Asia Financial Services

Financial markets in Thailand are experiencing rising levels of capital inflow, drawn by the economy’s solid performance and sustained political stability. However, there are concerns this flood of funding could cause overheating and create bubbles in some segments, including the stock and property markets.

As Papua New Guinea’s top banks and financial services firms record healthy profits, citing overall strength of the economy, the government has pledged a broad and ambitious infrastructure development programme in hopes of further boosting growth. However, concerns about the future distribution of an expected resource-driven boom continue to dampen long-term expectations.

Reports that international insurers are seeing healthy growth in Indonesia suggest high expectations over how the market’s potential will be met this year and beyond. However, concerns over new regulations and the country’s susceptibility to major natural disasters underline a sector that is not without risk.

Basking in an environment of rising demand for credit in a growing economy, Indonesia’s banks have become some of the most profitable in the world. In recent weeks, two of the big three global ratings agencies have given the banking system a strong vote of confidence. However, there is also a downside. The sector could be hit by rising non-performing loans (NPLs) and changes in government policy that could affect the rupiah.

As part of the rapid liberalisation of Myanmar’s economy, the banking sector is now opening up to foreign participation. The government is enacting reforms to promote foreign participation in the sector, while the US has recently lifted restrictions on four local banks. With the economy both fast-growing and underbanked, and with foreign investment on the rise, the opportunities for international institutions could be considerable.

With regional integration of the financial services industry drawing closer, analysts are warning Thailand’s banks to strengthen their position at home or risk being swallowed up by rivals once the Association of South-east Asian Nations (ASEAN) Economic Community is launched in 2015.