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ASEAN Equity Primer

Joy Wang, Head of ASEAN Equity Research and ASEAN Property

Video

  • Southeast Asia is set to become the fourth-largest economy in the world by 2030 …
  • … but how well do you know this dynamic region?
  • We provide an introduction by comparing the economies and stock markets of the six biggest countries

How well do you know Southeast Asia? The region is changing fast. It is well on track to become the fourth-largest economy in the world by 2030, according to HSBC economists. And while it’s long been commodity-dependent and capital-deficient, those days are coming to an end.

10 nations make up the Association of Southeast Asian Nations (ASEAN) - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. This densely populated region represents 3% of earth’s total land area but 9% of the world’s population.

ASEAN’s global profile is growing. Its companies are gaining share in the global supply chain by moving up the value ladder, be it nickel in Indonesia or semiconductors in Malaysia. That’s diversifying the region’s export base, boosting worker wages and creating a pool of domestic savings. Urbanisation is driving workers into cities, enlarging the middle class and creating new demand. And investments are funding everything from the construction of factories to the emergence of a new breed of companies.

Investments are funding the emergence of a new breed of companies.

A diverse region. Southeast Asia was an investor darling in the 2000s, but was later overshadowed by the emergence of China and India. Now it’s on the rise again, but not all investors may be familiar with its many and diverse markets. In our recent primer, we focus on the six biggest economies, looking at their demographics, banking and monetary systems, and stock markets.

There’s plenty of notable stats along the way. Did you know, for example:

  • Population: Indonesia has the largest population at 276m people, followed by the Philippines (116m)
  • Age: the median age in ASEAN is 30 years, but it ranges from as low as 25 years in Philippines, to as high as 42 years in Singapore
  • GDP: Indonesia has the largest absolute GDP at cUSD1.3trn, but Singapore has the highest GDP per capita at >USD84k
  • Growth: In the last 10 years, Vietnam’s GDP has grown the fastest among the six biggest economies, at an average 6%
  • Trade: Mainland China and the US remain ASEAN’s largest trading partners, followed by the EU, South Korea and Japan

The region’s stock markets, too, are diverse and unique. Thailand is the most liquid but Vietnam is the best performing market over the last decade, for example. Singapore has the highest free float, while Malaysia has the lowest. There are also some common themes across the region: despite rising interest rates, technology has been the best performing sector across multiple markets over the past 10 years.

Corporate structures are shifting. Regulation has played a part in this change. For instance, Singapore banks have over time divested their non-banking assets, while bank-owning conglomerates are still the norm in the Philippines. Commercial factors are also shaping the corporate fabric. In Indonesia, various families are expanding outside their original businesses into technology and healthcare. And increasingly, partnerships are forming between firms from different countries, driven by a desire to tap into local networks.

Would you like to find out more? In our full report, we drill down into the facts and figures on ASEAN’s six largest economies, take a deep dive into stock market composition and performance, and profile the key business groups in each. Click here* to read the report (please note, you must be a subscriber to HSBC Global Research to access this link).

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The following analyst(s), who is(are) primarily responsible for this document, certifies(y) that the opinion(s), views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Joy Wang, Shuo Han Tan, CFA, Weldon Sng, CFA, Herald van der Linde, CFA, Yun Liu, Aris Dacanay, Pranjul Bhandari, Piyush Choudhary, CFA, Rahul Bhatia, CFA, Selviana Aripin, CFA, Wern Juan Chng and Rayson Khoo

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