This course provides an overview of current Asian capital markets. The growth of Asian economies has been spectacular in the past 60 years; the advancement of Japan from the 1950s until the beginning of 1990s, the emerging Asian Tigers (Hong Kong, Korea, Singapore, Taiwan) in the 1980s, and the rapid transformation and growth of China and India since the 1990s. Asian capital markets are quite diverse as they consist of emerging markets at different stages of development as well as mature markets. Therefore, it is not easy to view Asian capital markets through a single lens. However, this course not only introduces students to capital markets in various Asian countries but also attempts at introducing a unified conceptual framework to understand markets in these countries. The framework focuses on institutional environments (such as legal systems) in different countries and their impacts on corporate behaviour. We also present empirical evidence that such a framework might not necessarily explain the recent developments in China and India. Two of the important features in Asian capital markets, which contrast those of capital markets in UK-US, are the roles played by the State and closely tied families, which we will discuss in detail. The globalization of the world economy in the past two decades has affected the developments of Asian capital markets. Although our course may discuss the development of capital markets of individual countries, we will discuss Asian economies in the global context and will explore the increasing weight of Asia in the world economy.

Learning Outcomes

Upon successful completion, students will have the knowledge and skills to:

Upon successful completion of the requirements for this course, students should have the knowledge and skills to:

1. Provide an overview of Asian economies and currency system
2. Demonstrate the conceptual framework for understanding financial markets and institutions
3. Be able to read academic articles
4. Demonstrate a familiarization with financial and corporate governance data analysis
5. Demonstrate a vision for the future of Asian capital markets and economies
   

Research-Led Teaching

Students will be introduced to research using readings from academic journals. Based on recent research in law and economics, the course introduces a conceptual foundation to analyze financial markets. Also, the students are expected to read and extract the essence of research papers that use empirical methods.

Required Resources

Reading List

(*) indicate required readings. (ref) indicate reference readings. Please click the link to download the articles. All other required and reference readings are uploaded on Wattle.

Link is provided below for those on internet. Others are either available in the library or uploaded to wattle.

