Changing world, new thinking: Three key takeaways from Barclays Asia Forum 2023
The way we work, live, and trade is changing, leaving businesses and economies to grapple with volatility and ambiguity to an extent not witnessed in decades. At Barclays Asia Forum, public and private sector leaders discussed practical strategies to create growth and opportunity in response.
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1. Macroeconomic shifts redraw areas of opportunity
The global economy is in recovery mode post-COVID, but the upturn remains fragile, with widening growth divergences across regions. While the US and eurozone have shown recovery and resilience, many emerging market and developing economies are struggling with tight global financial markets and record debt levels.
Adding to this divergence and fragility are ongoing risks presented by technology disruption, demographic shifts, geopolitical instability, and climate change, which threaten to weaken the major drivers of global growth such as employment, productivity, and trade.
Regarding interest rates, there was general consensus among speakers that 'higher for longer' is a more likely reality, and that the end of a tightening cycle is not the same as a reversal.
Despite this macroeconomic environment, opportunities exist. Ajay Rajadhyaksha, Chairman, Global Research, Barclays pointed out that past predictions of a recession in the US were off the mark. He attributed this to private sector balance sheets being in better shape than expected, and an “absolute boom in structures investment” thanks to the IRA and the CHIPS Acts.
Speakers agreed that India’s economic growth is likely to be sustainable in the medium term, and that while India has made progress improving the ease of doing business, more reforms may be needed to simplify rules and change bureaucratic mindsets.
Other green shoots include the growing number of electric vehicle manufacturers and renewable energy solution providers in China, as the country works to decarbonise its economy.
Opining on China’s evolving economy, Angela Liu, CEO, China, Barclays said, “A lot of investment has gone into sectors such as advanced technology, semiconductors, electric vehicles, lithium batteries, and of course, AI. These sectors will drive the next wave of economic growth.”
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2. Constant innovation calls for strategic transformation
The rapid development of AI was a dominant theme at the Forum, given the potential it has to disrupt almost every imaginable sector. However, there are significant risks associated with its proliferation including privacy, ethics, bias, disinformation, and economic disparity between those that can leverage AI and those that cannot.
“Technology has gotten ahead of regulation in some ways, and we saw this a little bit in the social media sector,” said Kristin Roth DeClark, Global Head of Technology Investment Banking at Barclays, speaking to Bloomberg from the event. “With AI we’re in a similar place, so we’ve got to get the regulation piece of this sorted so that consumers and people trust the technology.”
Digitalisation in the financial sector was another major trend that was discussed, such as the implications for markets of the rise of cryptocurrencies and other digital assets. In response, many central banks have plans to launch central bank digital currencies (CBDCs) which are seen by some as a possible threat to traditional banking models. Being volatile and still largely unregulated, there were calls for further research and collaboration to understand their potential implications for monetary policy, financial stability, and the broader economy.
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3. Financial services will play a key role in achieving greater sustainability
Countries in Asia Pacific, a region that produces more than half the world’s carbon emissions1, have an important role to play in terms of renewable energy production and adaptation. Yet in the region, energy demand is increasing, carbon taxes are well below what is needed, and the cost of decarbonising is unaffordable for some emerging and developing countries.
The cost of financing Asia’s energy transition is estimated to be $3 trillion per year until 20502. To facilitate this, projects will need public and development bank funding, and banks will need to play a vital role in transition financing.
Panellists welcomed the growing field of investable opportunities beyond solar and wind energy, such as decarbonising technologies in order to fund the transition. However, financing cannot go green at once and there was an awareness that funding low carbon intensity projects will play a part in the interim.
As the Asia Pacific region increasingly commits to more ambitious climate targets, investors have an opportunity to contribute to a future that is potentially more sustainable and economically prosperous. Many speakers suggested the best opportunities lie at the intersection of rapidly falling technology costs and policies intended to scale up that technology’s deployment.
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About the experts
CEO, China, Barclays
In her role, Angela is focused on strengthening the firm’s existing cross-border Corporate and Investment Bank platform by expanding its capabilities to connect Chinese corporates and financial institutions to the capital markets of Asia Pacific, UK, Europe, and the Americas; and also connect global clients to the fast-growing capital market opportunities in China. She leads the firm’s China growth initiatives across all product lines in Global Markets, Investment Banking, and Corporate Banking. In addition, she serves as Head of FIC Sales, Non-Japan Asia Pacific, responsible for distribution to clients across the region. Before joining Barclays, Angela was the Head of Institutional Client Group, China and Hong Kong at Deutsche Bank. Prior to that, she was at Morgan Stanley for over 17 years in New York and Hong Kong and also served as Chairman of the Board for Morgan Stanley Bank International (China). Angela graduated Magna Cum Laude from Columbia University with Bachelors and Masters degrees in Applied Mathematics. She now serves on the Board of Visitors for the School of Engineering and Applied Science at Columbia.
Global Chairman of Research
Ajay Rajadhyaksha is Global Chairman of Research at Barclays, based in New York. He drives the global macro research and strategy effort, including economics, rates, FX, commodities, emerging markets, and asset allocation. Since joining Barclays in 2005, Ajay has held various positions, including Head of Macro Research, Co-Head of FICC Research and, before that, Head of US Fixed Income Research and US and European Securitised Research.
Kristin Roth DeClark
Global Head of Technology Investment Banking
Kristin Roth DeClark is the Global Head of Technology Investment Banking at Barclays, overseeing the firm's coverage of technology clients worldwide across all capital markets products and M&A. She sits on the firm’s Investment Banking Management Committee. Ms. DeClark's career in investment banking spans over 20 years, largely focused on financing technology clients. Prior to her current role, she served as the Co-Head of Global Capital Markets, where she was responsible for Barclays’ capital markets businesses globally, including Equity Capital Markets, Debt Capital Markets, Leveraged Finance, Securitized Products, and Derivatives. Before that, she held the position of Co-Head of Equity Capital Markets (ECM) in the Americas and Global Head of Technology ECM. Ms. DeClark joined Barclays in 2019, and prior to that, she held several senior roles in ECM at Deutsche Bank and Credit Suisse, including serving as the Global Head of Technology ECM at Deutsche Bank from 2015 to 2019. Throughout her career, Ms. DeClark has financed numerous high-profile technology companies including more recently companies such as AvidXchange, BigCommerce, Compass, Definitive Healthcare, First Advantage, GoodRx, LegalZoom, Mobileye, Poshmark, PowerSchool, Procore, Rent the Runway, Rivian, ThredUp, and ZoomInfo. Ms. DeClark earned a B.S. in Commerce from the University of Virginia's McIntire School of Commerce.