Ravi Menon: Connecting global markets, supporting Asia's growth
Central bank: mas | Type: speech | Date: 2018-06-05

"C/uni006Fnnecting Gl/uni006Fbal Markets, Supp/uni006Frting Asia's Gr/uni006Fwth" - Presentati/uni006Fn by Mr Ravi Men/uni006Fn, Managing Direct/uni006Fr, M/uni006Fnetary Auth/uni006Frity /uni006Ff Singap/uni006Fre, at N/uni006Fmura Investment F/uni006Frum Asia /uni006Fn 5 June 2018Ladies and gentlemen, g/uni006F/uni006Fd m/uni006Frning.Thank y/uni006Fu f/uni006Fr inviting me t/uni006F speak at this imp/uni006Frtant investment f/uni006Frum.Asia's dynamism and gr/uni006Fwth will be the defining investment theme /uni006Ff the next decade.- Asian assets have bec/uni006Fme an essential c/uni006Fmp/uni006Fnent /uni006Ff a balanced and diversified p/uni006Frtf/uni006Fli/uni006F.- The expansi/uni006Fn /uni006Ff N/uni006Fmura's f/uni006Frum fr/uni006Fm an Asian equity event previ/uni006Fusly t/uni006F /uni006Fne that sh/uni006Fwcases the full suite /uni006Ff investment pr/uni006Fducts in the regi/uni006Fn reflects the gr/uni006Fwth in investment /uni006Fpp/uni006Frtunities in Asia.- Like N/uni006Fmura which serves invest/uni006Frs l/uni006F/uni006Fking t/uni006F invest in Asia, Singap/uni006Fre aims t/uni006F c/uni006Fnnect invest/uni006Frs t/uni006F /uni006Fpp/uni006Frtunities in the regi/uni006Fn.Asia will remain the fastest gr/uni006Fwing regi/uni006Fn in the w/uni006Frld /uni006Fver the next five years.- The IMF puts Asia at the t/uni006Fp /uni006Ff the gl/uni006Fbal gr/uni006Fwth league, with a pr/uni006Fjected annual gr/uni006Fwth rate /uni006Ff 6.4%.- India at 7-8% p.a., China at 6% p.a., and the ASEAN-5 ec/uni006Fn/uni006Fmies - Ind/uni006Fnesia, Thailand, Malaysia, Philippines and Singap/uni006Fre - at ar/uni006Fund 5% p.a.The size /uni006Ff the Asian middle class is set t/uni006F d/uni006Fuble by 2025, fr/uni006Fm 2015 levels.

## C/uni006Fnnecting Gl/uni006Fbal Markets Supp/uni006Frting Asias Gr/uni006Fwth- The rapid expansi/uni006Fn /uni006Ff the Asian middle class will spur urbanisati/uni006Fn and demand f/uni006Fr financial services, especially wealth management and insurance.Gl/uni006Fbal invest/uni006Frs are fl/uni006Fcking t/uni006F participate in the Asian gr/uni006Fwth st/uni006Fry- There has been a gr/uni006Fwing diversity /uni006Ff instituti/uni006Fnal invest/uni006Frs - fr/uni006Fm Asia, Eur/uni006Fpe and the Americas.Tw/uni006F key trends in the Asian landscape warrant invest/uni006Frs' attenti/uni006Fn:- the expansi/uni006Fn /uni006Ff Asian enterprises ; and- the demand f/uni006Fr infrastructure devel/uni006Fpment .M/uni006Fre Asian c/uni006Fmpanies are expanding regi/uni006Fnally and gl/uni006Fbally.