1. Global imbalance and Asia’s economy
2. (*)Charles Adams and Donghyun Park, 2009. Causes and Consequences of Global Imbalances: Perspective from Developing Asia. Asian Development Review, vol. 26, no. 1: 19-47. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1611424
3. (*)Martin S. Feldstein, 2008. Resolving the Global Imbalance: The Dollar and the U.S. Savings Rate. Journal of Economic Perspectives, vol. 22(3), pages 113-25, Summer.  http://www.nber.org/papers/w13952
4. (ref) Guonan Ma and Wang Yi, 2010. China’s High Saving Rate: Myth and Reality. BIS Working Paper No. 312  http://www.bis.org/publ/work312.htm
5. Asia’s currency issue
6. (*)Michael P. Dooley, David Folkerts-Landau, and Peter Garber, 2004. The Revived Bretton Woods System. International Journal of Finance and Economics, vol. 9: 307–313.
7. (*)Jeffery Frankel, 2011. Historical Precedents for the Internationalization of the RMB. Council on Foreign Relations Working Paper. http://www.cfr.org/china/historical- precedents-internationalization-rmb/p26293
8. Asia’s financial centres
9. (ref)Joshua Felman, Simon Gray, Mangal Goswami, Andreas Jobst, Mahmood Pradhan, Shanaka Peiris and Dulani Seneviratne, 2011. ASEAN5 Bond Market Development: Where Does it Stand? Where is it Going? IMF Staff Papers. WP/11/137.  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1869546
10. (* )Executive Summary, Sections I and II: from page 1 to page 59) Michael R. Bloomberg and Charles E. Schumer (City of New York and United States Senate), 2007. Sustaining New York’s and US’ Global Financial Services Leadership.  http://www.nyc.gov/html/om/pdf/ny_report_final.pdf
11. (ref) Global Financial Centres Index  http://www.longfinance.net/images/GFCI18_23Sep2015.pdf
12. Law and finance: A framework for understanding stakeholders and governance of Asian firms
13. (*)Rafael La Porta, Florencio Lopez-De-Silanes, Andrei Shleifer and Robert W. Vishny,1998. Law and Finance, Journal of Political Economy, vol. 106, no.6, pp.1113-1155.
14. Law and finance: Global and Asian evidence
15. (*)Stijn Claessens, Simeon Djankov and Larry H.P. Lang, 2000. The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics, vol. 58, pp.81-112
16. (ref) Rafael La Porta, Florencio Lopez-De-Silanes, and Andrei Shleifer, 1999. Corporate Ownership around the World, Journal of Finance, vol. 54, no.2, pp. 471-517.
17. (ref) Rafael La Porta, Florencio Lopez-De-Silanes, Andrei Shleifer and Robert W. Vishny, 1997. Legal Determinants of External Finance, Journal of Finance, vol. 52, no.3, pp. 1131-1150.
18.  State capitalism 1
19. (*)Andrei Shleifer and Robert R. Vishny, 1998. Perspectives of Government. Chapter 1 of The Grabbing Hand: Government Pathologies and Their Cures, Harvard University Press ISBN 0674010140
20. (*)The Visible Hand, Special Report: State Capitalism, 2012. The Economist, Jan. 21.
21. (*) Jianping Deng, Jie Gan, and Jia He (2011) Political Constraints, Organizational Forms, and Privatization Performance: Evidence from China, working paper.  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=970056
22. State capitalism 2
23. (*)Allen, Franklin, Jun Qian and Meijun Qian (2005) Law, Finance, and Economic Growth in China. Journal of Financial Economics 77: 57-116.
24. Family capitalism
25. (*) (from Lecture 5) Stijn Claessens, Simeon Djankov and Larry H.P. Lang, 2000. The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics, vol. 58, pp.81-112
26. (*)Mara Faccio, Larry H. P. Lang, and Leslie Young (2001) Dividends and Expropriation, American Economic Review, Vol. 91 No. 1: 54-78.
27. (ref) Michael L. Lemmon and Karl V. Lins (2003) Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis. Journal of Finance, Vol. LVIII, No. 4: 1445-1468.
28. (ref) Asian Family Business Report (2011) Credit Suisse Research Institute  http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=88E4D28A- 83E8-EB92-9D56EA529104BFC2
29. Informal financial sector and South Asia
30. (*) Allen, Franklin, Rajesh Chakrabarti, Sankar De, Jun Qian and Meijun Qian (2012) Financing Firms in India, Journal of Financial Intermediation Vol. 21 401-445.
31. (ref, especially Section 7 on informal sector) Allen, Franklin, Rajesh Chakrabarti, Sankar De (2007) India’s Financial System. Working paper.  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1261244
32. Corporate groups
33. (*) Kee-Hong Bae, Jun-Koo Kang and Jin-Mo Kim (2002) Tunneling or Value Added? Evidence from Mergers by Korean Business Groups. The Journal of Finance, Vol. 57, No. 6, pp. 2695-2740
34. (ref) The Benefits and Costs of Keiretsu Financing. Chapter 6 of Takeo Hoshi and Anil Kashyap (2001) Corporate Financing and Governance in Japan. The MIT Press, Cambridge MA, ISBN 0-262-08301-9
35. (*) Mark Scher (2001) Bank-firm Cross Shareholding in Japan: Why is it, Why does it Matter, Is it Winding Down? DESA Discussion Paper No. 15, United Nations  http://www.un.org/esa/desa/papers/2001/esa01dp15.pdf
36. Global Financial Crisis and lessons from the Japanese Financial Crisis of the 1990s
37. (ref) Takeo Hoshi and Anil K. Kashyap (2010) Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan. Journal of Financial Economics 97 398–417.
38. (*) Richard Koo and Masaya Sasaki (2010) Japan’s Disposal of Bad Loans: Failure or Success? – A Review of Japan’s Experience with Bad Debt Disposals and its Implications for the Global Financial Crisis – NRI Papers No. 151.  http://www.nri.co.jp/english/opinion/papers/2010/np2010151.html
39. (*) Richard Koo (2011) The World in Balance Sheet Recession: Causes, Cure, and Politics, Real-world Economics Review No. 58  http://www.paecon.net/PAEReview/issue58/Koo58.pdf

Recommended Resources

Regularly reading business newspapers are strongly recommended, such as Business Times (Australia), Financial Times (London), Wall Street Journal (USA). Bloomberg and Yahoo-Finance are good free sources on the internet.

Staff Feedback

Consultation time will be confirmed at the start of the semester.

Students will be given feedback in the following forms in this course:

• Feedback will be given verbally or by written comments (for project), both to individuals as well as to project groups

Student Feedback

ANU is committed to the demonstration of educational excellence and regularly seeks feedback from students. Students are encouraged to offer feedback directly to their Course Convener or through their College and Course representatives (if applicable). The feedback given in these surveys is anonymous and provides the Colleges, University Education Committee and Academic Board with opportunities to recognise excellent teaching, and opportunities for improvement. The Surveys and Evaluation website provides more information on student surveys at ANU and reports on the feedback provided on ANU courses.

Other Information

Scaling

Your final mark for the course will be based on the raw marks allocated for each of your assessment items. However, your final mark may not be the same number as produced by that formula, as marks may be scaled. Any scaling applied will preserve the rank order of raw marks (i.e. if your raw mark exceeds that of another student, then your scaled mark will exceed the scaled mark of that student) and may be either up or down.

