APAC private capital market looks to positive news from China for growth: Preqin

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China’s contribution to the region’s market for private capital has tumbled, but measures from Beijing could spark a turnaround

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Aileen Chuang

Published: 7:00am, 11 Oct 2024Updated: 7:20am, 11 Oct 2024

Asia-Pacific’s private capital sector could get support from Chinese government stimulus as well as greater development of other financial markets in the region, according to data provider Preqin.

China’s contribution to the region’s market for private capital has tumbled significantly in recent years, but stimulus measures and reforms from Beijing could spark a turnaround, said Angela Lai, head of performance and valuations for research insights at Preqin, in a research note published on Friday.

“China remains a heavyweight in APAC’s private capital market, and a major comeback in its economy could present further upside to our regional forecasts,” said Lai. However, “a deterioration may warrant reviews to the downside.”

She said China’s gross domestic product growth is one of the highest among the world’s major economies, adding that the next few years could bring “critical changes” as Beijing rolls out policy support and reforms targeting the property sector. A focus on technological development and value-added production is also important, she said.

“If well executed, all this could improve the long-term resilience of the market, and the benefits could extend beyond its investors to its neighbouring trade partners,” she said.

President Xi Jinping has said “hard tech”, or deep tech, is key to the country’s development. Government funds have been chasing deals in industries covering integrated circuits, artificial intelligence and new-energy vehicles. He also introduced the concept of “new quality productive forces,” which breaks away from the nation’s traditional economic model by focusing on technological innovation as the main driver of China’s productivity.

Preqin believes private market fundraising in APAC bottomed out in 2023 and will gradually improve, with an annualised growth rate of 6.7 per cent between the end of last year and 2029, according to its note.