To ameliorate the impact of bank balance sheets shrinking, companies are using technology to experiment with bringing buy-side liquidity into secondary markets. The challenge, as many have observed, is how these solutions can help to maintain liquidity in times of market volatility. 15 Second, companies are staying private for longer. According to McKinsey, in the US which drove the dot-com boom and is driving the “unicorn” and “decacorn” phenomenon, the average age of technology companies going public in 2014 was 11 years, up from 4 years in 1999 13. This has been enabled by the prolonged period of low yields, which has driven institutional investors to seek higher returns from liquidity and credit risk in private markets. McKinsey also found that 150 software companies were able to reach USD 10 billion in value through private financing in 2015, compared to just 10 in 2011. In Singapore, private equity assets under management grew 24% per annum on average for the last five years to over USD 100 billion in 2015. This creates a role for industry bodies like ASIFMA, which are set up around public markets like credit and equity, to support companies on their longer journey in private markets, and introduce the benefits of market transparency and market discipline while the companies remain private. 16 Third, underlying macro trends are supportive of investment continuing to flow from Developed Markets to Emerging Markets. On the one hand, accommodative monetary policies in developed economies will drive an ongoing search for relative yield in emerging markets, including in Asia.
ASIFMA has supported that journey over the past ten years by improving transparency through market surveys, advocating innovative solutions through white papers and roadmaps, and building consensus on best practices through events like these and collaboration with other industry bodies. 28 The economic opportunities in Asia are immense, and despite the cyclical slowdown, the region’s financing needs will continue to grow. Asia needs to continue strengthening its capital markets, especially its bond markets. Singapore will support Asia’s bond market by introducing a new Asian Bond Grant scheme, encouraging rated issuances, and supporting secondary market liquidity. 29  Please enjoy the rest of the conference. Thank you.