1. East meets West meets East

2. Important information
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3. Learning objectives
Discuss the current global macro-economic environment
Describe the possible effect on asset prices
Understand which economic conditions are more fundamental and longer term in nature; and which are less fundamental but likely to cause shorter term noise and asset price volatility

4. A simple message Investment growth comes from economic growth
Consumer spending is a large part of GDP
Look for large populations with low, but growing, income levels
Identify and invest early

5. Capital markets assumptions
Demographics and Economic Growth modelling
Focus is on the growth of the productive capacity of the economy, influenced by demographic changes
Other fundamental macro-economic factors are changing the global investment landscape: - Availability of labour - Savings and Investment - Technological Progress
These help inform the view of long-term economic activity across regions and provide a crucial input into a building block framework for estimating asset class returns

6. Capital markets assumptions
Demographics and Economic Growth modelling
Labour supply
Savings
Human capital
Economic growth
Fertility
rates
Fertility
rates
Labour supply
Savings
Human capital
Economic growth + =
Mortality
rates
Mortality
rates

7. Capital markets assumptions
Demographics and Economic Growth modelling
Global map sized according to GDP 2018
Source: For illustration only, we are not responsible for contents/reliability of the website(s) shown.

8. Capital markets assumptions
Demographics and Economic Growth modelling
Global map sized according to population 2018
Source: For illustration only, we are not responsible for contents/reliability of the website(s) shown.

9. World demographic change
Africa
Asia
Europe
Lat Am/Carib
N. America
Oceania
Source: World Population Prospects: The 2015 Revision. For illustration only, we are not responsible for contents/reliability of the website(s) shown.

10. Capital markets assumptions
Demographics and Economic Growth modelling
Model overview

11. Shift of the economic centre of gravity
Long-term perspective on the global economy
Source: McKinsey Global Institute, Angus Maddison (University of Groningen, MGI Cityscope v2.0)

12. Shift of the economic centre of gravity
Long-term perspective on the global economy
Source: For illustration only, we are not responsible for contents/reliability of the website(s) shown.

13. Shift of the economic centre of gravity
Long-term perspective on the global economy
Source: For illustration only, we are not responsible for contents/reliability of the website(s) shown.

14. African Capital Markets
Favourable structural factors for long-term economic growth
Global map sized according to GDP 2018
Global map sized according to population 2018
Catch up potential
Source: For illustration only, we are not responsible for contents/reliability of the website(s) shown.

15. African Capital Markets
Favourable structural factors for long-term economic growth
Favourable demographics
Low starting point – productivity catch up potential
Rapid urbanisation
Infrastructure development; strategic links with China
Multi-generational jump in Banking

16. SAA Framework
Common framework across the three main books of business

17. Adding value through a diverse & evolving SAA
Evolution of the SAA
Changes in the Strategic Asset Allocation - OBMG
Fixed Interest Property Alts Equities
Adding value through a diverse & evolving SAA

18. SAA Framework With-Profits Unit-Linked Annuities
Common framework across the three main books of business
With-Profits
(£100bn)
Customer Outcomes
Tailored Risk Appetite
Efficient Risk Return
Consistency Across Fund Ranges
Other Constraints (e.g. cost, liquidity) 1. 2. 3. 4. 5.
key Principles
Unit-Linked
(£30bn)
Annuities
(£40bn)

19. Key “take aways” Long term investments require long term strategies
Where do you think growth is going to come from in the future?
What is the best way to obtain exposure to new areas in a controlled and well resourced way?

20. Learning outcomes
Discuss the current global macro-economic environment
Describe the possible effect on asset prices
Understand which economic conditions are more fundamental and longer term in nature; and which are less fundamental but likely to cause shorter term noise and asset price volatility

21. Thank you for your time
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