82027f202176.916%CAGR8b.Information technology marketvalue1USD billion91.52027f202147.911%CAGR2 Refers to the maximum output that grid-connected non-hydro renewables(solar,wind,biomass,marine,geothermal)generating equipment can supply t
193、o system load,adjusted for ambient conditions.3 Refers to the maximum output that grid-connected solar(CSP and PV)generating equipment can supply to system load,adjusted for ambient conditions.4 Refers to the maximum output that grid-connected generating equipment can supply to system load.We are se
194、eing several Indian companies make commitments to reduce their carbon footprint.Thats why building a reliable supply chain and developing new capabilities in these areas would be important for Indiastransition.Senior executive of a Fortune 500 companyRenewable energyRising energy demand and strong g
195、overnment support are furthering growth in Indias renewable energy sector.The International Energy Agency(IEA)estimates that domestic energy demand will rise by 25-35%by 2030,from 2019 levels.India is expected to add almost 140GW of renewable energy capacity between 2021-2030.Solar energy is forecas
196、ted to account for more than two-thirds of this capacity increase,and 22%of Indias overall power capacity by 2030.Engineering,Procurement and Construction(EPC)companies and domestic Original Equipment Manufacturers(OEMs)along the solar supply chain stand to benefit from this expansion.Anticipating t
197、his growth potential,several local companies have announced significant capital investments to bolster their solar cell and module manufacturing capacity.47Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsSource:Fitch Solutions
198、9a.Renewable energy capacity2Gigawatt239.32030f2021100.410%CAGR9b.Solar capacity3 as of total energy capacity4%21.8%12.5%2030f2021Japanese corporates have significantly improved their underlying profitability in recent years,yet this hasnt been fully recognised by international investors and Japanes
199、e stocks are currently cheap versus other developed markets.Oliver Lee,Client Portfolio Manager,Eastspring InvestmentsJapanA highly developed and well-connected economy,focusing on digitalisation to shape its future 1 Total market capitalisation of the Tokyo Stock Exchange.2 Value indicates the sum
200、of the average daily turnovers across Prime,Standard,and Growth segments for the Tokyo Stock Exchange between 4 April 2022 and 31 December 2022.Tokyo Stock Exchange was restructured into these three segments on 4 April 2022.3 Companies listed on the Tokyo Stock Exchange.Overview and key enablersThe
201、Japanese government is looking to further digitalise its economy and industry.An ageing population underscores the need to raise productivity in Japan.Digitalisation is key to this transformation,and will give rise to opportunities in areas,such as fintech,digital payments and industrial automation.
202、Japans move towards a more productive and digital economy will require a highly educated and digitally-skilled talent pool.As such,the government has undertaken efforts to reskill workers in digitaltechnologies.In addition,Japans strengthened trade connectivity with regional partners China and South
203、 Korea as well as internationally with Europe and North America,will bolster its position as a key exporter in the global economy,especially in high-technology goods such as industrial machinery and robots.EconomyNominal GDP:USD4,232 billion(2022)Real GDP growth:0.9%(CAGR 2022-2030)Financial MarketM
204、arket capitalisation:1 USD5,229 billion(Dec 2022)Market cap as%of GDP:123.5%(2022)Daily turnover:2 USD22 billion(Avg.2022)Listed companies:3 3,799(Dec 2022)Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 48Economic powerhouseDespite being a high-tech economy,there is potenti
205、al for further digitalisation of government services which will increase efficiency in public payments.Digitalisation can also create new customer channels in banking and life insurance.As one of the worlds leading manufacturers and the largest producer and exporter of industrial robots,digitalisati
206、on can change how products are designed and produced within Japans automotives,electronics and industrial machinery sectors.To ensure that Japans digital transition is inclusive and supported by skilled local talent,the government has pledged USD7.5 billion to reskill workers over the next five year
207、s.Digitalisation to facilitate opportunities in digital payments,fintech and industrial automationExpanding trade networks to strengthen its position as a key global exporterTrade connectivity has been a major focus for Japans transformation.Over the years,Japan has entered into several major trade
208、agreements,such as RCEP,the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership(CPTPP),and the EU-Japan Economic Partnership Agreement(EPA).The RCEP is Japans first trade agreement with China and South Korea key destinations for Japanese exports,from electrical goods to machine
209、ry to automobile components.The agreement is expected to lift Japans GDP by 2.7%and create approximately 570,000 jobs.The EU-Japan EPA and CPTPP will facilitate greater trade flows between Japan and the EU and Canada,respectively cementing Japans role as a key trade destination and exporter in the g
