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Asia Summit—A World in Turmoil: Finding Opportunities Amid Volatility

 

September 24, 2015
   
   

China Establishing a Foundation for Long-Term Growth

Asia Summit Gallery

The turmoil in China doesn’t pose a serious threat to the global economy, according to the expert panelists assembled for the Asia Summit panel titled, “A World in Turmoil: Finding Opportunities Amid Volatility.” Even though recent stock-market volatility and currency devaluations are a drag on global growth, it’s making the right moves as it transitions from manufacturing to a consumer-driven economy.

The consensus was that China and its Asian neighbors ultimately will overcome recent setbacks and remain drivers of global prosperity. The panelists’ outlook on China was among several optimistic perspectives offered during their overview of key regions.

China is establishing a foundation that will enable it to adapt and prosper, said Piyush Gupta, CEO and director of DBS Group and director of DBS Bank in Hong Kong. “By policy prescription, the Chinese have been doing exactly what people thought they should do,” he said. “Moving from a controlled to a market economy is difficult in the best of times. In that transition there will be volatility. Markets will be choppy.”

Continuing the theme of optimism, Michael Milken, chairman of the Milken Institute, drew a contrast between the economic perspective of people who live in developed nations, and are long accustomed to prosperity, and those in emerging countries who are on the brink of joining the middle class.

”I am guessing tomorrow will be the best day in history… for more than 50 percent of the people in the world,” he said. “Whereas we might feel it will be the worst day, for a lot of people in the world, tomorrow will be the best day — the best day for their health, the best day for opportunities for their children.”

Amid the current economic turmoil, where should investors look for investment opportunities?

The decline in Brazil’s equity markets have made the BRIC country a good place for bargain hunting, according to Scott Minerd, managing partner, chairman of investments, and global chief investment officer at Guggenheim Partners. Sub-Saharan Africa offers a large and growing population of young consumers who make up an emerging middle class. Banking services are being modernized, he said.

“When you look at Africa over a generation or two, the impact on the entire global growth is going to be incredible,” he said. “There is nowhere in the world where the demographics are better than Africa.”

Asia also offers opportunities, even if the rate of growth is slowing, Gupta said. The region’s large population, growing middle class, and spending on infrastructure won’t go away, he said. “Slowing Asia will grow at 5 percent. That’s a whole lot of growth, and I don’t see that changing.”