· Asia is a region rich in opportunities. But
it comes with significant challenges, a vice president at Asian
Development Bank has said;
· The ADB vice president warned a real
currency war was likely to strike the region, as result of the
Bank of Japan’s quantitative easing
· He also listed bad relations between India
and China, the China-Japan island dispute, and the 1.7 billion
Asians still living in poverty as significant obstacles to
· Topping his list of regional positives,
however, was the increasing importance attributed to governance
· He also envisaged significant opportunities
in China’s real estate market, as well as the
region’s new frontier markets.
Asia is a region rich in opportunities. But an Asian
Development Bank (ADB) vice president has warned would-be
investors to be mindful of its challenges.
Thierry de Longuemar, the ADB’s vice president
of finance and risk management, last week outlined the
region’s top opportunities, and its most
significant challenges for foreign investors.
While Europe has been languishing in an entrenched economic
crisis, Asian markets seem to have gone from strength to
strength. But, alongside the emerging opportunities, the ADB
has stressed the region faces real challenges ahead.
"With around 60% of the world population in Asia, [...]
it’s clearly a region of significant importance,"
said de Longuemar.
Investors must remain awake to the region’s
"We see the likelihood of a real currency war as a result of
quantitative easing of the Bank of Japan," said de
The second challenge was that the two biggest countries in
Asia - India and China - are not on speaking terms. "They are
not trading," said de Longuemar.
The impact of that could be huge. "Just to give one example:
there are four flights a week between Delhi and Asia; there are
35 flights a week between London and Delhi," de Longuemar
The third challenge the ADB speaker identified was the
ongoing China-Japan island dispute. This, he said, was not
receding and there were serious threats looming in that part of
The last challenge de Longuemar listed is that 1.7 billion
in Asia still live under 2 dollars a day. However, although
this present challenges, it could also present would-be
investors with opportunities.
Asia’s growth drivers
Nonetheless, de Longuemar believed the growing importance of
regional governance in Asia would present significant
opportunities for investors looking to put money to work in the
region. The Association of Southeast Asian Nations (the Asean
group), along with Korea, Japan and China have now planned a
clear agenda for a fully-fledged trade union, said de
He believed Asia and Europe could learn important lessons
from each other.
"The ATUC [Asean Trade Union
Council] is very active putting in place governance with
lessons learned from the European Union," he said.
According to de Longuemar, the euro-area crisis had also
significantly altered the debate in Asia around the benefits of
adopting a common currency. "It was talked about a few years
ago but not anymore, given what is perceived as a failure of
the eurozone," he said.
He was optimistic that the possibility of including
China’s renminbi in the SDR [special drawing
rights] would have a positive impact on regional investment.
"This is likely to happen in the next five years;
that’s one opportunity," said de Longuemar.
rising middle class would be a major regional growth
driver, he explained. While China’s real estate
market, and the promotion of interregional trade across Europe,
the US and Asia presented additional investment
Lastly, opportunities in Asia’s new frontier
markets should not be overlooked, the ADB vice president told
delegates at the International Capital Market
Association’s (ICMA’s) annual general
meeting in Copenhagen last week.
the most recent of these emerging tiger economies. With a
population of 60 million, Myanmar is huge, and geographically
very important, said de Longuemar. It will create a link
between the Indian Ocean and China, which is set to have
significant impact on the way China trades with the rest of the
Although North Korea could also present an opportunity, it
may be too soon to mention, said de Longuemar.
More coverage from last week’s
Liikanen reveals why he had to split the banks
ECB: how to make Europe’s banking union
Revealed: the future for asset management