The Rise Of Asia’s Tigers

Big economies such as China, India and ASEAN have the potential to record strong growth in the second half of the year. By James Cheo, Chief Investment Officer for Southeast Asia at HSBC Global Private Banking and Wealth

2023 Outlook

The stage is set for Asia to outshine the Western economies in the second half of 2023. While the U.S. and Europe are late in their economic cycles, Asia is still growing strongly.

Due to the banking turmoil in the West, tighter bank lending will slow the growth of developed economies in the second half of the year. Despite a less rosy global outlook, big economies such as China, India and ASEAN can still experience a strong growth trajectory.

This resilience comes from the strength of the domestic consumption and pent-up investments for supply chain relocation. There should be more room for cyclical recovery in India and ASEAN for the rest of this year. With a healthy banking system, credit growth is going to be robust. Inflation in many of these Asian economies has peaked and will create a favourable monetary policy environment for the rest of 2023.

Rise of the Asian T-I-G-E-R

Over the past decade, China has been a key part of Asia’s growth story. Looking ahead, there is a need to look beyond China, and we could put some focus on India and ASEAN as well.

Over the past decade, India and ASEAN economies have undergone a healthy reset as they have deleveraged and continued to invest in infrastructure. As a result, Indian and ASEAN companies have developed resilient fundamental strengths and stronger balance sheets to thrive in the next decade.

The growth prospects of India and ASEAN will accelerate in the next decade since several factors that were not as strong decades ago are now stronger than ever.

Let’s use TIGER as an acronym to illustrate the growth factors in the region, where T stands for technology or the digital economy, I is for rising income of the middle class, G stands for green transformation, E is for energy infrastructure and R is for reforms.

T: Technology or Digital Economy

The pandemic has accelerated the internet economy of India and ASEAN, with digital adoption becoming mainstream. ASEAN’s digital economy is expected to accelerate and grow to US$330 billion by 2025; this growth is not by accident. ASEAN is home to more than 10 million online merchants, and e-commerce sales are on the rise, with revenues expected to reach US$150 billion by 2025.

Over in India, the adoption of digital technologies is boosting productivity. India’s digital economy recorded a growth rate of 15.6% between 2014 and 2019, 2.4 times faster than the growth of India’s real economy. The country’s online traffic usage is among the highest in the world. India’s Gen Z spends an average of 8 hours a day online while smartphone adoption is accelerating in rural areas. Against this backdrop, India would have the second largest group of online shoppers of around 500 million by 2030, with the e-commerce market estimated at US$350 billion.

I: Rising Income of the Middle Class

India has become the world’s most populous country with over 1.4 billion people. ASEAN, with 680 million people, is the third most populous after China and India. Both India and ASEAN have one of the best demographic dividends in the world with a rising working age population and increasing productivity. Almost half of their people are below 30 years of age and their sizeable labour force is estimated to peak only in 2045.

The rise in the working-age population will provide India and ASEAN with an abundant supply of labour, which will have a bearing on future investment and production potential.

G: Green Transformation

India aims to achieve net zero emissions by 2070 and meet 50% of its electricity requirements from renewable energy sources by 2030. The country has recently announced plans to increase the renewable energy target to 450 GW by 2030. To reach net zero emissions by 2070, the International Energy Agency estimates that US$160 billion per year is required across India’s energy economy between now and 2030. That’s three times today’s investment levels.

Similarly, ASEAN has set a target of 23% share of renewable energy in primary energy supply by 2025. ASEAN’s green transformation can account for more than US$1 trillion in annual economic opportunities. The resource-rich locations in ASEAN could be important beneficiaries of the decarbonisation megatrend as global demand for nickel—critical in electric vehicles battery production—accelerates. Indonesia is the key beneficiary as the country has the world’s largest nickel ore reserves, accounting for a quarter of global production.

James Cheo, Chief Investment Officer for Southeast Asia at HSBC Global Private Banking and Wealth

E: Energy Infrastructure

India and ASEAN will experience a population surge in the next decade, putting more stress on existing urban infrastructure. Cities are a key contributor to climate change, responsible for 75% of carbon emissions, with transport and buildings being the largest emitters. Smart building solutions, such as efficient energy usage, can unlock cost savings.

However, to combat climate change, the future of transport has to be electric, which is currently insignificant at under 1% of market penetration globally. Over in ASEAN, Indonesia has an ambitious target of having electric vehicles make up 20% of the total vehicle production in the next five years.

India is expected to see greater exponential expansion for electric vehicles. The South Asian country has launched several initiatives to promote electric mobility, including the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, which provides subsidies to buyers of electric vehicles, and the National Electric Mobility Mission Plan (NEMMP), which aims to put millions of electric and hybrid vehicles on the roads. In India, electric two- and three-wheelers will represent the lion’s share of the total electric vehicle fleet, as this category is most suited to rapid transition to electrification.

R: Reform

Make in India 2.0 is a game-changer with many economic reforms to enhance its manufacturing competitiveness. Economic reforms such as easing foreign investment rules, streamlining taxes and the promotion of Special Economic Zones have set the stage for India’s manufacturing upgrade.

Over in ASEAN, the implementation of the Regional Comprehensive Economic Partnership (RCEP) will further integrate trade and accelerate investments for the region. The RCEP will promote trade efficiencies across ASEAN, especially important as companies look for new locations to diversify supply chains.

Investment Strategy: Look Toward India and ASEAN

Investors have been looking at China for exposure in Asia. However, both India and ASEAN are shaping up to be a big part of Asia’s growth in the years ahead.

Due to the unique characteristics of the Indian and ASEAN economies, an allocation to both India and ASEAN can increase diversification for global investors. A key reason for the diversification benefit stems from the resilience of their domestic economies, where domestic companies are closely linked to their strong structural growth opportunities. In an environment where this growth is positioned to continue, choosing India and ASEAN as a means for diversification becomes an even more crucial consideration.

With strong growth potential, the rise of the digital and green economy and smart manufacturing, investors should consider a satellite allocation to India and ASEAN, in addition to a broad emerging markets allocation. Such a strategy would allow investors to capitalise on the region’s longterm growth potential for diversification and alpha opportunities in the global portfolio context.

Global investors cannot afford to ignore the roar of the new Asian economic Tiger.


About James Cheo

James Cheo is a member of the Global Investment Committee for Private Banking and Wealth Management and also a member of the Regional Investment Committee in Asia. In his role, he spearheads the development of investment strategies across all asset classes for global private banking and wealth management clients in Southeast Asia.

With his knowledge and wealth of experience, his investment views are frequently sought after, with appearances on notable financial media including BBC, Bloomberg, CNBC, and Channel NewsAsia.


Investments in emerging markets may be extremely volatile and subject to sudden fluctuations of varying magnitude due to a wide range of direct and indirect influences. Such characteristics can lead to considerable losses being incurred by those exposed to such markets. This article is not a personalized communication from HSBC to you and does not constitute and should not be construed as legal, tax or investment advice or a solicitation of the sale or recommendation of any product or service. You should not make any investment decisions based mainly or solely on this article. All investments involve risks and may experience upward or downward movements and may even become valueless. Issued by The Hongkong and Shanghai Banking Corporation Limited

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