Global Capital Finance: Who Will Finance the...
Transcript of Global Capital Finance: Who Will Finance the...
Global Capital Finance: Who Will Finance the Future?
Raymond McGuire
Head of Global Banking, Citi
Dino Patti Djalal
Indonesian Ambassador to the U.S.
Seth Merrin Founder and CEO
Liquidnet
Mike Milken Chairman
Milken Institute
Pierre Beaudoin President and CEO Bombardier, Inc.
A few countries account for more than a half of world’s financial assets
2 Sources: World Bank, IMF.
Western Europe,
33%
U.S., 26%
Japan, 12%
Rest of the
world, 29%
World financial assets (2010): $250 trillion
Western Europe,
6%
U.S., 4%
Japan, 2%
Rest of the world,
88%
World population: 6.8 billion
Importance of global capital to economic growth Singapore vs. Jamaica
3 Sources: World Bank; UNCTAD.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1960 1970 1980 1990 2000 2010
Singapore
Jamaica
Real GDP per capita
0102030405060708090
100
Singapore
Jamaica
Inward FDI stock per capita (thousand US$)
Importance of global capital to economic growth South Korea vs. Colombia
4 Sources: World Bank; UNCTAD.
0
3,000
6,000
9,000
12,000
15,000
18,000
1960 1970 1980 1990 2000 2010
South Korea
Colombia
Real GDP per capita
0
500
1,000
1,500
2,000
2,500
3,000
South Korea
Colombia
Inward FDI stock per capita (US$)
Different growth paths for selected African countries
5 Source: World Bank.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Botswana
KenyaRwanda
Real GDP per capita (constant 2000 US$)
P = Prosperity Ft = Financial Technology HC = Human Capital SC = Social Capital RA = Real Assets
P=ΣFti*(ΣHCi+ΣSCi+ΣRAi)
“The most important financial innovation that I have seen the past 20 years is the automatic teller machine…I wish someone would give me one shred of neutral evidence that financial innovation leads to economic growth. One shred of evidence.”
Paul Volcker Former Chairman, Federal Reserve
7
America Goes to Work U.S. and Fortune 500 Employment
00 95 90 85 80 75 70
200
180
160
140
120
100
80
60
U.S. = +62 million jobs
Fortune 500 = minus 4 million
New financial technologies are fully implemented
Index 1970 = 100
Modern capital markets begin
Dispersion is at the core of the problem in Europe.
2.0
1.0
0
-1.0
-2.0
Standard Deviation
GREECE
PORTUGAL
IRELAND
ITALY
FRANCE
HUNGARY
ICELAND
US
BELGIUM
SPAIN
AUSTRIA
POLAND
CANADA U
K
JAPAN
GERMANY
SLOVAKIA
NEW ZEALAND
AUSTRALIA
CZECH REP
NETHERLANDS
DENMAKR
FINLAND
KOREA
SWEDEN
LUXEMBOURG
SWITZERLAND
NORWAY
Unit Labor Costs in Europe
100
Spain Greece Portugal Ireland Italy Germany
Index
110
120
130
140
EU Unemployment Rate
5%
9%
13%
17%
21%
Spain Greece Portugal France Italy U.K. Germany
6% 8% 8%
10% 12%
17%
21%
Pensions for Greece’s Most Dangerous Jobs
• High-risk workers are eligible for early retirement:
• Full government pension benefits
• Age 50 for women, 55 for men
• Who qualifies?
• 580 job categories
• 700,000 workers (14% of workforce)
Source: NY Times, 3/11/10.
High-Risk Occupations in Greece
Coal Mining Bomb Disposal
Source: NY Times, 3/11/10.
High-Risk Occupations in Greece
Source: NY Times, 3/11/10.