210、lobal economy.49Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsJapanDemographic shifts and accelerated digitalisation to generate opportunities in manufacturing and financialsHigh opportunity sectorsJapans deep and liquid fin
211、ancial markets have made it an attractive investment destination.Meanwhile,corporate governance reforms have increased dividends and share buybacks,enhancing mid to long-term shareholder value.Japanese companies are at the gateway of Asia ex-China,where they can both facilitate and partake in Asias
212、growth story via the finance,retail and consumer goods sectors and also by supporting factory automation,infrastructure and energy transition.Japans demographic shift underscores an urgent need for automation to raise productivity and digitalisation,which will generate opportunities across two key s
213、ectors:Manufacturing and Financials.1 Per every 10,000 employees in the manufacturing industry.ManufacturingJapan is home to some of the worlds leading industrial machinery manufacturers and is the worlds leading industrial robot manufacturer,delivering 45%of the global supply.Solution providers in
214、automation,robotics and Industry 4.0 can benefit from Japans advanced manufacturing technologies.Industrial robot density in Japan has grown on average by 6%annually since 2016 ranking 3rd globally.Information and Communication Technology(ICT)verticals stand to gain from Japans increased manufacturi
215、ng sophistication,as digitalisation and consumption of online content are driving demand for AI-enabled advanced automation solutions.Electrification,hydrogen and autonomous vehicle trends are also generating demand for hardware,as well as ancillary software and services.Eastspring Investments:Asia
216、2.0 Investing in an era of new opportunities 50Economic powerhouseSource:IHS Markit,World Federation of Robots10a.Industrial machinery sector gross outputUSD billion449.72028f2021323.25%CAGR10b.Robot density63036%CAGR2 Financial sector gross output divided by nominal GDP.FinancialsJapans
217、banking industry is well-developed and well-capitalised.The financial sector as a percentage of GDP is expected to grow from 6.8%in 2021 to 8.4%in2028.Digitalisation is transforming the way traditional banks operate.Major full-service banks have announced investments in digital banks and services.So
218、me have partnered with other industry players,such as mobile operators and application services providers to offer services beyond traditional banking,such as financial services through the metaverse.The banking sectors expansion will generate opportunities in fintech,blockchain,digital payments and
219、 mobile banking.Although digital banks account for less than 3%of deposits now,they are seeing rapid growth(up from 1.6%of deposits in 2017).The listing of virtual banks are potential new opportunities for investors.The ongoing positive structural changes,such as the deleveraging of balance sheets,r
220、ising dividend payouts,stock buybacks and numbers of contested takeovers are also evident in Japans small-and mid-caps.Max Godwin,Portfolio Manager,Eastspring Investments51Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsSource
221、:World Economic Forum,IHS Markit,Fitch Solutions11a.Cashless payments as a percentage of all payment transactions%40.0%target20252010202132.5%13.2%11b.Financial sector as percentage of GDP2%8.4%2028f20216.8%TaiwanA high-tech market,focusing on innovation and attracting skilled global talent to trans
222、form its industries Supportive government policies to promote industry-specific education and attract global talent will be a key driver of sector growth.Government initiatives to develop local infrastructure and connectivity will also be critical in supporting Taiwans industrial transformation.Seni
223、or executive of a top chip design company1 Total market capitalisation of the Taiwan Stock Exchange.2 Value indicates the average daily turnover for the Taiwan Stock Exchange for the calendar year of 2022.3 Companies listed on the Taiwan Stock Exchange.Overview and key enablersTaiwan is moving towar
224、ds higher-value added goods and services by developing new capabilities in smart machinery,green energy and biotechnology.The government is also keen to strengthen regional R&D collaboration under the umbrella of its New Southbound Policy(NSP),which will open doors to cross-border investment opportu
225、nities.Similar to Japan,Taiwans industrial transformation will heavily rely on skilled talent.Taiwan has introduced policies to attract global talent,such as preferential visas or employment cards,in particular targeting highly-skilled professionals in industries,such as semiconductors,blockchain,fi
226、nance and renewables.In addition to the critical role Taiwan already plays in the global semiconductor industry,Taiwans industrial innovation will present new opportunities for investors.EconomyNominal GDP:USD761 billion(2022)Real GDP growth:2.8%(CAGR 2022-2030)Financial MarketMarket capitalisation:
227、1 USD1,444 billion(Dec 2022)Market cap as%of GDP:189.6%(2022)Daily turnover:2 USD8 billion(Avg.2022)Listed companies:3 971(Dec 2022)Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 52East Asia cornerstone4 Association of Southeast Asian Nations(ASEAN):Brunei Darussalam,Cambod
