1. Market development is strong, with uneven progress
Asia’s capital markets have grown rapidly over the past 25 years. The number of listed companies has nearly doubled, reaching almost 29 000 by 2024, during a period in which both Europe and the United States saw their number of publicly listed companies shrink. Market capitalisation rose by USD 25 trillion. Today, Asia is home to 55% of the world’s listed companies and accounts for 27% of global market value. But challenges remain. Many markets still lack robust regulatory frameworks and investor trust. Outside the People’s Republic of China (hereafter ‘China’) and Japan, capital raised through equity markets has fallen relative to GDP, showing that more work is needed to unlock the full potential of market-based finance.
2. Companies still rely heavily on bank financing
Market-based financing in Asia has reached 108% of GDP. However, traditional bank lending still dominates corporate financing. Bank credit as a share of GDP stands at 98% in Asia – much higher than the global figure of 71%. There are big disparities within the region: some economies make very limited use of capital markets while others have more balanced financing structures. The biggest challenge is in developing economies where neither the banking sector nor capital markets are deep enough, leaving many businesses financially constrained and limiting growth and innovation.
3. Stronger capital markets are associated with stronger innovation
In Asia, economies with deeper equity markets, including China, Japan, Korea and Chinese Taipei, have produced global leaders in advanced manufacturing, electronics and biotech. Their success shows how crucial access to long-term, risk-tolerant capital is to innovation. Public listings play a key role: when companies go public, they unlock funding to grow, expand and invest in R&D. Our analysis shows that investment ratios often rise after an IPO, especially in fast-moving sectors like tech and healthcare.
4. Corporate governance is improving, but gaps remain
As Asia has expanded its number of listed companies, regulators have continuously strengthened governance frameworks to promote board independence, shareholder rights and transparency. But challenges persist. Concentrated ownership and complex group structures can dilute accountability and weaken investor protection, highlighting the need for continued reform.
5. State-owned enterprises are key issuers in Asian markets, increasing expectations for better governance practices
State-owned enterprises (SOEs) remain major players in Asia’s capital markets. They make up 26% of the region’s total market capitalisation – far above the global average. Listing large SOEs has spurred early market growth in many countries such as China and Viet Nam, boosting liquidity and market dynamism. These listings work best when paired with high-quality governance: better disclosure, transparent boards and clear performance targets make SOEs more efficient and competitive, building market confidence.
6. Corporate bond markets are growing, only in a few markets
Asia has a large corporate bond market, accounting for almost 30% of outstanding corporate bonds and 24% of sustainable bonds worldwide. Yet many firms, especially smaller ones, still rely mainly on bank loans. Corporate bond activity is also concentrated in just five economies, with China alone making up over 75% of total issuance.
7. Private equity and venture capital have potential but face hurdles
Over the past decade, private equity (PE) and venture capital (VC) have made big strides in Asia, complementing traditional finance. From 2015 to 2021, assets under management by Asian PE firms tripled, while VC assets grew more than sixfold, outpacing growth in North America and Europe. But deep-rooted conglomerate structures, strong family control, limited exit options and complex regulations still constrain private capital’s full potential.
8. Equity markets for growth companies are a regional strength
Asia’s equity markets are key platforms for high-growth firms in innovative sectors like technology. The region has over 8 500 listed growth companies – more than half of the global total – and about 80% of their total market capitalisation. China alone hosts around 2 000 growth companies worth USD 2.5 trillion. Japan, Korea, Chinese Taipei and Viet Nam have well-established segments where early-stage and scale-up businesses can tap capital.
9. Institutional investors have room to grow
Institutional investors, pension funds, insurance companies and investment funds still play a smaller role in Asia than elsewhere. Domestic institutions own just 8% of Asia’s stock market and foreign institutional investors another 10%, for a total of 18% – far below the global figure of 47%. Asset-backed pension schemes remain underdeveloped in much of the region, accounting for no more than 10% of global pension assets. While advanced Asian economies have sizeable funds, many developing countries still rely on pay-as-you-go systems and conservative investment strategies, limiting the flow of long-term capital.
10. Retail investment is vital for inclusive markets
Promoting retail access to capital markets helps make them more inclusive and widens opportunities for households to build wealth. Thanks to mobile brokerages and better financial literacy, more people in Asia are investing. In Korea and Chinese Taipei, retail investors make up over half of daily stock trading. In other countries, however, low savings and limited financial literacy remain barriers. Fintech initiatives may help bridge the gap. Mobile brokers and micro-investment tools in India, Indonesia and Viet Nam have brought millions of first-time investors online, while digital wallets and payment platforms are helping build trust step by step.
