DLA Piper today hosted a press briefing with lawyers from across Asia region who shared their views on what they see as key market trends in 2015, with a focus on capital markets, real estate and investigations. They predict that 2015 will continue to be another year of opportunity for Asia.
In the capital markets space, and following the US listing of Alibaba, many Chinese companies may re-think their IPO strategy and consider where best to list. The Hong Kong Stock Exchange’s decision not to accept Alibaba’s proposed board structure has led various investors to question whether Hong Kong's competitive position as the market of choice for offshore listings from China might be adversely impacted. Further, while the total number of Chinese companies listing in the US was lower than in Hong Kong, the US garnered some of the most high profile listings, such as JD.com and Weibo Corp. Many of the best performing Chinese technology IPOs were the US listings.
Stephen Peepels, partner and Head of US Capital Markets, Asia-Pacific, at DLA Piper commented: "Hong Kong continues to be one of the best places for Chinese companies to list their shares. The Hong Kong Exchange offers great liquidity and a signifcant base of sophisticated institutional investors familiar with PRC companies, especially in the technology sector. That said, Alibaba's success, coupled with the acceptance by US exchanges of a dual class share structure, may be influential as other Chinese technology companies contemplate overseas listings in 2015 and beyond. We expect that this point is not lost on the SFC as it contininues to evaluate its one share class requirement for listing applicants. We believe the ability to raise capital while maintaining founder or key shareholder control of the company is an important consideration for companies beyond Alibaba."
Anti-bribery, compliance and regulatory and internal investigations will be another strong area of interest throughout 2015. This is a continuation from last year where we saw a marked increase in the number of regulatory enforcement actions undertaken in Asia, particularly in China. Compliance and effective anti-corruption procedures and programmes are playing a pivotal role in shaping Asian businesses, and we expect this to ramp up further in 2015.
Sammy Fang, partner and Head of Compliance & Investigations at DLA Piper said: "We are now seeing an uptick in the number of companies committed to bolstering their compliance resources, including separate compliance functions specific to the Asia region. As a result, companies are increasingly devoting more resources to due diligence as part of overall deal execution, which in some cases will lead to longer transaction windows. Companies will also be looking to devote more to compliance review resources as part of the post-completion integration process."
“We do not view this as a temporary trend. This change occurs across countries and sectors throughout Asia and will further filter down to developing economies such as Malaysia, Indonesia and Vietnam, where we are already seeing some activity in the anti-corruption space” added Fang.
Chinese outbound investment across Asia Pacific will remain strong in 2015, and in conjunction with an increasingly regulated and transparent economy, will further bolster China's role as an international investor. As an impact of the significant visa programme and a steady market and currency, Chinese investment into Australia will also continue to increase. Some mature markets, such as Hong Kong, will see more development or renovation but pricing and availability of assets still remains a challenge.
"We hope to see an increase in capital flows into the region" says Susheela Rivers, partner and Head of Real Estate, Asia Pacific at DLA Piper. "Capital will look to more developing markets, such as, Laos, Cambodia, Myanmar, Vietnam and Indonesia. The growth of the manufacturing and hospitality & leisure sectors in these jurisdictions will also facilitate capital flows towards Southeast Asia".
"This will be a good year for Asia as many countries within the region will look to align regulations and legislation as the first stage of ASEAN Economic Community integration gets underway" Rivers concluded.