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NEW DELHI: The increase in women equality could boost global GDP by 31 per cent o r $28 trillion -- the size of the US and China combined -- by 2025, said a BofA-ML report, which suggested a $72 trillion of financial assets will be controlled by women by 2020, double the 2010 level and 1.5 times faster than men.
A higher diversity in management is one of the factors that brings lower volatility in earnings and boost dividends of a company, the brokerage 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.
The foreign brokerage carried out studies on various regions to conclude that women diversity can boost return on equity (RoE), profits, dividends and market capitalisation, and that too at a lower risk.
For instance, it noted 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,” it said.
In case of Asia, while women comprise 49 per cent of population and 36 per cent of the total GDP, they hold just 12 per cent of board seats and 3 per cent of CEO positions.
In India, only 39 out of 345 fund managers managing around Rs 22.2 lakh crores assets, are women.
They are managing funds either as primary/secondary managers or have oversight as heads of equity/debt.
BofA-ML's proprietary database on Asian boards shows the lack of gender diversity is most acute in information technology, industrials and consumer discretionary.
“Asia Pacific stocks with at least two female board members have a P/E premium, and higher net profit margins (up 3 per cent) 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,” it said.
The US has so far lagged other developed nations in both pay and policy gaps.
The average SP 500 board has four men for every woman and just 5 per cent of companies have a woman at the helm.
Corporate America does not look like Main Street America, the brokerage said.
In Europe, percentage of women in corporate boards has surged three times over the past 15 years.
“Within that, those in executive positions have jumped 60 per cent over the past five years with every one in six of executive members now women.
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 per cent from its current 64 per cent,” it said.
For European equity investor, it has been rising diversity (more women on company boards) are a positive development as there has been lower volatility in earnings and dividends in the company that are making efforts to increase diversity.
BoFA-ML said it itself screen for companies that have become more diverse and visibility of earnings/dividends has improved.