228、ia,Indonesia,Lao PDR,Malaysia,Myanmar,the Philippines,Singapore,Thailand and Vietnam.5 Launched in 2018,the Taiwan Employment Gold Card is a 4-in-1 card that includes a resident visa,work permit,Alien Resident Certificate(ARC),and re-entry permit,which allows the card holder to leave and re-enter Ta
229、iwan multiple times over the course of one to three years.Innovation to transform Taiwans industries and create opportunities across multiplesectorsGovernment keen to attract global skilled talent to support industry transformationThe 5+2 Innovative Industries Plan lays out Taiwans forward-looking a
230、mbitions to transform its industry and forge a new model for sustainable development.The plan focuses on smart machinery,green energy,biomedicine and biotechnology,and the circular economy,with a focus on high value-added goods and services.Leveraging Taiwans strengths in the semiconductor industry,
231、this plan creates opportunities both in industrial mainstays such as electronics and manufacturing,and in new economy sectors such as renewable energy and the digital economy.Under the NSP,Taiwan is also looking to foster collaboration in innovative industries with ASEAN4 countries,through promoting
232、 R&D and capacitybuilding.To fulfil its ambitions to transform its industry,Taiwan will need skilled global talent to complement its domestic workforce.The government hopes to attract more global professionals in view of its ageing population.A segment of these special professionals will qualify for
233、 work in sectors such as semiconductors,blockchain,finance,and offshore wind power.To this end,Taiwan enacted the Act for Recruitment and Employment of Foreign Professionals under which it introduced employment gold cards for highly-skilled global talent.5 The gold card facilitates greater global mo
234、bility by providing foreigners more flexibility to leave and re-enter Taiwan.Moreover,the Act also provides foreigners that have obtained permanent residence in Taiwan,retirement,insurance and tax benefits.53Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKe
235、y considerations for investorsHigh opportunity sectorsTaiwan boasts of a highly liquid capital market,with deep expertise in technology.To increase market accessibility,the Taiwan Stock Exchange Corporation(TWSE)has simplified the registration process and related documentation required of foreign in
236、vestors.In March 2020,the TWSE implemented a new trading system to enhance market transaction efficiency and information transparency that will benefit investors.Taiwans semiconductor sector will continue to play an important role in the markets overall growth.Against this backdrop,Taiwans industria
237、l development and focus on innovation will create opportunities across two key sectors:Semiconductors and Manufacturing.SemiconductorsTaiwanA strong expertise in semiconductors will facilitate Taiwans pivot to advanced manufacturing Taiwans semiconductor industry is well known for its Integrated Cir
238、cuit(IC)design and wafer fabrication.Most of the worlds semiconductor manufacturing capacity is concentrated in Taiwan.Gross sector output was the 2nd largest in the world in 2021,and Taiwan controls more than 80%of the market for chips with the smallest and most efficient circuits.Within the sector
239、,wafer foundry manufacturers can benefit from the strong demand for 5G,IoT,high-performance computing and automotive applications for chips.Growing demand for consumer electronics will also boost growth for those in IC fabrication and design.Given the high degree of integration along the domestic su
240、pply chain,downstream packaging and testing firms,and material suppliers will also experience further growth.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 54East Asia cornerstoneSource:IHS Markit,Taiwan Semiconductor Industry Association12a.Semiconductor sector gross outpu
241、t USD billion155.22028f2021125.73%CAGR12b.Semiconductor industry revenue breakdown%2022eManufacturing 57%Design 28%Packaging 10%Testing 5%1 Per every 10,000 employees in the manufacturing industry.Taiwan is not only home to Tier 1 foundries,chip packaging and integrated design companies,it also has
242、other small and mid-cap companies within the semiconductor ecosystem which can provide investors with attractiveopportunities.Rebecca Lin,Head of Investments,EastspringTaiwanManufacturingTaiwan is Asias 4th largest exporter of industrial machinery.Gross sector output is projected to increase at 6%CA
243、GR(2021-2028f),supported by Taiwans increased focus on smart machinery.From high-precision Computer Numeric Control(CNC)cutting machines to power presses and machine tools,to industrial automation and collaborative robots there is a myriad of players across Taiwans manufacturing industry that can be
244、nefit from the economys pivot towards higher-end,smart manufacturing.Upstream component suppliers that support smart machinery implementation can also leverage the industrys growth.55Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for inve
245、storsSource:IHS Markit,World Federation of Robots13a.Industrial machinery sector gross output USD billion64.32028f202143.46%CAGR13b.Robot density61779%CAGRSouth KoreaOne of the worlds most important manufacturers,focusing oninnovation to drive a digital and green transformation We are inv