Support for Students

The University offers a number of support services for students. Information on these is available online from http://students.anu.edu.au/studentlife/

Class Schedule

Week/Session	Summary of Activities	Assessment
1	Introduction Asia’s economy and global imbalance Asia’s economic growth Global imbalance and its cause
2	Asia’s currency issue Bretton Woods System II Capital controls and liberalization Road to convertibility: Chinese Yuan
3	Asia’s financial markets Asian markets in the global portfolio: Equity and bond markets Currency market Can Asia embrace global financial centres? China’s segmented equity market
4	Law and finance: A framework for understanding stakeholders and governance Textbook finance vs. reality Law and finance
5	Law and finance: Global and Asian evidence Who controls Asian firms? Shareholder rights: cash-flow rights and voting rights Ownership concentration External finance	Group project workflow due
6	State capitalism Part 1: Asia’s growing sovereign economic power State capitalism State owned enterprises (SOEs) and privatization Market incentives and state objectives Government control of partially privatized SOEs The impact of state on market and firms
7	State capitalism Part 2: China’s growth puzzle
8	Family capitalism Family control around the world Growth of family business in Asia Is family business a good organizational structure? US example: diversified ownership and good legal environment Asian firms: concentration of control and expropriation
9	Informal financial sector and South Asia (India) India’s development and financial markets Financing Indian corporate firms Corporate groups and informal financing Microfinance
10	Corporate groups Korea: Chaebol Tunnelling Japan: Keiretsu Main bank system Cross-shareholding
11	Global Financial Crisis and lessons from the Japanese Financial Crisis of the 1990s The Japanese asset price bubble in the 1990s Bank crisis De-levering of firms and recession	Group project deadline
12	Wrap up and left-over topics: Tale of two cities: Hong Kong and Singapore Wrap up

Tutorial Registration

NA

Assessment Summary

Assessment task	Value	Due Date	Return of assessment	Learning Outcomes
Group Project on Stock Selection (plan)	0 %	29/03/2019	05/04/2019	2,3,4,5
Group Project on Stock Selection	35 %	20/05/2019	05/06/2019	2,3,4,5
Final Examination	65 %	06/06/2019	04/07/2019	1,2,3

* If the Due Date and Return of Assessment date are blank, see the Assessment Tab for specific Assessment Task details

Policies

ANU has educational policies, procedures and guidelines, which are designed to ensure that staff and students are aware of the University’s academic standards, and implement them. Students are expected to have read the Academic Misconduct Rule before the commencement of their course. Other key policies and guidelines include:

• Student Assessment (Coursework) Policy and Procedure
• Special Assessment Consideration Policy and General Information 
• Student Surveys and Evaluations
• Deferred Examinations
• Student Complaint Resolution Policy and Procedure

Assessment Requirements

The ANU is using Turnitin to enhance student citation and referencing techniques, and to assess assignment submissions as a component of the University's approach to managing Academic Integrity. For additional information regarding Turnitin please visit the ANU Online website. Students may choose not to submit assessment items through Turnitin. In this instance you will be required to submit, alongside the assessment item itself, hard copies of all references included in the assessment item.

Moderation of Assessment

Marks that are allocated during Semester are to be considered provisional until formalised by the College examiners meeting at the end of each Semester. If appropriate, some moderation of marks might be applied prior to final results being released.

Examination(s)

See above.

Assessment Task 1

Group Project on Stock Selection (plan)

See Assessment Task 2 for the group project details.

One A4 page work flow plan to be submitted after group is formed and before the end of Week 5 (29 March). Feedback will be given.

Assessment Task 2

Group Project on Stock Selection

(For more details, please see slides presented in class and uploaded on Wattle)

1.   Assume that you are a consultant firm to design an investment strategy for a professionally managed portfolio in Asian securities.

2.   Your assignment is to design an investment strategy for the fund manager who is going to buy and sell individual securities for his/her portfolio.

3.   Portfolio strategy must be a conceptual framework for a fund manager that sets its investment policy for a long-term horizon, rather than recommending certain securities to trade at certain timing.

4.   Please report below:

–    Three Asian stocks a fund manager might select based on your strategy.

–    Three Asian stocks a fund manager might want to avoid based on your strategy.

–    Choose stocks that are among the largest 10 stocks in terms of market capitalization in each country.

•     You may include more than one stock from a country in your portfolio.

–    Summarize why the fund manager might chose each stock

5.   You must consider what you learn from the course. As you learn more as you proceed in this 11-lecture course, you must discuss and assess your ideas continuously throughout the course with your group mates until you submit the report on the due date.

6.   You can use any resources in the library or the web. Most essential information will be included in the financial statement of individual firms.

7.   Report must be not more than 3000 words. Please format the document as a professional consultancy report. You may include an Appendix up to three A4 pages.

