STRICTLY CONFIDENTIAL
Australian Japan Business Co-operation Committee
Viewing Change as Opportunity: Financial Connection
Ms Shemara Wikramanayake Head of Macquarie Asset Management
9 October 2017
Co-operation Committee Viewing Change as Opportunity: Financial - - PowerPoint PPT Presentation
Australian Japan Business Co-operation Committee Viewing Change as Opportunity: Financial Connection Ms Shemara Wikramanayake Head of Macquarie Asset Management 9 October 2017 STRICTLY CONFIDENTIAL The Financial Connection connecting
STRICTLY CONFIDENTIAL
9 October 2017
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Source: US Federal Reserve
1,000 1,500 2,000 2,500
2.0 3.0 4.0 5.0 2008 2011 2014 2017
S&P500 vs US Federal Reserve balance sheet
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Source: Brad DeLong & Angus Maddison (LHS), United Nations (RHS)
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 1950 1980 2010 2040 2070 2100 World Population Growth World GDP Growth Trend World GDP Growth Trend (LHS) World Population Growth (RHS)
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 1950 1980 2010 2040 2070 Population Growth Period Beginning
Japan Europe China UK USA
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Zero Yield Policy
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Source: OECD
OECD pension fund assets ($UStr)
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Source: Willis Towers Watson and secondary sources 1. 1 DC assets in Switzerland are cash balance plans where the plan sponsor shares the investment risk and all assets are pooled. There are no pure DC assets where members make an investment choice and receive market returns on their
2. 2 In January 2017, the UK’s Office for National Statistics stated that the figures previously disclosed for DC entitlements were significantly overestimated. As a result there is a significant decrease in UK DC pension assets this year when compared to the previous editions of this study. This change has a very limited impact on the P7 DC assets; in the order of a one percent reduction.
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(¥JPYtr)
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Source: Macquarie and Bloomberg. For the US based on S&P 500 Index and 10 year US Treasury Bonds, for Japan based on the Tokyo Stock Exchange Price Index and 10 year Japanese government bonds. For Australia based on Australian All Ordinaries index and 10 year Australian Commonwealth Government Bond
68 21 23 17 Australia US 72 53 40 38 Australia US 287
Still Counting
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0% 1% 2% 3% 4% 5%
0% 4% 8% 12% 16% 20% 1822 1834 1846 1858 1870 1882 1894 1906 1918 1930 1942 1954 1966 1978 1990 2002 2014 Equity risk premium World GDP trend (RHS)
Source: Bloomberg, April 2016
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Emerging Markets Growth Developed Markets Growth World growth China Growth US Growth EU Growth
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Source: IMF, MSCI, Macquarie Investment Management
Asia (ex- Japan) 73% Non- Asia 27% Emerging Markets Non-Asia EM Asia ex-Japan 4.5% 1.9% 6.0%
Growth gap
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Source: Bloomberg
75% in three countries 75% in 2 languages Easy to cover from anywhere in the world The “western approach” works
11 countries 1,419 cities Many languages and dialects Vast cultural differences
US UK
Japan Asia
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1. IMF WEO Database as at 9 December 2016 2. United Nations Department of Economic and Social Affairs: World Urbanization Prospects 3. EY: Hitting the sweet spot - The growth of the middle class in emerging markets (middle class defined as earning $US10-100 per day) 4. World Bank: Global Saving in 2030, World Bank: Capital for the Future - Saving and Investment in an Interdependent World
63% 50% 37% 50% 0% 25% 50% 75% 100% 2015 2030F Asia Global ex-Asia 1.2 3.2 45% 66% 0b 1b 2b 3b 4b 2015 2030F Population % of Global middle class population 2.1 2.8 48% 56% 0b 1b 2b 3b 2015 2030F Urban population % of Asian population 6.7 12.7 34% 44% $0tn $4tn $8tn $12tn $16tn 2015 2030F Savings % of Global savings
640 million people By 2030: 1 billion people in China 475 million people in India
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7.0 Transport 0.7 Water/Sanitation 2.0 Telecommunications 1.5 Renewables 9.0 Electricity
1. Asian Development Bank: “Meeting Asia’s Infrastructure Needs”, 2017; International Energy Agency: World Energy Outlook 2015
Asia Infrastructure Projected Demand for Capacity and Replacement (2016-2030)1
$20.2 trillion
from China alone
from India
from Southeast Asia
Of the $20.2 trillion projected demand…
Resulting to an infrastructure funding gap of
Augmented by robust brownfield opportunities, as a result of
Non-core asset sales and capital recycling for new infrastructure
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United States ■ Atlantic Aviation ■ Aquarion Company ■ Bayonne Energy Center ■ Broadrock Renewables ■ Cleco Corporation ■ Dulles Greenway ■ Elizabeth River Tunnels ■ Goethals Bridge ■ Harley Marine Services ■ InSite ■ International-Matex Tank Terminals ■ Leaf River Gas Storage ■ Lordstown Energy Center ■ Maher Terminals ■ MIC Renewable Energy Holdings ■ MIC Hawaii ■ NYK Ports ■ Penn Terminals ■ Puget Energy ■ Red Hills Solar ■ Waste Industries ■ WCA Waste
1. As at 30 June 2017. Represents portfolio businesses which Macquarie Infrastructure and Real Assets manages on behalf of investors with various direct percentage stakes held in each. Portfolio businesses shown on the map are representative and not exhaustive. In some instances they represent the operations of a single business where it has operations across different countries.