246、esting heavily in R&D to create new products that are biodegradable and more eco-friendly.As it stands,the market is changing,and we are gradually transforming our business to reduce carbonemissions.C-suite level executive of a leading petrochemicals company 1 Total market capitalisation across the
247、KOSPI and KOSDAQ segments of the Korea Exchange.2 Value indicates the sum of the average daily turnovers across KOSPI and KOSDAQ segments for the Korea Stock Exchange for the calendar year of 2022.3 Companies listed on either KOSPI or KOSDAQ segments on the Korea Exchange.Overview and key enablersSo
248、uth Korea manufactures a range of products from consumer electronics to automotives.The government has stressed the importance of innovation to bolster the countrys manufacturing edge.As such,South Korea has not only invested heavily in R&D especially in the latest digital technologies but also in s
249、kills development and training for domestic talent.In particular,the government is keen to equip the local workforce with knowledge of smart manufacturing and green technologies,which will lend support in growing the EV and renewable energymarkets.EconomyNominal GDP:USD1,726 billion(2022)Real GDP gr
250、owth:2.4%(CAGR 2022-2030)Financial MarketMarket capitalisation:1 USD1,610 billion(Dec 2022)Market cap as%of GDP:93.3%(2022)Daily turnover:2 USD12 billion(Avg.2022)Listed companies:3 2,437(Dec 2022)Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 56East Asia cornerstoneGovernm
251、ent push to upskill workers will create jobs Innovation to bolster South Koreas strength in strategic technology sectorsThe Ministry of Environment aims to create over 80,000 green industry jobs by 2025,where 25%of workers will be trained in green convergence technology.Separately,the government has
252、 also announced the Comprehensive Plan to Nurture Digital Talent to widen digital education and add a million people to the countrys digital workforce by 2026.As part of this initiative,the government will introduce digital and information education at the primary and secondary school levels,while i
253、ntroducing postgraduate courses in AI,metaverse,cybersecurity and big data.Both digital and industry-focused training will provide South Korea with needed skilled talent to support expansion in both traditional and new economy sectors.South Korea is an economic powerhouse,with a technological edge i
254、n manufacturing and hardware-based industries.More recently,the government has heavily emphasised R&D,particularly in high-growth sectors such as hydrogen,battery materials and storage,and EV manufacturing.In October 2022,the government announced the National Strategic Technology Nurture Plan,which
255、fosters innovation across strategic technologies in semiconductors and display,secondary cells,hydrogen and nuclear energy.The plan provides policy and investment support,while strengthening talent initiatives and international cooperation to drive innovation in these areas.57Market perspectivesAppe
256、ndixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsHigh opportunity sectorsThe tech-heavy Korean equity market has a high degree of exposure to semiconductors,EVs,batteries and battery materials.The government plans to deregulate the local stock market
257、 and make it more accessible to foreign investors;measures include disclosing information in English and allowing foreign investors to use their passport numbers/globally standardised legal entity identifier(LEI)to trade Korean stocks.Given South Koreas manufacturing sophistication and push for inno
258、vation,there are two key sectors that stand to benefit from the countrys transformation:Renewable energy and EVs.1 The 8.2-GW project is nearly seven times larger than the current largest operating offshore wind project,the UKs Hornsea(1.2 GW).2 Refers to the maximum output that grid-connected non-h
259、ydro renewables(solar,wind,biomass,marine,geothermal)generating equipment can supply to system load,adjusted for ambient conditions.Renewable energySouth KoreaSouth Koreas push for innovation and leading role in hydrogen technology to generate growth across green industries The 9th Basic Plan for Lo
260、ng-Term Electricity Supply and Demand 2020-2034 outlines South Koreas aim to increase its renewable energy mix from 15.1%in 2022 to 40%by 2034.Solar and wind will drive most of this increase,with offshore wind playing a major role(40%of project pipeline).Photovoltaic(PV)cell/module manufacturers and
261、 offshore wind developers will benefit most as South Korea continues to develop solar parks and build the worlds largest offshore wind farm.1Already accounting for half of the worlds installed capacity of utility-scale stationary fuel cells,South Korea is leading the transition to hydrogen.Its hydro
262、gen industry is forecasted to reach USD20 billion by 2030,driving growth for those in the hydrogen ecosystem from fuel cell manufacturers to chemical/industrial companies building hydrogen refuelling stations.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 58East Asia corner
263、stone14a.Renewable energy capacity2Gigawatt41.42030f202122.37%CAGR14b.Roadmap for hydrogen economy by 2040Source:Fitch Solutions,Ministry of Trade,Industry and Energy Hydrogen vehicle(units)Fuel cells used for Industrial(GW)81,0001.5310506,200,000 15.01,2002,100Fuelling stations(units)Fuel cells use