Forming Groups

1.      Group size will be determined in Week One based on class size.

2.      All students must form groups on Wattle. The group leader must send one email with the names of all the group members before the beginning of class in Week Three.

3.      Anyone not in a group according to those emails from group leaders will be randomly allocated to groups by the next day.

4.      The group leader becomes responsible for submitting the group assignment.

 

Assessment Rubrics

The project will be based equally on following rubrics:

1. Strategy: Uses concept from class adequately

2. Logic: Consistency and persuasiveness

3. Presentation: Clarity of presentation

 

Word limit (where applicable): No more than 3000 words (excluding appendix which has a limit of 3 pages)

Assessment Task 3

Final Examination

The final examination (2 hours duration plus 15 min reading period) will be based on all the work covered throughout the duration of the semester. The final examination is worth 65% of the overall course grade. To do very well in the examination, you would need to have accessed the required readings of the course. Students will be provided with further details regarding the exam as it approaches.

Academic Integrity

Academic integrity is a core part of our culture as a community of scholars. At its heart, academic integrity is about behaving ethically. This means that all members of the community commit to honest and responsible scholarly practice and to upholding these values with respect and fairness. The Australian National University commits to embedding the values of academic integrity in our teaching and learning. We ensure that all members of our community understand how to engage in academic work in ways that are consistent with, and actively support academic integrity. The ANU expects staff and students to uphold high standards of academic integrity and act ethically and honestly, to ensure the quality and value of the qualification that you will graduate with. The University has policies and procedures in place to promote academic integrity and manage academic misconduct. Visit the following Academic honesty & plagiarism website for more information about academic integrity and what the ANU considers academic misconduct. The ANU offers a number of services to assist students with their assignments, examinations, and other learning activities. The Academic Skills and Learning Centre offers a number of workshops and seminars that you may find useful for your studies.

Online Submission

The group assignment will be submitted online in Wattle.

Hardcopy Submission

NA

Late Submission

No submission of assessment tasks without an extension after the due date will be permitted. If an assessment task is not submitted by the due date, a mark of 0 will be awarded.

Referencing Requirements

Accepted academic practice for referencing sources that you use in presentations can be found via the links on the Wattle site, under the file named “ANU and College Policies, Program Information, Student Support Services and Assessment”. Alternatively, you can seek help through the Students Learning Development website.

Returning Assignments

The feedback will be returned by email.

Extensions and Penalties

Extensions and late submission of assessment pieces are covered by the Student Assessment (Coursework) Policy and Procedure. The Course Convener may grant extensions for assessment pieces that are not examinations or take-home examinations. If you need an extension, you must request an extension in writing on or before the due date. If you have documented and appropriate medical evidence that demonstrates you were not able to request an extension on or before the due date, you may be able to request it after the due date.

Resubmission of Assignments

Resubmission of assignments is not permitted.

Privacy Notice

The ANU has made a number of third party, online, databases available for students to use. Use of each online database is conditional on student end users first agreeing to the database licensor’s terms of service and/or privacy policy. Students should read these carefully. In some cases student end users will be required to register an account with the database licensor and submit personal information, including their: first name; last name; ANU email address; and other information.
In cases where student end users are asked to submit ‘content’ to a database, such as an assignment or short answers, the database licensor may only use the student’s ‘content’ in accordance with the terms of service – including any (copyright) licence the student grants to the database licensor. Any personal information or content a student submits may be stored by the licensor, potentially offshore, and will be used to process the database service in accordance with the licensors terms of service and/or privacy policy.
If any student chooses not to agree to the database licensor’s terms of service or privacy policy, the student will not be able to access and use the database. In these circumstances students should contact their lecturer to enquire about alternative arrangements that are available.

Distribution of grades policy

Academic Quality Assurance Committee monitors the performance of students, including attrition, further study and employment rates and grade distribution, and College reports on quality assurance processes for assessment activities, including alignment with national and international disciplinary and interdisciplinary standards, as well as qualification type learning outcomes.

Since first semester 1994, ANU uses a grading scale for all courses. This grading scale is used by all academic areas of the University.

Support for students

The University offers students support through several different services. You may contact the services listed below directly or seek advice from your Course Convener, Student Administrators, or your College and Course representatives (if applicable).

• ANU Health, safety & wellbeing for medical services, counselling, mental health and spiritual support
• ANU Diversity and inclusion for students with a disability or ongoing or chronic illness
• ANU Dean of Students for confidential, impartial advice and help to resolve problems between students and the academic or administrative areas of the University
• ANU Academic Skills and Learning Centre supports you make your own decisions about how you learn and manage your workload.
• ANU Counselling Centre promotes, supports and enhances mental health and wellbeing within the University student community.
• ANUSA supports and represents undergraduate and ANU College students
• PARSA supports and represents postgraduate and research students