- C/uni006Fmpanies fr/uni006Fm Asia have bec/uni006Fme increasingly active in cr/uni006Fss-b/uni006Frder M&A as they seek t/uni006F expand their regi/uni006Fnal and gl/uni006Fbal f/uni006F/uni006Ftprint.The need t/uni006F fund this expansi/uni006Fn has led t/uni006F a surge in capital raising in Asia and increased the depth and diversity /uni006Ff Asian assets.- D/uni006Fllar b/uni006Fnd issuance by Asia-ex Japan c/uni006Fmpanies climbed t/uni006F a rec/uni006Frd high /uni006Ff ar/uni006Fund US$400 billi/uni006Fn last year, up 40% fr/uni006Fm 2016.- Ab/uni006Fut /uni006Fne-third /uni006Ff equity raised thr/uni006Fugh IP/uni004Fs gl/uni006Fbally in 2017 were in the Asia Pacific.- Invest/uni006Frs n/uni006Fw have a wide array /uni006Ff Asian assets t/uni006F ch/uni006F/uni006Fse fr/uni006Fm.As Asian c/uni006Fmpanies gain market share gl/uni006Fbally, investing in Asian c/uni006Fmpanies has bec/uni006Fme m/uni006Fre attractive.- Asia's share /uni006Ff c/uni006Fmpanies with market value /uni006Ff m/uni006Fre than US$10 billi/uni006Fn stands at 30%, c/uni006Fmpared t/uni006F 20% just ten years ag/uni006F.Invest/uni006Frs in Asia are als/uni006F l/uni006F/uni006Fking t/uni006F private markets f/uni006Fr investment /uni006Fpp/uni006Frtunities.- Asian c/uni006Fmpanies are ch/uni006F/uni006Fsing t/uni006F stay private f/uni006Fr l/uni006Fnger and bec/uni006Fming m/uni006Fre receptive t/uni006F venture capital (VC) and private equity (PE) financing.- Asia is already a maj/uni006Fr destinati/uni006Fn f/uni006Fr VC and PE investments.- Last year, VC and PE investments int/uni006F Asia reached US$160 billi/uni006Fn, acc/uni006Funting f/uni006Fr 30% /uni006Ff gl/uni006Fbal investments, surpassing Eur/uni006Fpe f/uni006Fr the first time.- With cl/uni006Fse t/uni006F 7,000 start-ups in S/uni006Futheast Asia al/uni006Fne, there are /uni006Fpp/uni006Frtunities ab/uni006Fund f/uni006Fr private investments in the regi/uni006Fn.The demand f/uni006Fr infrastructure financing in Asia is /uni006Futpacing c/uni006Funtries' funding capacity.- Acc/uni006Frding t/uni006F the ADB, Asia will need ar/uni006Fund US$1.7 trilli/uni006Fn annually in infrastructure financing between n/uni006Fw and 2030 t/uni006F sustain ec/uni006Fn/uni006Fmic gr/uni006Fwth.- Currently, m/uni006Fre than 90% /uni006Ff infrastructure investment is financed by g/uni006Fvernments.- This is n/uni006Ft sustainable if the demand f/uni006Fr infrastructure is t/uni006F be met.The challenge f/uni006Fr g/uni006Fvernments in Asia is this: t/uni006F make infrastructure m/uni006Fre attractive t/uni006F private capital.- At their recent meeting in Singap/uni006Fre, ASEAN Finance Ministers agreed t/uni006F accelerate infrastructure devel/uni006Fpment thr/uni006Fugh m/uni006Fbilising private capital.This means mainstream infrastructure financing as an asset class.- The pr/uni006Fspects are g/uni006F/uni006Fd.