264、d for Household(MW)20222040fWe are seeing ample investment opportunities in companies in the traditional sectors such as chemical,energy,and metals.Many are combining their long-established manufacturing edge with the new technologies to become major suppliers in the global renewable energy and EV s
265、upply chainsegments.Paul HJ Kim,Head of Equities,EastspringKoreaElectric vehiclesEVs will play a key role in South Koreas green transition.Domestic passenger EV sales is expected to grow by 26%CAGR to over 520,000 units in 2030.Global demand for EVs is also expected to boost exports,which have doubl
266、ed in value from 2019 to USD7 billion in 2021.The government has announced tax incentives and other measures(amounting to USD66 billion)to double EV production,and aims for a 12%share of the global EV market by 2030.Local EV battery manufacturers will benefit from this expansion,with government subs
267、idies to encourage R&D spending.Fuel Cell Electric Vehicle(FCEV)automakers will also see growth given the trend of rising exports and governmental support.59Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsSource:Fitch Solution
268、s,The Korea Herald 15a.Passenger electric vehicle salesThousands526.12030f202166.226%CAGR15b.EVs as percentage of all automotive exports%15.8%8.1%20212019MalaysiaA key economy focusing on increasing digital adoption and strengthening trade links to lift competitiveness There are tremendous opportuni
269、ties for Malaysias semiconductor industry if we can further strengthen our position as a key regional hub by attracting high quality investments.Doreen Choo,Head of Investments,Eastspring Malaysia1 Total market capitalisation of Bursa Malaysia Main Market:Ordinaries Shares.2 Value indicates the aver
270、age daily turnover for the Bursa Malaysia for the calendar year of 2022.3 Companies listed on the Bursa Malaysia.Overview and key enablersMalaysia aims to grow its economy by fostering innovation in technology-based industries.Malaysias 2023 budget of USD86.8 billion aims to accelerate its economic
271、growth and encourage investments in key industries such as electrical and electronics via enhanced tax incentives.The budget continues to emphasise the development of the digital economy through investments in automation,connectivity and cloud services.Malaysia is also looking to modernise its manuf
272、acturing capabilities.The government is encouraging local manufacturers to adopt Industry 4.0 solutions,to automate and develop smarter processes.This will boost the industrys growth and productivity,while enhancing Malaysias manufacturing competitiveness on the global stage.EconomyNominal GDP:USD40
273、6 billion(2022)Real GDP growth:4.0%(CAGR 2022-2030)Financial MarketMarket capitalisation:1 USD370 billion(Dec 2022)Market cap as%of GDP:91.2%(2022)Daily turnover:2 USD473 million(Avg.2022)Listed companies:3 972(Dec 2022)Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 60Regio
274、nal contender4 The Comprehensive and Progressive Agreement for the Trans-Pacific Partnership(CPTTP)is a Free Trade Agreement among 11 countries:Australia,Brunei Darussalam,Canada,Chile,Japan,Malaysia,Mexico,New Zealand,Peru,Singapore and Vietnam.Government initiatives to digitalise and transform the
275、 manufacturing industry New trade agreements to enhance manufacturing competitivenessUnder the aegis of Industry4WRD,Malaysia envisions to have a transformed manufacturing industry by 2025.This policy has driven growth for the manufacturing sector,leading to an increase in sector gross value added(G
276、VA)from USD77.2 billion in 2018 to USD99.3 billion in 2022.To further digitalise its industry and raise its manufacturing competitiveness,Malaysia has also introduced several financing schemes and grants to support companies automate their production processes.With these measures,domestic manufactur
277、ers can strengthen their technological capabilities,allowing them to venture into high-technology,value-added segments.Malaysia has forged key trade links to attract investments and provide companies with greater access to international markets.In September 2022,the government ratified the CPTPP.4 A
278、ccording to local government estimates,this trade agreement can boost Malaysias GDP by USD56.5 billion between 2021-2030.Similarly,RCEP,which came into force in January 2022,is expected to increase exports by USD200 million.The countrys manufacturing sector will benefit from these multilateral partn
279、erships with the reduction in tariffs and the removal of non-trade barriers boosting Malaysias regional competitiveness.61Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsMalaysiaMalaysias focus on high value-added products to
280、generate opportunities in semiconductors and manufacturingHigh opportunity sectorsMalaysias capital market is maturing,with market capitalisation at 91.2%of GDP.The country also has a prominent Islamic capital market,accounting for 27.7%of assets under management of Islamic funds globally in 2021.Ov
281、er 80%of equities on Malaysias stock exchange were Shariah-compliant as of November 2022.Investors wanting exposure to Shariah-compliant securities will find Malaysia attractive.The manufacturing industry contributes nearly 25%of the countrys GDP and is closely integrated with global value chains.As
