Khaberni - A report published by the Harvard Law School Forum on Corporate Governance outlines a number of trends affecting global capital markets.
Over the span of decades, especially since the adoption of laws like Sarbanes-Oxley and associated reforms; capital movements between markets—whether financial, geographical, or regulatory—are crucial for resource flows globally. These transfers are subject to a set of economic, legal, and operational rules to maintain market efficiency and stability.
The report authored by Anna Pinedo of Mayer Brown LLP points to a decline in the number of American public companies and an increase in the significance of private markets, with the size of private assets growing from $9.7 trillion in 2012 to $22 trillion in 2024. Companies are staying private longer before their initial public offerings—about 16 years on average—which is 33% longer than a decade ago.
The following are some of the top trends:
Private markets continue to rise
Private markets are expanding as a major alternative to public markets in corporate financing, where they are used in multiple funding rounds without the need for a public offering. This field is no longer exclusive to venture capital, but has attracted a wider spectrum of investors, from private equity funds and sovereign wealth funds to hedge funds and family offices. In sectors such as biotechnology and sciences, delaying public offerings is no longer about the need for capital, but rather for strategic and operational considerations.
More complex financing structures
As private companies grow in size and value, funding rounds are becoming larger and more complex, supported by complex financial structures that combine bank debt and various capital instruments, reflecting the maturity and institutional development of this sector.
Increased liquidity outside exchanges
Despite not being listed in public markets, private companies are providing partial liquidity to early investors and employees as a tool to attract and retain talent. In this context, the role of private secondary markets is growing, where investor stakes are traded through specialized financial platforms, changing the conventional concept of liquidity.
Tokenized assets open new doors
Furthermore, tokenized assets have emerged as a new means of accessing private companies, especially outside the United States. These tools allow investors, particularly international ones, to achieve returns or shares linked to major private companies, including unicorns, in an evolution that reflects the intersection of traditional finance and digital technology.
Flexible regulations enhance private offerings
In the United States, special listing exemptions continue to dominate distribution operations, with increasing reliance on Section 4a2 of the United States Securities Act of 1933, which offers regulatory flexibility and reduces compliance requirements associated with individual investors.
Expanding participation of individual investors
Regulatory reforms are expected to gradually open up private markets to individual investors, through tools like semi-liquid funds, hybrid structures, and insurance company investments, alongside new partnerships between asset managers and alternative capital providers.
Revival of private debt
Concurrently, the private debt market, especially investment-grade issuances, is seeing increasing interest from new investors, particularly in sectors related to artificial intelligence, infrastructure, energy, and minerals. Some of these deals are documented within regulatory frameworks like 144A to facilitate trading and settlement.
Changes in the public stock market
Public markets are also experiencing a change in financing mechanisms, with a decrease in reliance on traditional offerings and the rise of market-marketed offers and At-the-Market offerings.
Stock repurchase programs continue despite the increasing regulatory and political controversy around them.
Accelerated financial innovation
These transformations are accompanied by a boom in financial products, most notably defined outcome ETFs, the merger of financial derivatives with insurance and investment funds, as well as the growing role of private indices in guiding investments.
Artificial intelligence at the heart of the financial scene
Lastly, artificial intelligence is solidifying its presence in financial institutions, through enhancing compliance and surveillance, improving operational efficiency, and supporting research and customer service, amid a regulatory environment that requires a precise balance between innovation and governance.
January performance
Additionally, a report by "Reuters" based on data from the London Stock Exchange Group - LSEG Lipper noted that global equity funds recorded positive cash flows for the third consecutive week during the week ending January 28, clearly indicating an improvement in investors' risk appetite, supported by optimistic earnings forecasts, despite the escalating uncertainty linked to U.S. trade policies.
According to data from the London Stock Exchange Group, net flows into global equity funds reached $33.39 billion, compared to $9.5 billion the previous week.
Regionally, European funds led with inflows of $11.03 billion, the highest level for them in three weeks, followed by American funds with $10.73 billion, and then Asian funds with $6.95 billion. In terms of sectors, funds in industry, technology, and minerals and mining accounted for the largest share of the flows, totaling more than $8 billion in just one week.
Meanwhile, investors continued to bolster their positions in fixed income instruments, as global bond funds attracted $18.02 billion for the fourth consecutive week. Short-term bonds alone accounted for about $3.8 billion, while corporate bond funds recorded inflows of $3.45 billion.
Money market funds also returned to recording net inflows amounting to $10.31 billion after two weeks of net outflows.
Regarding safe havens, gold and precious metal funds attracted weekly inflows of $2.25 billion, the highest level since late December, amid ongoing geopolitical and trade concerns, according to Reuters.
Notably, emerging market equities recorded record inflows of $12.63 billion, their highest level since at least 2022, driven by relatively more attractive valuations and better growth prospects.
Emerging market bond funds also attracted $3.51 billion, reflecting renewed interest in this asset class amid a weakening dollar and increased desire for portfolio diversification.
