Capital market trends and their implications on Asia

In 2014, capital markets institutions finally inched toward steadier ground. Global investment banking fees reached a total of USD 69 billion during the first nine months of 2014, the strongest since 2007. Out of this number, the Asia Pacific region (excluding Japan) accounted for USD 9 billion (13%) of the pie, surpassing its previous record in 2011. Furthermore, the Asia Pacific debt capital markets reached record volumes of USD 894 billion, an increase of 22% from the first nine months of 2013.

Yet this upbeat narrative was tempered by a perfect storm of macro events including lower than expected growth in emerging markets, declining commodity prices and the strengthening dollar with the spectre of rising rates. While the end of the US Federal Reserve’s quantitative easing programme brings worries of rate hikes, the unexpected injection of an additional stimulus by the Bank of Japan has caught many by surprise.

In this paper, we focus our attention on the current state of capital markets in Asia and assess how the region compares to the rest of the world. To better understand the developments in Asia, we have also identified five mega trends for discussion. In this constantly evolving market, it is imperative for capital markets players to keep abreast of not only industry-specific trends but also the mega consumer and institutional trends shaping the region. This paper concludes by positing a number of implications that capital markets firms should consider for their businesses, as well as the capabilities that they will need to develop going forward.