dbAccess Asia, Deutsche Bank’s largest investor forum globally, will open its doors for a ninth year. The conference will be attended by over 250 corporates representing both dynamic regional and global organisations, around 1,400 individual investors from 400 buy side institutions, senior corporate executives, influential industry experts and thought-leading academics.
At Deutsche Bank, we know that unlocking value in Asia requires a broad understanding of macro conditions, detailed company knowledge and cross-product awareness. That is why our experts in Economics, Equities, Forex, Derivatives and Fixed Income will provide a 360-degree overview of country markets, industries, companies and capital structures over the course of the conference.
dbAccess Asia will once again feature an unrivalled line up of insightful and influential keynote speakers including:
- Gerhard Schroeder, Chancellor of Germany, 1998-2005
- Dick Cheney, Vice President of the United States, 2001-2009
- Ban Ki-moon, Secretary-General of the United Nations, 2007-2016
- Juergen Schmidhuber, leading global authority on Artificial Intelligence
- Edward Luce, Chief U.S. Commentator, Financial Times
- David Folkerts-Landau, Deutsche Bank’s Chief Economist and Global Head of Research
Access the experts
1. What are the key themes that will dominate Asian equities for the rest of the year?
We see three key themes. By the end of May, China’s A-shares will be included in MSCI’s indices. This will require a renewed focus on mainland markets from both passive and active funds investing in Asia. This first step will represent a weighting in MSCI EM indices of just 0.4%, before doubling in August and heading towards an expected weighting of 14%. Ahead of this milestone, investor flows into Shanghai and Shenzhen markets have been steadily climbing. Daily gross market flows have reached over US$3bn recently and will rise further into year-end. This focus comes at the same time as rising trade tensions and market fears of the potential dislocation to global supply chains. The Fed’s progress in raising rates, which is already demanding a response from Asian central banks, notably in the ASEAN region, is also influencing portfolio flows and returns across equity, credit and Foreign Exchange (FX) markets.
2. What do investors based outside of the region need to be paying more attention to when looking at Asian opportunities?
Investors need to understand policy within China to manage domestic conditions. In particular, the goal of supply side reform, and the imperative to deleverage and de-risk the financial system. The reduction of excess capacity has already shifted industry pricing and profitability. In areas such as steel and aluminium, this has significantly changed regional earnings and the outlook for inflation as well as global commodities. Signals are also coming from the People’s Bank of China (PBoC) as it looks to deleverage. Changes in liquidity and market rates need to be seen in the context of curbing the use of credit by high risk borrowers and shadow banking lenders. They should not be interpreted as simple stimulus versus measures to slow growth, or as automatic triggers for investment decisions.
3. How will AI transform how Asian equities trade?
The increased role of Artificial Intelligence (AI) is evident in all our communications, commerce and multiple industries from transport to manufacturing. For the equity investor, AI presents a number of opportunities across a range of companies and sub-sectors. These include high bandwidth memory specialists such as Samsung and Hynix, server makers supplying datacentres (Quanta) or surveillance equipment like Hikvision or DaHua. The Chinese internet names are also leaders in many of the facets of AI. Investors need to be aware not only of the upside potential from AI but also of the disruption in fields like financials and manufacturing, where the pace of automation continues to accelerate.
1. Why is corporate access important?
Direct and candid dialogue between investors and companies is fundamental to the efficient operation of markets, as better information leads to better investment decisions and better allocation of capital. This is especially true in diverse and dispersed markets like Asia, where access to information can be challenging at times and regular meeting opportunities may not be easy.
For investors, spending time with corporate management teams is an important part of the investment decision process. For listed companies, Access Asia represents a unique platform to communicate their equity stories to some of the world’s largest investors. We are therefore very proud to play a role in connecting international investors with the most promising companies across the region through events like dbAccess Asia.
2. What has changed over the past 9 years of the dbAccess Asia conference?
Over the past 9 years the level of interest in gaining deeper access to this region, as evidenced by the steadily increasing attendance figures at this event, has only grown. Global investors' understanding of the region has also increased significantly over the years. It's incredibly exciting to see Asian markets and companies drawing intensified global focus as the opportunity set also expands.