There is a str/uni006Fng pipeline /uni006Ff pr/uni006Fjects in the transp/uni006Frt and energy sect/uni006Frs, diversified acr/uni006Fss the ASEAN c/uni006Funtries.- We have seen s/uni006Fme early success.- F/uni006Fr instance, the debut /uni006Ff pr/uni006Fject b/uni006Fnd issuance by PT Pait/uni006Fn, Ind/uni006Fnesia's sec/uni006Fnd-largest independent p/uni006Fwer pr/uni006Fducer, reflects gr/uni006Fwing demand f/uni006Fr Asian infrastructure debt.Singap/uni006Fre is well p/uni006Fsiti/uni006Fned as a gateway t/uni006F investment /uni006Fpp/uni006Frtunities in Asia.- We /uni006Fffer a w/uni006Frld class financial centre, with a s/uni006Fund regulat/uni006Fry framew/uni006Frk and business-friendly envir/uni006Fnment.- With its pan-Asian reach, Singap/uni006Fre is an ideal l/uni006Fcati/uni006Fn f/uni006Fr invest/uni006Frs t/uni006F set up base and tap /uni006Fn /uni006Fpp/uni006Frtunities in the regi/uni006Fn.Let me highlight tw/uni006F things Singap/uni006Fre pr/uni006Fvides t/uni006F c/uni006Fnnect gl/uni006Fbal invest/uni006Frs t/uni006F Asia :- first, a c/uni006Fmpelling asset management ec/uni006Fsyste m; and- sec/uni006Fnd, a treasury centre with a c/uni006Fmprehensive suite /uni006Ff risk management s/uni006Fluti/uni006Fn s.Singap/uni006Fre is a leading asset management hub f/uni006Fr instituti/uni006Fnal invest/uni006Frs and fund managers t/uni006F access pan-Asian /uni006Fpp/uni006Frtunities.- Assets under management in Singap/uni006Fre have gr/uni006Fwn by an average 15% each year /uni006Fver the last five years, reaching US$1.9 trilli/uni006Fn in 2016.- Ab/uni006Fut 80% /uni006Ff funds are s/uni006Furced fr/uni006Fm /uni006Futside Singap/uni006Fre.- Tw/uni006F-thirds are invested in Asia.- Interestingly, we have seen faster gr/uni006Fwth in alternative AUM (17%) c/uni006Fmpared t/uni006F traditi/uni006Fnal AUM (3%).- This p/uni006Fints t/uni006F the gr/uni006Fwing p/uni006F/uni006Fl /uni006Ff invest/uni006Frs setting up in Singap/uni006Fre t/uni006F access private market /uni006Fpp/uni006Frtunities in Asia.We are taking three maj/uni006Fr initiatives t/uni006F further strengthen the asset management ec/uni006Fsystem further.- We will intr/uni006Fduce by next year a new c/uni006Frp/uni006Frate structure f/uni006Fr investment funds - the Singap/uni006Fre Variable Capital C/uni006Fmpany (S-VACC) -- The S-VACC structure will all/uni006Fw asset managers t/uni006F achieve greater synergies thr/uni006Fugh c/uni006F-l/uni006Fcating their management and d/uni006Fmiciliati/uni006Fn activities.- We have simplified regulati/uni006Fns t/uni006F facilitate the activities /uni006Ff VC and PE managers.- The increased availability /uni006Ff alternative investments like VC, PE, and infrastructure has helped t/uni006F attract s/uni006Fvereign wealth funds and pensi/uni006Fn funds.- We are strengthening the ec/uni006Fsystem f/uni006Fr family /uni006Fffices.- The quality and capability /uni006Ff service pr/uni006Fviders /uni006Ff family /uni006Fffices - like lawyers, c/uni006Fnsultants and tax advis/uni006Frs - has deepened.By welc/uni006Fming a br/uni006Fader range /uni006Ff instituti/uni006Fnal invest/uni006Frs t/uni006F set up base in Singap/uni006Fre, we aim t/uni006F build a deeper and m/uni006Fre diverse p/uni006F/uni006Fl /uni006Ff capital f/uni006Fr Asia.

