Asia-Pacific countries are in the limelight
lately due to economic growth rates that have surpassed other developed
countries. Higher returns and favourable regulatory
changes are attracting capital investments from overseas.
A new Celent report, Equities Markets in Asia:
Magnet for Foreign Capital Inflows, examines the ever-increasing
foreign capital flows into the Asia-Pacific region. Countries like China,
Hong Kong, India, Taiwan, South Korea, and Singapore are acting like
magnets for foreign capital by taking advantage of the favourable economy.
The major global brokerages active in the region have responded to
increased buy side demand by building up their operations in the
Asia-Pacific region to better serve these institutional clients.
Most of the target markets have seen sustained
foreign portfolio investments over the past few years, one of the key
global financial trends in recent times. The US and Europe (primarily the
UK) account for 50–75% of the net foreign inflows in each of these
countries.
In the secondary markets, foreign institutional
investors invested a net of US$49 billion in 2006. The investments total
around US$62 billion, the highest for any emerging economic region.
“Global investors will likely continue to show
their interest in Asian equities over the next three to five years,
propelled by economic growth, high returns, technological developments,
favourable regulatory changes, and the scope for development in these
regions,” says Prathima Rajan,
analyst at Celent and co-author of the report.
Technology is emerging as a key differentiator for
brokerages competing for business from institutional investors, “Whereas
five years ago, e-trading had just started in Asia, brokerages and buy
side firms are now using sophisticated proprietary systems and vendor
systems,” says Neil Katkov,
managing director of Celent’s Asia Research group and co-author of the
report. “Brokerages are poised to introduce sophisticated e-trading
capabilities even in emerging markets such as China and India.”
The report highlights the factors driving this kind
of growth in the Asia-Pacific region by analysing parameters like economic
growth, high returns, regulatory changes, and technological advancements.
Then we examine the trends pertaining to such growth in both primary and
secondary markets. Each of the selected countries is studied as a
potential investment market.
The 42-page report contains 33 figures and seven
tables. A table of contents is available here.