Radio Hosts? (“Bacteria on microphones”)
Hairdressers? (“Exposure to hair dyes”)
Computer Storage: $2 million per megabyte
1957 America
IBM System 370/168 in 1976
• 8 megabytes for $8 million
• Cost per megabyte: $1 million
Apple iPad 3
• 64 gigabytes for $699
• Cost per megabyte: $0.01
There are more than 6 billion mobile phones in the world!
Overview of Banked and Un-Banked Consumers & Businesses There are over 2.3 billion people who are under-banked or un-banked across the globe.
Est. Working Age Population With Out a Bank
Account
India 52%
Mexico 75%
Philippines 74%
Brazil 57%
South Africa 54%
China 58%
US 9%
Unbanked –Require More than Financial Access
Unbanked – Bankable
Underbanked
Banked
Rural/UrbanPoor
Micro Entrepreneurs
Informal Sector
Small Business Owners
Salaried
Affluent
HNWI
800 million people under $5
a day
2.5 BillionPeople
Top Countries by Number of Financially Excluded Adults, 2010
US #21 - 19mm
Mexico #8 – 19mm
Brazil #5 – 75mm
Argentina #20 – 19mm
Nigeria #6 – 72mm
Tanzania #16 – 22mm
Kenya #18 – 20mm
Ethiopia #11 – 39mm
Russia #12 – 32mm
China #1 – 562mm
India #2 – 393mm
Pakistan #4 – 92mm
Ukraine #15 – 25mm
Turkey #14 – 25mm
Indonesia #3 – 97mm
Philippians #10 – 42mm
Egypt #13 – 30mm
Sudan #17 – 21mm
Thailand #19 – 20mm
Vietnam #9 – 43mm
Bangladesh #7 – 65mm
Global population of 7 billion people with 4.2 billion people of working age (15 – 65 yrs old) 1.9 billion people have a bank account in a formal financial institution, thus are considered “Banked” or “Financially Included” That leaves ~2.3 billion “unbanked” who do not have an account and are considered “Financially Excluded” China and India make up 950 million excluded working age adults or 41 % of the world’s total of “Financially Excluded”
– Inclusion as a % of total population vary greatly: China, India, Indonesia, Brazil, Egypt, and Turkey all range from 40 to 49% Bangladesh, Mexico, Vietnam, Philippines, Ukraine and Argentina range from 25% to 35% Sub-Saharan African countries (plus Pakistan), fewer than 15% of adults have accounts
U.S. (23.6%) China (8.7%) Japan (8.6%) Germany (5.2%) France (4.4%) U.K. (3.6%) Italy (3.4%) Brazil (3.1%) Canada (2.6%) Russia (2.4%)
Today
The World’s Top 10 Economies (Percent of World GDP)
China (18.7%) U.S. (16.5%) India (11.8%) Brazil (4.8%) Indonesia (3.5%) Japan (3.1%) Mexico (3.0%) Russia (2.7%) Germany (2.4%) U.K. (2.2%)
2050
Sources: World Bank/Angus Maddison, “The World Economy: Historical Statistics” (OECD)/ PricewaterhouseCoopers/Milken Institute/Goldman Sachs (9/09)
The World’s Economic Clout Moves East Leading Cities Ranked by GDP
• More than 20 of the world’s Top 50 cities will be
located in Asia by 2025, up from 8 in 2007.
• More than half of Europe’s Top 50 cities will drop off the list, as will three in North America.
• Shanghai and Beijing will outrank Los Angeles and London … Mumbai and Doha will surpass Munich and Denver.
Source: McKinsey Global Institute (March 2011)
Importance & Opportunity of Mobile Money In Countries that have low bank account penetration, often have very high cell phone penetration. In Latin America, on average only 30% of the population have bank accounts, whereas 90% have cell phones.
Global Mobile Transactions ($B)
CAGR 95%
$60B
$1.13T
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014
Mobile Phones : Bank Accounts
Cash Payments : Electronic Payments
5Bn
1.8Bn
~15%~85%
Cell Phone Penetration vs. Bank Penetration