## Most liquid FX and derivatives market in AsiaAs gl/uni006Fbal players invest in Asia, they will need s/uni006Fluti/uni006Fns t/uni006F manage their risks in the Asian time z/uni006Fne.As a gl/uni006Fbal FX and derivatives centre, Singap/uni006Fre pr/uni006Fvides a wide range /uni006Ff risk management /uni006Fpti/uni006Fns f/uni006Fr invest/uni006Frs

## C/uni006Fnnecting Gl/uni006Fbal Markets Supp/uni006Frting Asias Gr/uni006Fwth- Singap/uni006Fre is the third largest FX centre gl/uni006Fbally after L/uni006Fnd/uni006Fn and New Y/uni006Frk, and the largest in Asia.- Every day, /uni006Fver half a trilli/uni006Fn US d/uni006Fllars /uni006Ff FX is traded here.- All t/uni006Fp 5 gl/uni006Fbal banks have their regi/uni006Fnal FX trading desks here.- Singap/uni006Fre has the m/uni006Fst diverse range /uni006Ff futures and /uni006Fpti/uni006Fns traded in its three exchanges.- In FX al/uni006Fne, there are m/uni006Fre than 30 futures and /uni006Fpti/uni006Fns.The next stage in /uni006Fur gr/uni006Fwth as a risk management centre is t/uni006F bec/uni006Fme an electr/uni006Fnic trading hub in Asia.- As Asian FX fl/uni006Fws gr/uni006Fw, Asia will bec/uni006Fme an increasingly imp/uni006Frtant FX market where price disc/uni006Fvery takes place.- We are w/uni006Frking with key partners t/uni006F build up the e-trading infrastructure in Singap/uni006Fre.- This will impr/uni006Fve trade executi/uni006Fn and reduce latency in pricing, thereby l/uni006Fwering transacti/uni006Fn c/uni006Fsts f/uni006Fr invest/uni006Frs.Besides c/uni006Fnnecting gl/uni006Fbal invest/uni006Frs t/uni006F Asia, Singap/uni006Fre is well placed t/uni006F facilitate financing /uni006Fpp/uni006Frtunities f/uni006Fr Asia.We are building platf/uni006Frms t/uni006F facilitate b/uni006Fnd issuance and infrastructure financing in Asia.- This will in turn br/uni006Faden the suite and depth /uni006Ff Asian investable assets f/uni006Fr gl/uni006Fbal invest/uni006Frs.Singap/uni006Fre is am/uni006Fng the ch/uni006Fice destinati/uni006Fns f/uni006Fr Asian b/uni006Fnds issuance.- Singap/uni006Fre's b/uni006Fnd market has been gr/uni006Fwing at a c/uni006Fmp/uni006Fund annual gr/uni006Fwth rate /uni006Ff ar/uni006Fund 9% /uni006Fver last five years t/uni006F reach US$243 billi/uni006Fn.- The b/uni006Fnd market ec/uni006Fsystem remains a big draw, with several c/uni006Fmpanies issuing in Singap/uni006Fre repeatedly.- F/uni006Fr instance, Hitachi Internati/uni006Fnal Ltd has tapped Singap/uni006Fre's debt market frequently f/uni006Fr m/uni006Fre than a decade, raising /uni006Fver US$1.5 billi/uni006Fn in t/uni006Ftal.Invest/uni006Frs are able t/uni006F access in Singap/uni006Fre a variety /uni006Ff b/uni006Fnds, den/uni006Fminated in G3 as well as Asian currencies.

## C/uni006Fnnecting Gl/uni006Fbal Markets Supp/uni006Frting Asias Gr/uni006Fwth- S/uni006Fme examples:- U/uni004FB's eur/uni006F-den/uni006Fminated c/uni006Fvered b/uni006Fnd in 2016 was the first /uni006Ff its kind in Asia.- Ch/uni006Fngqing Western M/uni006Fdern L/uni006Fgistics raised US$500 milli/uni006Fn /uni006Fut /uni006Ff Singap/uni006Fre in 2016 t/uni006F fund infrastructure devel/uni006Fpment in China.There are tw/uni006F grant schemes that make Singap/uni006Fre's b/uni006Fnd market even m/uni006Fre c/uni006Fmpelling f/uni006Fr issuers.- The Asian B/uni006Fnd Grant Scheme defrays the issuance c/uni006Fst f/uni006Fr first-time Asian issuers l/uni006F/uni006Fking t/uni006F raise internati/uni006Fnal capital fr/uni006Fm Singap/uni006Fre.- We have received str/uni006Fng interest in the scheme.

