Rise and interconnectivity of the emerging markets (SAAAME)
The issue with SAAAME -- the fast growing emerging markets of South America, Africa, Asia and the Middle East - is not so much about the speed of growth within the SAAAME markets, but how interconnected the trade flows between them have become. Trade between the SAAAME markets is growing much faster than the developed-to-developed and developed-to-emerging market flows.
Relying on large but slower growing developed markets is not enough for financial institutions to remain competitive. As more trade flows between fast-growing emerging economies, Western financial institutions need to find ways to become involved in this trade to remain competitive.
Facts
By 2050, the E7 countries will have 45.9% of global banking assets, compared to 18.2% in 2013 whilst the G7’s share of global bank assets will shrink from 54.4% in 2013 to 29.9% in 2050.
Our latest research anticipates that SAAAME also has a dominant position in Sovereign Wealth Funds, with 39% of SWF assets under management in Asian SWFs, 36% in Middle Eastern SWFs and only 14% of SWF assets in European SWFs.
So what does this mean for your business?
The development of the SAAAME markets is leading to a radical shake-up in the growth opportunities and competitive environment for your business.
These include:
- infrastructure financing
- access to large and growing consumer markets
- large supplies of low-cost highly educated talent
- acting as a gateway into the emerging markets for Western blue chip clients
- opportunity to profit from the war for natural resources
SAAAME financial institutions
Success will depend on being able to develop the customer-centric model needed to keep pace with consumer expectations. You also need to work out how to attract and retain scarce talent when competitors and companies from other sectors are looking to lure your best people away.
Western financial institutions
The opportunities are evident, but regulation, local competition and a lack of cultural understanding are making it increasingly difficult to penetrate these markets. Success will depend on being able to deliver products and capabilities that domestic players cannot.
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