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Fellow (1 September 1995 - 30 June 1996)
I spent ten months at NIAS as a member of the theme group "Pacific Asia and Europe". During my stay, I researched the portfolio investment potential of emerging markets in Asia. The objectives of my research were to study (1) Asian emerging markets for the purpose of evaluating their potential as portfolio investment alternatives for European, American, and Japanese investors (especially for pension funds, which are supposed to operate very prudently); and (2) the investment policies of European and American pension funds toward emerging capital markets in order to gain insight into the future course of global investment by Japanese pension funds. In the following paragraphs, I summarise the major findings of this research.
Asian (i.e. Pacific Asian) emerging markets appear to be very attractive both on the strength of their past achievements in economic development and from the standpoint of their potential for economic growth in the future. In this regard, Pacific Asian emerging markets differ from other emerging markets such as those in Latin America, Eastern Europe, the Middle East and Africa. Of course they also present a number of risks and problems, including market volatility, currency fluctuations, inadequate securities investment laws and socio-political instability of the countries, as do the other emerging markets. Nonetheless, the Pacific Asian emerging markets still have the advantage over the others in the existing continuous money flow from the developed countries into their region by both the direct investments and the portfolio investments from the developed countries.
The reason for this international money flow is deeply dependent on the strong economic growth and past economic performance of the Pacific Asian region. Such good economic performance brought stable socio-economic development and improved their country credit rating in the international financial market. Nonetheless, they are still trying to enlarge their domestic markets and their regional market (ASEAN), to strengthen the private sector of their economies, to develop their infrastructure, to improve their financial systems and to internationalise their capital markets. Such facts and efforts attract international investors to invest in Pacific Asian emerging markets.On the basis of this research carried out during my stay at NIAS, I am more and more convinced that the countries of Pacific Asia will surely and increasingly develop and enlarge their economies and that our (European, American and Japanese) money outflows to this region both for direct and portfolio investments will increase.
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