VIDEO | Asia is rapidly becoming the epicenter of global investment, with shifts in capital flows, technological innovations, and regulatory advancements driving the region’s financial growth. Emerging markets like China, India, and Indonesia are leading this transformation, attracting both retail and institutional investors. These trends were highlighted during the PostTrade 360° Nordic 2024 session on how Asia and other emerging markets are responding to global investment patterns.

The global economic balance is tilting toward Asia, with countries like China and India climbing the ranks of the world’s largest economies. “The economic center of gravity is shifting towards Asia,” said Anand Rengarajan, global head of Sales and head of Asia Pacific, Middle East, and Africa at Deutsche Bank’s Securities Services. He explained that both China and India are now major players, with India expected to break into the top three largest economies. This shift is driving global financial institutions to seek opportunities in Asia, eager to capitalise on the region’s growth potential.

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Fintech innovations

A key driver of Asia’s financial rise has been the explosion of retail investors, especially since the COVID-19 pandemic. Across markets like Indonesia and India, young investors have embraced fintech platforms that make investing more accessible. “In Indonesia, more than 50 per cent of recent investments have come from retail investors, with 58 per cent of them under the age of 30,” Rengarajan noted. Fintech apps, with low entry barriers, have played a significant role in this transformation, allowing individuals to invest small amounts and participate in global markets.

This trend has created new challenges for the traditional investment landscape, where convenience and speed are critical. Rengarajan highlighted how innovations like tokenisation are streamlining processes for investors, enabling 24/7 redemption and liquidity. “Tokenisation allows investors to sell assets quickly and receive funds almost instantly,” he said, underscoring how these digital shifts are making investments more attractive and flexible.

Market infrastructure

Asia is also leading in market infrastructure improvements. India, for instance, has already implemented T-plus-one settlement for retail investors, meaning trades are settled within a day. Plans are underway to introduce T-plus-zero for institutional investors, which would enable real-time settlements. “The shift to T-plus-zero is inevitable,” Rengarajan stated, explaining how this could revolutionise global post-trade services and benefit both retail and institutional sectors.

Role of regulation

Regulation is playing a crucial role in shaping Asia’s financial markets. Countries like Singapore are fostering innovation through regulatory sandboxes, allowing companies to test technologies like blockchain in controlled environments. “These experiments help regulators define policies and prepare for wider adoption of digital assets,” Rengarajan said.

Despite recent underperformance in emerging market indices, investors remain attracted to the long-term prospects of these regions, according to Rengarajan. Countries like India continue to offer strong returns, and the diversification benefits make these markets valuable for global investors.

Speakers:
Anand Rengarajan, global head of Sales and head of Asia Pacific, Middle East and Africa, Securities Services, Deutsche Bank
Sean Tuffy, independent consultant


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