282、 Malaysia strengthens its manufacturing capabilities and trade links,there are opportunities across two key sectors:Semiconductors and Manufacturing.1 HS Codes 8541 and 8542 were used to calculate semiconductor exports.SemiconductorsAs a well-established assembly and testing hub,Malaysia plays a key
283、 role in the global semiconductor supply chain.The sectors gross output is forecasted to grow at 7%CAGR to reach USD46 billion in2028.Outsourced Semiconductor Assembly and Testing(OSAT)vendors and ancillary companies that provide support services(e.g.,precision cleaning,refurbishment,etc)and testing
284、 equipment will benefit from the rise in global demand for semiconductors.In addition,the growing presence of Malaysias OSAT players in China is expected to unlock further growth opportunities.Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 62Regional contender16a.Semiconduc
285、tor sector gross output USD billion46.02028f202129.47%CAGRSource:IHS Markit,Malaysian Investment Development Authority,ITC16b.Malaysias share in global semiconductor sector in 2021%Assembly&testing output13%Semiconductor exports16%Malaysia is seeing tremendous foreign direct investment inflows as it
286、 enhances its manufacturing capabilities.Smart systems will be the key to success;robotics,machine learning and AI will create many opportunities for companies likeours.President&CEO of an award-winning manufacturing company Manufacturing Smart industrial machinery manufacturers will see new growth
287、opportunities arising from the push to adopt Industry 4.0 solutions in sectors such as automotives,electrical and electronics,and medical devices.For medical device manufacturers specifically,government efforts to modernise healthcare facilities and promote production of high-end equipment will gene
288、rate new growth opportunities.Those making implantable devices,such as pacemakers and intra-ocular lenses,patient monitors and imaging equipment,will see further growth,driving medical device sales up from USD1.9 billion in 2021 to USD3.6 billion by 2030.63Market perspectivesAppendixExecutive Summar
289、yThree dimensions of changeAsias transformationKey considerations for investors17a.Industrial machinery gross output USD billion15.12028f20218.68%CAGR17b.Medical devices salesUSD billion7%CAGR3.62030f20211.9Source:IHS Markit,Fitch solutionsThailandA major export economy,leveraging government support
290、 and greater connectivity to create value-based industries On the back of innovation and digitalisation,Thailands 4.0 blueprint will help unleash a major transformation force for the Thai economy.Bodin Buddhain,Head of Investment Strategy,EastspringThailand1 Total market capitalisation of common sto
291、cks of the Stock Exchange of Thailand.2 Value indicates the average daily turnover for the Stock Exchange of Thailand for the calendar year of 2022.3 Companies listed on the Stock Exchange of Thailand.Overview and key enablersThailands business-friendly policies and well-connected infrastructure hav
292、e laid the foundations for its economic development.Going forward,innovation will be a key defining feature of its transformation.Thailands 4.0 economic blueprint seeks to promote digitalisation and support R&D/infrastructure investments to create more value-based industries.Thailands high mobile in
293、ternet penetration provides an attractive platform for digital banking to thrive.Government policies to promote virtual banking services will introduce new players and new customer segments.Also home to innovative food start-ups,Thailand is well positioned to capitalise on shifting consumer trends t
294、oward plant-based alternatives.As a major food exporter,stronger trade links and a rise in global demand for more innovative food products will drive growth in Thailands Food and Beverage(F&B)industry.EconomyNominal GDP:USD487 billion(2022)Real GDP growth:2.8%(CAGR 2022-2030)Financial MarketMarket c
295、apitalisation:1 USD587 billion(Dec 2022)Market cap as%of GDP:120.6%(2022)Daily turnover:2 USD2 billion(Avg.2022)Listed companies:3 612(Dec 2022)Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 64Regional contenderGovernment is pushing growth in digital banking and alternative
296、 foodsGreater connectivity to entrench Thailands position as a major food exporterTo establish a value-based industry,the government intends to increase R&D expenditure to 4%of GDP.This will benefit the agriculture,food,tourism,digital,robotics,and logistics sectors.The Thai authorities are also dev
297、eloping a taxonomy to gear financial flows towards sustainable development,promoting regulatory sandboxes to better oversee new technologies,particularly in Central Bank Digital Currencies(CBDCs).In addition,the government envisages Thailand being a major player in the Future Food industry.Governmen
298、t agencies are supporting local farmers with agri-tech to increase productivity,and encouraging R&D to produce new food-tech products that cater to varied consumer demands.Thailands agri-food sector holds an established position globally and in Asia.Rising awareness about health,environmental challe
299、nges and animal welfare are shifting consumer behaviour towards plant-based dairy and meat alternatives.Plant protein has always featured strongly in Asian diets.Rising affluence is also driving demand for such products.As a major food exporter,increased regional connectivity via trade agreements(e.
