Citibank expects investment activity across the Asia-Pacific region to strengthen further this year, supported by resilient equity markets, accelerating artificial intelligence (AI) investment and rising cross-border capital flows, the global bank’s senior executives said yesterday.
Kenneth Chow, Citi cohead of Asia equity capital markets, told an online news conference that investor sentiment has turned more forward-looking after a strong rally in regional equities.
“We think this is going to be a better year and everyone is busy,” Chow said, pointing to broad-based gains across Asia-Pacific stock markets and renewed global risk appetite.
Photo courtesy of Citibank
Citi sees Taiwan as a major driver of financing activity this year, citing its concentration of globally competitive technology companies at the core of the AI hardware supply chain.
The bank expects another strong year for fundraising by Taiwanese firms, particularly through convertible bonds and global depositary receipts, as companies ramp up capital spending to meet surging AI-related demand.
“Taiwan is a strategic market for Citi,” Chow said, adding that international investor participation has increased in Taiwanese deals, reflecting confidence in the sector’s long-term growth prospects.
Citi has raised more than US$30 billion for Taiwanese clients since 2020 from global capital markets to support their growth.
Equity markets across Asia-Pacific delivered standout performance last year, with the regional equity index rising about 25 percent, outperforming both the US and Europe, Citi said.
South Korea led gains with an increase of roughly 76 percent, driven by its deep exposure to the AI supply chain. Hong Kong followed with a 28 percent rise as international funds returned to the market.
Investor preferences are also shifting, with growing appetite for companies that are not yet profitable, but are positioned to generate earnings within next three to five years, Chow said.
Competition for initial public offerings has intensified, particularly in Taiwan, Hong Kong, Japan and South Korea, all of which are benefiting from the AI investment cycle, he said.
Jan Metzger, Citi’s head of Asia-Pacific banking, capital markets and advisory, said that overall deal activity has rebounded sharply.
Mergers and acquisitions deal value in the region rose 30 percent year-on-year to more than US$913 billion, while funds raised through equity and equity-linked offerings climbed 27 percent to US$294 billion, he said.
Primary bond issuance increased 23 percent.
AI-related supply chain activity has expanded rapidly across Greater China, Japan and South Korea, especially in hardware-focused segments, Metzger said.
“We are looking at companies with fundamental hardware technologies, which is a more exciting space than it’s been in a really long time,” he said, adding that Citi expects deal momentum to carry into this year.
Ho-Yin Lee, Citi’s head of technology and communications investment banking in Asia, said that companies are upgrading facilities while stepping up research-and-development spending.
Tight memory supply and rising prices, partly driven by data-center demand, are expected to fuel further capital needs, he said.
Growing demand for private and public cloud services would require substantial financing as AI applications move toward broader commercial adoption, Lee added.
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