IFR Asia Asian Development Bank Roundtable 2015: Where are Asia’s capital markets heading?

IFR travelled to Baku, Azerbaijan, in early May to host a full house of around 200 delegates at a luncheon seminar during the Asian Development Bank’s annual meeting.

It is the third year running that the ADB has featured an IFR panel on its official knowledge-sharing programme, and the 2015 vintage saw a high-level panel discuss Asia’s transition from a bank-dominated financial system to a mature capital market economy.

Panellists debated the implications of tougher bank capital regulations on Asian credit growth, as well as the significance of recent developments in the international and local capital markets, and the region’s economic prospects.

Delegates heard about the capital constraints facing Asian lenders first hand from the head of India’s biggest bank, who gave a fair and frank assessment of the challenges facing the country’s financial system.

Green bonds, a fast-emerging funding tool for climate-sensitive projects, were also high on the agenda, and the deputy managing director of Export-Import Bank of India shared his experience as one of Asia’s first green bond issuers. India Exim and the ADB had both issued green bonds in March, less than two months before the seminar, and were ideally placed to share their experiences.

Panellists also discussed some of the measures being taken to stimulate capital markets across Asia, from the ADB’s role in credit enhancement facilities to the gradual removal of cross-border restrictions in China and India. Azerbaijan’s top securities regulator provided some local colour with an update on the host country’s development – under particular scrutiny following a slump in oil prices.

Infrastructure bonds – a key area of focus for the ADB’s private sector department – were also up for discussion, and the panel left delegates in little doubt as to the need for the development of a long-term, local investor base to support Asian infrastructure projects.

An engaged audience grilled the panel on a range of topics, including the relevance of the capital markets in funding SMEs, seen as a key part of Asia’s growth story. Questions also focused on the impact of a rising US dollar on Asia’s emerging markets, giving the panel an opportunity to address a pressing concern ahead of a US rate hike expected later this year, and the outlook for securitisation.

With policy makers and private sector executives among the audience, the seminar sought to offer suggestions as to the way ahead for Asia’s capital markets. Delegates enjoyed a lively debate – and a good meal – and went away with plenty of ideas for the future.