300、g.,RCEP,CPTPP),allows Thailand to tap the growing potential in the region andglobally.65Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsThailandImproved market access and innovation will allow investors to capitalise on opport
301、unities in financials and alternative foodsHigh opportunity sectorsIn 2022,Thailands IPO proceeds amounted to USD3.4 billion,which was the highest within Southeast Asia.To encourage greater foreign participation,the Stock Exchange of Thailand(SET)has announced a strategic plan(2023-2025)to improve m
302、arket access for investors and make fundraising easier for new economy companies and start-ups.Thailands emphasis on R&D and innovation will drive growth in two key sectors:Financials and,Food and Beverage(F&B).FinancialsThailand is a hotspot for emerging fintech services.It has over 300 fintech sta
303、rt-ups and the volume of payments transactions via internet/mobile grew more than fourfold from 5.5 billion to 22.7 billion between 2019 and 2022.Anticipated regulatory changes will introduce new players into the mix,as the Bank of Thailand(BoT)will allow virtual banks to offer financial services fr
304、om 2025.Supporting this,high levels of mobile internet penetration will pave the way for an increased uptake of digital banking services.Local small and medium businesses will also benefit from easier loan access and data-centric solutions provided by digital banks,such as big data analytics to gene
305、rate insights on customerbehaviour.The rise of insurtech and more innovative products will also benefit insurance providers and create opportunities for intermediary players(e.g.,web aggregators and online distributors)to enter/grow the market.Eastspring Investments:Asia 2.0 Investing in an era of n
306、ew opportunities 66Regional contenderSource:Bank of Thailand,Fitch Solutions18a.Volume of internet/mobile payments as a percentage of total payment transactions%2022Internet/mobile payments 81%18b.Total gross insurance premiums writtenUSD billion39.32030f202126.84%CAGR1 GDP contribution across the v
307、alue-chain,including agricultural production,F&B manufacturing and F&B distribution.2 Indicates value of household domestic consumption of food.Food and BeverageThe F&B industry is an integral part of Thailands economy,accounting for over 20%of GDP1 and 13%of exports.Thailand has a well-established
308、food supply chain,with over 128,000 companies in agriculture,processing,ingredients and packaging.Domestic food sales are expected to rise from USD63.5 billion in 2021 to USD85.9 billion by 2027.A major shift in consumption towards convenience food will benefit food processing and packaging companie
309、s.Food packaging volumes are forecasted to increase from 23 billion in 2022 to 28 billion units in2027.In addition,rising global interest in technology-based food solutions,such as plant-based alternatives to meat,seafood,milk and eggs,will benefit local innovative food start-ups and food manufactur
310、ers.Sales of dairy and meat alternatives are expected to remain on a positive trajectory.Thailand has been and will continue to be a key ASEAN market.The investment pipeline has been exciting,and we are expecting more to come.Daniel Lum,Portfolio Manager,Eastspring Investments67Market perspectivesAp
311、pendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsPlant-based dairy569.56%Tofu and derivatives22.410%11.313%Meat and seafood substitutesSource:Fitch Solutions,National Food Institute,Euromonitor19a.Domestic food sales2USD billion85.92027f202163.55%C
312、AGR19b.Thailands ranking and share of global food exportsLargest food exporter in Asia2ndShare of globalfood exports2.3%Fig 19.c Sales and growth forecast for dairy and meat alternatives Sales,2022(USD million)CAGR2022-2027IndonesiaAn emerging economic force,focusing on structural reforms and infras
313、tructure to facilitate industrial transformationIndonesia owns large reserves of nickel and cobalt which are key inputs used in the batteries in electric vehicles.Thedevelopment of new industries where it has comparative advantages,will structurally transform its economy and support the next stage o
314、f economic growth.Kong Qian Liew,Head of Equities,Eastspring Indonesia 1 Total market capitalisation of the Indonesia Stock Exchange.2 Value indicates the average daily turnover for the Indonesia Stock Exchange in local currency unit(LCU)for the calendar year of 2022,based on information declared by
315、 the IDX Yearly Statistics.Converted to USD at IDR1=USD0.0000643404,as of 31 December 2022.3 Companies listed on the Indonesia Stock Exchange.Overview and key enablersIndonesia is the largest economy and consumer market in Southeast Asia.The countrys transformation will be defined by improved infras
316、tructure and a friendlier operating environment for businesses and foreign investments.Besides reforms to reduce red tape and streamline regulations,Indonesia is also introducing progressive policies such as regulatory sandboxes to allow businesses to test and launch innovativeproducts.Indonesia has