S/uni006Fme examples:- China Sin/uni006Fchem Internati/uni006Fnal raised US$300m in seni/uni006Fr unsecured b/uni006Fnds.- PT Pait/uni006Fn Energy, Ind/uni006Fnesia's sec/uni006Fnd largest independent p/uni006Fwer pr/uni006Fducer, raised US$2bn f/uni006Fr its pr/uni006Fject b/uni006Fnd.- The Green B/uni006Fnd Grant Scheme defrays the additi/uni006Fnal c/uni006Fsts /uni006Ff /uni006Fbtaining an external review f/uni006Fr green b/uni006Fnds.- F/uni006Freign green b/uni006Fnd issuers include Indian Renewable Energy Devel/uni006Fpment Agency as well as Canadian insurer Manulife.Infrastructure financing is an/uni006Fther avenue f/uni006Fr invest/uni006Frs l/uni006F/uni006Fking t/uni006F /uni006Fpp/uni006Frtunities in Asia.And Singap/uni006Fre, as a full service Asian infrastructure financing hub, is a g/uni006F/uni006Fd place t/uni006F l/uni006F/uni006Fk f/uni006Fr such /uni006Fpp/uni006Frtunities.- Singap/uni006Fre has str/uni006Fng c/uni006Fnnectivity t/uni006F the regi/uni006Fn and has deep capabilities in pr/uni006Fject devel/uni006Fpment, urban s/uni006Fluti/uni006Fns, and financial and pr/uni006Ffessi/uni006Fnal services.We have set up Infrastructure Asia: a g/uni006F-t/uni006F kn/uni006Fwledge centre f/uni006Fr infrastructure players and invest/uni006Frs in Asian infrastructure.- The /uni006Fffice will facilitate infrastructure investment and financing, availing invest/uni006Frs t/uni006F infrastructure investment /uni006Fpp/uni006Frtunities.Singap/uni006Fre is devel/uni006Fping tw/uni006F significant initiatives t/uni006F facilitate the take-/uni006Fff /uni006Ff Asian infrastructure financing.First, an infrastructure debt distributi/uni006Fn facility t/uni006F help cr/uni006Fwd-in instituti/uni006Fnal invest/uni006Frs.- We are w/uni006Frking with industry partners t/uni006F securitise a p/uni006F/uni006Fl /uni006Ff br/uni006Fwnfield regi/uni006Fnal pr/uni006Fject finance l/uni006Fans fr/uni006Fm banks int/uni006F a c/uni006Fllaterialised l/uni006Fan /uni006Fbligati/uni006Fn that instituti/uni006Fnal invest/uni006Frs, including insurance c/uni006Fmpanies and pensi/uni006Fn funds, can invest in.Sec/uni006Fnd, creati/uni006Fn /uni006Ff investment benchmarks t/uni006F make infrastructure an investable asset class.- This will all/uni006Fw invest/uni006Frs t/uni006F c/uni006Fmpare the returns /uni006Ff privately-held infrastructure debt and equity against /uni006Fther asset classes.Let me c/uni006Fnclude.Last M/uni006Fdified /uni006Fn 05/uni002F06/uni002F2018The Asian gr/uni006Fwth st/uni006Fry will d/uni006Fminate the investment agenda in the next decade.Capital and investment will c/uni006Fntinue t/uni006F fl/uni006Fw int/uni006F Asia.As an internati/uni006Fnal financial centre, Singap/uni006Fre's r/uni006Fle is t/uni006F c/uni006Fnnect gl/uni006Fbal invest/uni006Frs t/uni006F Asia, and t/uni006F bring Asian /uni006Fpp/uni006Frtunities t/uni006F gl/uni006Fbal invest/uni006Frs.And that is why N/uni006Fmura has gathered y/uni006Fu here.

I wish y/uni006Fu a stimulating f/uni006Frum, fruitful investments, and an enj/uni006Fyable stay.Thank y/uni006Fu.C/uni006Fpyright © 2018 M/uni006Fnetary Auth/uni006Frity /uni006Ff Singap/uni006Fre