3. Why have we chosen to focus on technology and AI for this year's conference?
Our overarching goal is to help unlock insight and facilitate discussion on the topics that are most relevant to our clients. For Asia, the dominant theme continues to be the very exciting technologies being developed and deployed in this part of the world. Artificial Intelligence in particular has captured investors' imagination and attention, as the application of these disruptive technologies spans a wide range of industries and creates enormous opportunities, both in business and in markets.
1. With significant market reform in Asia’s two largest economies – India and China – what is your overall outlook for Asia this year?
Asian economies are enjoying robust growth. This starts with China, whose growth has been remarkably stable at just under 7% for three years, and India which is recovering from some policy shocks in 2016/17 and is now again posting the highest growth rates in the region. The other Asian economies are, as a group, growing at their fastest pace since the 2010 rebound from the financial crisis. We expect growth will moderate in most places – India is a notable exception – over the coming year as the external demand impulse from the US and EU seems to have peaked.
Such strong, and in most places likely above-potential growth, means inflation is becoming more of an issue. This is especially true with commodity prices rising internationally and food prices in some economies rebounding unfortunately strongly after a subdued 2017. Policy rates in Asia are not as far from neutral as they were in the US, but we still expect three or four rate hikes in most countries over the next 18 months.
Interest rates are under upward pressure too as yields in the US rise capital flows – especially from those economies with current account deficits – are reversing, so some Asian economies need higher yields to continue to attract foreign investment.
For investors, the mix of rising inflation and gradually slowing growth can be an uncomfortable one. But we think the relatively high growth potential in Asia compared to other regions, will continue to make this an attractive destination for capital.
2. Given that many economies in APAC are export-dependent, what are your views on the impact of any escalating trade war moves?
Asia has benefitted tremendously from the liberalised global trading system, allowing small economies to benefit from economies of scale by producing for a global market. In that competitive process they have improved their technological sophistication so that in many parts of the electronics supply chain, Asian firms dominate not just production but also design and innovation. Any move away from free trade threatens the basis of what are now pan-Asian production networks. But, of course, international trade is not perfectly free and Asian economies themselves are not above protecting their industries from foreign competition.
So far, the measures proposed in the US and China do not seem hugely consequential, even for those two countries. At the national level, the economic costs are likely to be small. But each new restriction to trade reduces the efficiency of resource allocation internationally, lowering countries productivity and potentially, for smaller economies, forcing a very damaging reorganisation of supply chains.
So, while the current trade disputes are not yet cause for reconsidering the economic outlook, future additional measures – a true “trade war” – may.
3. What role will Asia play in the onward march of automation and the application of AI technologies?
New technologies always offer important benefits to users or producers but also impose costs on those who are displaced. One of the lessons of the recent shift towards populism in advanced economies is that insufficient consideration was given to helping those displaced workers adjust to new conditions.
In some respects, Asia is at the forefront of the adoption of some new technologies. The world’s most advanced user of robots, for example, may be China, which now installs one third of all robots globally. This is twice as many as in all of Europe and three times that of the US or Japan.
China is already the world’s largest exporter of robots, if you include the personal-use robots, including those that vacuum many peoples’ homes, for example. The use of new technologies in emerging market economies will allow them to close more quickly the quality gap of their goods and services versus the more advanced economies. But equally, the labour-replacing technologies mean that growth in some emerging market economies will be less based on the rapid absorption of a cheap labour supply – as was the case in China. Indeed, in some areas, new technologies remove the need for trade, as 3D printing and robotics, for example, could lead to the ‘re-shoring’ of manufacturing in advanced economies.
Emerging market governments cannot hide from these new technologies. They should seek to use their cost advantages in manufacturing to make them – the way they dominate consumer electronics manufacturing – and to hasten the adoption of these technologies to improve productivity growth.