317、 committed substantial resources to strengthen infrastructure and connectivity.The government allocated an infrastructure budget of USD26 billion in the 2023 budget,an increase of 7.8%from the previous year,to improve the provision of basic services,and productivity through connectivity and mobility
318、 infrastructure.This will facilitate the countrys industrial transformation as it develops downstream industries in mineral processing and battery production.EconomyNominal GDP:USD1,319 billion(2022)Real GDP growth:4.9%(CAGR 2022-2030)Financial MarketMarket capitalisation:1 USD608 billion(Dec 2022)M
319、arket cap as%of GDP:46.1%(2022)Daily turnover:2 USD946 million(Avg.2022)Listed companies:3 828(Dec 2022)Eastspring Investments:Asia 2.0 Investing in an era of new opportunities 68Emerging playerStructural reforms to attract foreign investors and bolster Indonesias regional competitiveness Infrastruc
320、ture development to lift integration across supply chainsIn an effort to increase FDI inflows and make Indonesia more competitive on the global stage,the government has enacted several structural reforms,including legislation to improve Indonesias labour market.In the past few years,the government h
321、as introduced new laws that provided greater flexibility on foreign labour,particularly in technology-based industries.There are also amended provisions for licensing and land acquisition.To attract foreign investments,the government now allows for 100%foreign ownership in certain sectors(e.g.,EVs)a
322、nd offers various tax incentives to businesses.Regulatory sandboxes have also been set up to encourage R&D in various areas,such as fintech.In the long run,infrastructure development outside of Java can bring forth additional gains,beyond the key provinces and major cities.Since 2020,Indonesias infr
323、astructure industry has grown by 12%reaching USD88 billion in 2023.Digital infrastructure development will also be a priority,as 25%of the countrys population still remains offline.As Indonesia builds its downstream manufacturing capabilities,especially in EVs robust digital and physical infrastruct
324、ure will play a critical role in ensuring seamless integration across supply chains.69Market perspectivesAppendixExecutive SummaryThree dimensions of changeAsias transformationKey considerations for investorsIndonesiaA dynamic equity market with opportunities in financials and the EV supply chainHig
325、h opportunity sectorsIn 2021,Indonesian regulators relaxed rules for new IPO listings to encourage more local companies to go public.Technology companies in particular will be allowed to issue multiple voting classes of shares and need not meet the usual asset and profit requirements.This will open
326、doors for companies in new economy sectors such as ride-hailing,e-commerce,and fintech to be listed on the stock exchange,creating a differentiated and diverse set of opportunities for future investors.As Indonesia looks to develop an integrated EV supply chain and promote greater financial inclusio
327、n,there will be opportunities in two key sectors:EVs and Financials.Electric vehiclesIndonesia is looking to leverage its abundant reserves in transition metals(nickel,cobalt,etc.)to develop downstream EV sectors.In 2020,the government banned exports of nickel ore to attract FDI in mineral processin
328、g,which is expected to boost domestic refined nickel production in the next few years.Mining companies and those in downstream sectors such as mineral processing,battery production and EV manufacturing can benefit from Indonesias vision to establish an integrated EV supply chain,and from greater dem
329、and for EVs.Indonesia aims to produce 140 GWh of battery manufacturing capacity,13 million electric motorcycles and 2.2 million electric cars by 2030.In 2018,there were already close to 120 million motorcycles in Indonesia,offering a large market ripe for electrification.Eastspring Investments:Asia
330、2.0 Investing in an era of new opportunities 70Emerging playerSource:Fitch Solutions20.Nickel refined productionThousand tonnes827.82030f2021260.214%CAGR1 Age 15 and above.2 Analogous to the combined balance sheet assets of all commercial banks in Indonesia.They do not incorporate the balance sheet
331、of the central bank of Indonesia.In aggregate it is the sum of client loans,bond portfolio and other assets.Indonesia has mass market potential for EVs with a population of over 270 million people.The regulatory environment will be critical in supporting businesses to capitalise on opportunities in
332、the market.Attracting talent and building user-friendly industrial parks will facilitate development of Indonesias integrated EV supply chain.Executive Chairman of a leading mining companyFinancials Indonesia has a large and vibrant financial services industry and the largest fintech ecosystem in AS
333、EAN with close to 800 fintech companies operating in the country at the end of 2021.Widespread adoption of digital banking services has enabled the sector toflourish.Yet,over 90 million adults1 remain unbanked(50%of the population),highlighting the significant potential for growth in banking services.An expanding middle-class is expected to strengthen the demand for more sophisticated financial pr