Equality for women could boost global GDP by 31 percent or $28 trillion by 2025, says a report by Bank of America Merrill Lynch( BofA-ML) on the theme of 'She-conomy’.
Equality for women could boost global gross domestic product (GDP) by 31 percent or $28 trillion by 2025, the size of US and China GDP combined, says a report by Bank of America Merrill Lynch( BofA-ML) on the theme of 'She-conomy’.
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With women driving the labour market, as well as the wealth management sector, it is expected that by 2020 they will hold $72 trillion of the world’s financial assets, double the 2010 level and accumulating assets 1.5 times faster than men, the report said.
"We see women driving the labour market, as well as the wealth management sector. But there is still much to do. The economic gender gap is reducing at a snail's pace, and all being equal, will not close for centuries - 202 years,” the brokerage said.
Studies on various regions were conducted to conclude that women diversity can boost return on equity (RoE), profits, dividends and market capitalisation.
The report observed that incentives to close the gender gap in the US are evident, "Our work suggests that companies focused on gender diversity at a board, C-suite and firm level have consistently achieved higher ROE and lower earnings risk in the subsequent years. Moreover, companies focused on diversity have generally traded at a premia to more homogeneous counterparts."
In Asia, women comprise 49 percent of Asia's population and 36 percent of GDP, but just 12 percent of board seats and 3 percent of CEO positions, the report said.
BofAML’s proprietary database on Asian boards shows the lack of gender diversity is most acute in Info Tech, Industrials and Consumer Discretionary.
According to the report, "Asia Pacific stocks with at least two female board members have a P/E premium, and higher net profit margins (+3 percent) and dividend yield. Much needs to be done to close the gender gap but progress is being made in tertiary education and laws to support equal pay and government-assisted childcare. Industry sources value the potential uplift at $3.2 trillion to $4.5 trillion of incremental GDP."
Despite the increased focus on diversity, the US lags other developed nations in both pay and policy gaps. The average S&P 500 board seats four men for every woman; just 5 percent of companies have a woman at the helm. Corporate America does not look like Main St. America, the brokerage said.
Further, Europe has seen a significant shift regarding gender equality and
representation with the percentage of women in corporate boards surging three times over the past 15 years.
"Within that, those in executive positions have jumped by 60% over the past five years with every 1 in 6 of executive members now women. Moreover this trend is expected to surge as one of the European Commission goals for 2020 is to increase the employment rate for women to 75 percent from its current 64 percent," the report said adding that it is a positive sign for the equity investors as stocks that have seen rising diversity on boards have seen lower volatility in earnings and dividends.
First Published: Mar 8, 2019 6:00 AM IST