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Note: After 15 years with Lehman Brothers in Asia, Jasjit "Jesse" Bhattal found himself leading the sale of the firm's international business to Nomura in 2008. Two years later, to counter staff defections as retention bonuses began to expire, Nomura turned to Bhattal to run its wholesale banking business, making him the only non-Japanese member of the bank's executive management board. He recently spoke to Toby Fildes about his outlook for investment banking, the continuing expansion project at Nomura, and the regulatory challenges that the industry faces.
One year ago, it was at least possible to say that 2010 had to be better than 2009. But what reasons do we have to look forward to 2011, and what worries you most about the coming year?
In terms of the global recovery, we continue to believe that it will remain a two-track process, with the emerging economies growing much faster than the developed world. Emerging markets, particularly those in Asia, generally have good domestic fundamentals whereas developed economies, particularly the US and Europe, continue to face headwinds in the aftermath of the financial crisis.
It seems to me that with the sovereign crisis, we've seen rounds one and two in Europe, but most of the bond vigilantes continue to remain on the prowl. I would think that sometime in the next six months or so we may see another round relating to the sovereign issue.
But if you look at 2011, our view is that the emerging markets will account for three-quarters of global growth, with China and India alone accounting for almost half. And, if you get even more granular, China will contribute almost three times as much as the US to global growth in 2011, and India will contribute as much to global growth as western Europe and Japan combined.
In terms of the concerns, obviously a further deterioration on the sovereign front is always a fear, but equally we've got to be mindful of what could happen in the emerging markets. Asset prices rallied considerably last year, but the recent turmoil in the Middle East has stemmed the flow of money into the emerging markets, at least in the near term. Sentiment will also be driven by the continued bias towards loose...