Tokio Marine appoints new CEO for Asia region; Ben Rudd made CEO of Prudential Wealth Management; HKEX hires from Prudential; Samsung SRA appoints former KIC infra head as CEO; HSBC Asset Management appoints senior vice president; Morningstar names head of manager research for Europe and Asia; PGIM adds ESG lead for Europe and Asia; Apex Group adds Singapore managing director; and more.
The private sector will play a growing role in financing, implementing and operating these projects, provided governments offer political stability. Given these are assets that both require a long-term investment commitment as well as provide services to the public, investors need a stable environment with a committed public partner, Carapiet notes.
This includes a strong, developed regulatory environment, reduced corruption and a defined and foreseeable pipeline of deals - because, given the duration and cost of infrastructure projects, private investors and operators can provide more cost-effective services if there is scale.
Carapiet made his remarks earlier this week at the Macquarie Asian Infrastructure Conference held in Singapore.
The private sector is playing a larger role in infrastructure finance around the world. Carapiet calls the reduction of public spending (as a percentage of GDP) on infrastructure "an unambiguous trend". At the same time, urbanisation, economic growth and, in Asia, many years of public-sector neglect has created a massive and immediate demand for infrastructure improvements and new projects. There is also an increased appetite among institutional investors for exposure to these long-duration assets.
Private involvement in infrastructure is not new, but it is expanding. There is now nearly $4 trillion of private ownership worldwide, including $2.5 trillion invested in 225 listed infrastructure stocks.
In the past two years, 20% of the top 50 biggest M&A deals concerned infrastructure, Carapiet notes. And to highlight how global this trend has become, he notes that of the top six biggest infrastructure deals, two were in America, two in Europe, and two in Asia-Pacific.
This reflects an ideological shift by many state and national governments. "It used to be the case that the only time governments involved the private structure in infrastructure was in times of economic stress," Carapiet says. "That is no longer the case." Governments have come to welcome private involvement not just for the money it brings, but also for efficiency and better performance in utilities.
Moreover, infrastructure has been a winner for investors. Over the past three years, infrastructure stocks have outperformed broad equity indices. In the past several months, this has still been true, despite the subprime credit and liquidity crisis.
Infrastructure stocks in Asia have performed especially well, vastly outperforming equity index benchmarks. Infrastructure plays have only underperformed in Australia and New Zealand (because of the massive outperformance of Australia's resource stocks) and in Japan.
Of that estimated $700 billion in needed spending, China accounts for $320 billion, says Carapiet. The figure is based on China's own most recent five-year plan, which envisages a total need of $1.6 trillion. "China is the big story," Carapiet says. "Any serious player has to focus on it."
He adds India is also a massive market but its lack of a developed bond market means foreign banks are keener on China deals.
Hong Kong’s Mandatory Provident Fund recorded investment losses for 2021 as local and mainland Chinese equities underperformed, but experts eye other headwinds for the coming year.
One of Hong Kong's biggest family firms, New World Development, plans to beef up its ESG vision, leading the way for other family offices and family firms in the region.
Nature loss across Asia will profoundly damage economic activities that rely on natural capital, according to several recent studies. Investors need to act.
Nuveen’s Simon England-Brammer discusses the firm’s investment outlook, identifying the opportunities and risks across a range of asset classes.