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Asia's final frontier

The governments of Asia have never trusted financial markets. They view stock exchanges as little better than Chinese gambling dens, and find it hard to comprehend that bond, foreign exchange and money markets are any less dominated by wild speculation. As a result, the regulatory and tax environment for financial markets in Asia is still rooted in the 1960s. Banking systems are rigged in a such a way that banks are forced to provide cheap finance for industry, and allowed little room to develop. The biggest Asian economies have progressed remarkably in technical and managerial competence in the past 20 years, but their financial industries remain appallingly backward.

As Euromoney's journalists travelled Asia in December and January to prepare this Asia special issue, the overriding theme became clear: Asian finance has a long way to go before it approaches the standards of Europe and the us.

Asian companies still rely mostly on internally generated funds to finance expansion. When those are insufficient they turn to trusted relationship banks, but hardly ever to capital markets. This shows little sign of changing. International bond issues by Asian companies have not increased rapidly in recent years. In 1996 they totalled $19.4

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