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Think EAST

June 24, 2015

The oncoming train in the tunnel is coming from the East Reflections on the AIMA Next Generation Managers Conference 23rd June 2015

After a packed morning of a conference with such a high level of content it is very difficult to know in some ways where to start so the main themes from the over view of the world and changes coming through to financial markets by 2020. I will look at the advice to New Managers in a separate note.

Firstly we are going to be dominated by the growth of wealth coming from Emerging Markets which will see, according to the Credit Suisse Wealth Report, the number of millionaire’s rise 50% from 35 million to 53 million. Of the increase in total wealth to $369 trillion some 2^5 of the additional wealth will be coming from Emerging Markets as against 11% in the period 2000-­‐2015.

Secondly we will be looking East More

The major sporting event will be the Olympics which will see us reflect on the changes in Japan since the previous Tokyo Olympics. There will be 4 million less Japanese than there are today as the population shrinks with over 25% of Tokyo’s population over 65. Robots will be in every home monitoring the older population.

They will also translate and guide to the Olympics where travel will be in unmanned transport. Minor operations will also be carried out and to mark the games robots will have started work on ta moon station building plan. The need of an estimated 1.25 million jobs created with under 1 million unemployed will have changed the make up of the population. Dubai in October will host the World Expo which is expected to attract 25 million visitors. Given that 1/3 of the world’s population live in 4 hours flying time and 2/3rds within 8 hours it is quite possible. With an airport already dominating regional travel it will by then account for 22% of employment in the state and 32% of the GDP. Dubai Mall is already the world’s largest tourist attraction with 80 million visitors last year.

China will have come of age with the ending of the capital controls. Renminbi will be the second largest traded currency. Its GDP will be the largest in the world with wealth per head passing $10,000 against $40,000 per head for the US. The “One Belt One Road” Plan will have seen the development of the economic corridor to Europe with 50 cultural centres open on the new Silk Road. TGV service will link Paris and maybe London daily by train to Peking instead of the once a week freight train that runs to Warsaw.

Thirdly Digital Technology Revolution

With more people used to banking online it is a small step to investing on line. It will revolutionise Fund Management distribution, straight through processing giving regulators total transparency and risk analysis. For the Fund Manager evaluation will be deep dive availability in seconds and the ability to switch or overlay portfolio in seconds.

All this is going to mean in only 4.5 years a total reorientation of news, financial flows and the effects on how markets will trade and be monitored. Are you getting ready for it?

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