Hong Kong, the PRC, and India are the emerging markets that increasingly shape the landscape for international capital markets, according to new research from DLA Piper.

Asia and other rapidly emerging markets are changing the capital markets landscape, while, at the same time, developed markets have been slowed by the credit crunch. The emerging economies, according to the report, will continue to have an important influence on the direction of international capital markets. “The continuing surge in activity by companies in emerging markets in Asia, Latin America, the CIS, CEE has played an important role maintaining a degree of buoyancy within global IPO and M&A markets over the last six months. In the short term, the benefits of the IPO trends in emerging markets are likely to be seen by the local stock exchanges in those markets,” says the report.

Stephen Peepels, head of US capital markets at DLA Piper, Asia, said: “Cash-flush Asian companies, particularly in the PRC and India, will have significant influence over the direction of international capital markets.” In the short term, Peeples said that the benefits of IPO trends in Asia and emerging markets are likely to mainly affect local stock exchanges. However, in the longer term, the growth of these markets will likely have a positive spin-off to the more established international stock exchanges as locally-based companies seek opportunities to tap into the broader investor base that international pools of capital provide, including through secondary or dual listings, he said.

In terms of challenges facing individual exchanges, for Hong Kong, the bigger issue is structural, with certain regulations in place in the PRC affecting the ability of Chinese companies to list outside the mainland, Peepels said.

“The extent to which increased competition among international stock markets and the lack of issuer satisfaction affects exchanges does differ,” he said.

While familiarity with the local market continues to underpin a significant number of listing decisions in Asia, as well as Europe and the US, the growing internationalization of business and dissatisfaction with primary listings indicates that there may be a trend towards exchange shopping or consideration of alternative listings. Some respondents also believe the PRC and India will continue to be capital markets hot spots in years to come.

“Our findings highlight the importance to any company of giving careful consideration to its intended stock exchange and then reviewing the benefits of its listing on a regular basis,” said Esther Leung, partner at DLA Piper’s corporate finance group. The feeling amongst investment bankers, she said, is that there have been increasing thoughts given by their clients to moving their primary listing to other exchanges. Leung believed this trend will continue as businesses become more global and as individual stock exchanges implement more active marketing strategies.

DLA Piper’s International Capital Markets Survey was conducted amongst publicly quoted businesses listed on eight key international stock exchanges and investment banks across the world. It included 12 companies listed on the Hong Kong Stock Exchange and 24 on the Australian Stock Exchange.