Italy ■ Hydro Dolomiti ■ Renvico ■ Societa’ Gasdotti Italia S.p.A.
Roads and Rail Renewable Energy Other Transport Services Real Estate Communications Airports Other Real Assets Energy Utilities Waste Agriculture
Canada ■ Autoroute 25 ■ Fraser Surrey Docks ■ GFL Environmental ■ Halterm Limited Mexico ■ Concesionaria Universidad Politécnica ■ Decarred ■ FIBRA Macquarie México ■ Mexican Tower Partners ■ Parque Solar Coahuila ■ San Rafael HydroGen Brazil ■ Cruzeiro do Sul Grãos (3 farms) South Korea ■ AJ Parking Tower ■ Baekyang Tunnel ■ Busan New Port Phase 2-3 ■ Cheonan-Nonsan Expressway ■ CNE Motorway Service Stations ■ Daegil Industry / Daegil Environment ■ Daejon Cogeneration ■ DB Hotel ■ Deok Pyeong Land Company LLC ■ D’LIVE ■ Goyang Bus Terminal ■ Gwangju 2nd Beltway Section 1 ■ Gwangju 2nd Beltway Section 3-1 ■ Hangdarm Island ■ Hanjin Pacific Corporation ■ Incheon Airport Hotel ■ Incheon Grand Bridge ■ Incheon International Airport Expressway ■ Jinju ■ Koentec ■ Machang Bridge ■ Moda ■ North East Chemical ■ Parking Tower II ■ Pyeong Chang Motorway Service Station ■ Saehan Environment Co. ■ Seoul Chuncheon Expressway ■ Soojungsan Tunnel ■ United Terminal Korea Limited ■ Woomyunsan Tunnel ■ Yeongyang Wind Power ■ Yongin-Seoul Expressway ■ Youngduk Wind Power Russia ■ Brunswick Rail ■ GSR Energy Investments ■ OGK-5 ■ Russian Towers China ■ Dallan Hengji Xinrun Water ■ Hengyang Holdings ■ Jinko Solar Power Engineering ■ Longtan Tianyu Terminal ■ Mosaic Xi’an ■ Mosaic Beijing ■ Mosaic Qingdao ■ Mosaic Shanghai ■ Mosaic Chongqing ■ Shenyang Water Treatment Co. ■ Shenyang Zhenxing Environmental Protection ■ Star King ■ Tianjin Port Huisheng Terminal ■ Zhenxing Wastewater Philippines ■ GNPower Kauswagan ■ LRT 1 Metro ■ Negros Island Solar Power ■ NLREC Wind Farm ■ Philippine Coastal Storage & Pipeline ■ San Carlos Solar Energy Australia ■ Axicom Group ■ Endeavour Energy ■ GWA ■ Hobart International Airport ■ Lawson Grains (10 farms) ■ MREEFs ■ Paraway Pastoral (23 farms) ■ Prospect Water New Zealand ■ Oceania Healthcare Taiwan ■ Hanjin Pacific Corporation Japan ■ Central Tank Terminal ■ Hanjin Pacific Corporation United Kingdom ■ AGS Airports ■ Arqiva ■ Cadent ■ Calon Energy ■ Condor Group ■ M6 Toll ■ National Car Parks ■ Race Bank Spain ■ Compania Logistica de Hidrocarburos ■ Viesgo Sweden ■ Arlanda Express Belgium ■ Brussels Airport Germany ■ Open Grid Europe ■ TanQuid ■ Techem ■ Warnow Tunnel France ■ APRR ■ Pisto SAS ■ Renvico Poland ■ DCT Gdansk ■ TanQuid Denmark ■ Copenhagen Airports Slovakia ■ EP Infrastructure ■ Vector Parks ■ Towercom Singapore ■ Universal Terminal Austria ■ Energie Steiermark India ■ Adhunik Power and Natural Resources ■ Ashoka Concessions ■ GMR Airports ■ Gujarat Roads & Infrastructure Corp ■ Ind-Barath Energy ■ MB Power ■ Soham Renewable Energy ■ Swarna Tollways Private Limited ■ Viom Networks Portugal ■ Viesgo Czech Republic ■ Vector Parks ■ Ceske Radiokomunikace ■ Czech Gas Networks
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