Han Joon Kim
1. What are the top trends to look out for in the Technology, Media, and Telecom (TMT) sector in APAC?
Asia Pacific is a broad region where the pace of economic change and the evolution of TMT varies significantly. We’re seeing a number of trends such as the growth of data centers and cloud infrastructure, the rise of the mobile payment infrastructure, the evolution of online gaming across platforms, and retailers integrating their online and offline infrastructure. We can also see a shortage of key hardware components (such as semiconductors) as emerging industries such as Artificial Intelligence (AI) and cryptocurrencies exacerbate supply and demand.
2. How will industry 4.0 impact Asian technology?
With regards to smart manufacturing and automation, we are seeing a lot of Japanese companies benefitting. Smart manufacturing is partially aimed at improving labour efficiency in many of the manufacturing hubs in Asia, so those businesses can sustain growth as they improve on production efficiency. If we’re talking about the Internet of Things (IoT), I would argue that emerging markets such as China are in a better position to develop affordable hardware with integrated software and potentially lead innovation. Across Asia, there’s also a lot of research and development going into de-centralise technologies such as blockchain.
3. Do you see the centre of gravity for innovation moving towards this region?
It already has and will continue to do. There’s definitely a technology edge and innovation that comes from the US. They are strong in some areas but Asia will develop certain opportunities much faster. For example, in developed Western markets, mobile payments can be hindered by the interests of various players in the payment value chain. The lack of incumbents to disrupt this in certain Asian markets, means we can leapfrog into mobile payments much faster. There is massive human and financial capital being deployed in Asia to facilitate technological advancement. This will lead to rising innovation being spearheaded out of the region.
1. Are you seeing more Asian investors utilising “quant” in their portfolios?
All clients that we work with have different mandates: different investment universes and horizons, loss aversion functions, varied costs and capacity constraints. But they also each have their own, investment philosophies, which they want to be reflected at every step of their investment process; from signal processing, risk and portfolio construction to trading. Each step can benefit from a data driven, quantitative analysis. The number of quantitative analysts manning specialised functions at our clients has been increasing together with the adoption of sophisticated quantitative techniques and tools.
2. How can active investors benefit from shifting into quant strategies?
Every investor can benefit from incorporating more sophisticated techniques into their investment process. These include, for example, using web scraped data to create leading indicators of KPIs for some companies. Or simply understanding the relevance and tone of news for a particular stock. We use “alternative” data, machine learning techniques in our publications, and showcase cutting edge research and technology at our conferences to benefit all types of investor – from stock pickers to macro traders. Conferences like dbAccess Asia give AI and machine learning specialists a platform to share techniques on applying the latest algorithms to finance and investing.
3. In an increasingly connected world, how can the market use data and other available info to be more efficient?
To use a well-known analogy, if artificial intelligence is a new industrial revolution, and if deep learning is the steam engine, then data is its coal. Deep learning techniques and new algorithms can help investors make their process more efficient, not only by helping them understand which data is relevant, but also by enabling them to delegate and automate parts of the investment process itself - for example picking a suitable trading algorithm to build a position in a particular liquidity environment.
About dbAccess Asia
dbAccess Asia is Deutsche Bank’s flagship conference in Asia held in Singapore each year, connecting large intuitional investors from around the world with leading corporate from the Asia Pacific region. The event is part of Deutsche Bank’s global series of major Corporate Access conferences and corporate days.
Throughout the conference, Deutsche Bank will host more than 2,500 investor meetings with attending corporate management teams in Marina Bay Sands.
Previous speakers at the event have included; John Kerry, Nicolas Sarkozy, Madeleine Albright, Piyush Goya, Sir Ken Robinson, Duncan Clark & Joe Tsai, Olivier Blanchard, Gideon Rachman, Zbigniew Brzezinski, James Cameron, Sir Ranulph Fiennes, Larry Summers, Rudy Giuliani, Malcolm Gladwell, Al Gore, Shekhar Gupta, Takatoshi Ito, Michio Kaku, Bernard Kouchner, Justin Yifu Lin, Pranav Mistry, Mario Monti, Joby Ogwyn, Lewis Pugh, Gideon Rachman, Eisuke Sakakibara, Yashwant Sinha, David Shambaugh, Daniela Rus, Jimmy Wales, Hiroshi Watanabe, James Wolfensohn and Fareed Zakaria, to name just a few.