(SINGAPORE) With loans, debt capital and M&A (merger and acquisition) activities hitting record levels and equity markets still charging ahead, banks in the Asia-Pacific region (excluding Japan) found themselves sitting on fatter investment banking revenues for the first half of this year.

Data from investment banking research group Dealogic shows companies in the region generated US$3.8 billion in investment banking revenue in the first half to June, 33 per cent higher than the same period last year.

Among them, UBS Investment Bank topped the ranking with an investment banking revenue of US$438 million and 11.4 per cent market share, followed by JPMorgan and Citi.

Analysts attributed the stellar performance to the strong economic growth in the region, which is fuelling more capital investments, funding requirements and M&A activities.

'The growth prospects for Asia is upbeat. People are still pretty positive and they look towards the region, including Singapore, as a place where they want some exposure,' Citi economist Chua Hak Bin said.

'At the same time, interest rate costs is reasonable and I guess that a lot of funds are taking advantage of that to leverage out and buy assets.'

George Lee, head of investment banking at OCBC, noted that the buoyant equities market also makes it attractive for companies to issue new shares in the form of warrants or convertible bonds as well as initial public offering while the bullish real estate market has given rise to more construction activities and lending opportunities.

Marketed loans in Asia-Pacific (excluding Japan) reached the highest first-half volume of US$123.2 billion, up from the US$113 billion seen in the year-ago period, while volume in debt capital markets rose 19 per cent to US$164.4 billion, also the highest first-half volume. Corporate debt hit a record high of US$94.9 billion in the first half of this year, up 25 per cent year-on-year.

Data from Dealogic also showed targeted M&A activities in the first half leaping by 58 per cent from a year ago to US$266.1 billion via 4,581 transactions, the highest half-year on record.

From January to June, equity capital market activity in Asia-Pacific (excluding Japan and Chinese A shares) accounted for 54 per cent of the total investment banking revenue in the region from 49 per cent in the first half of last year as volumes jumped 48 per cent to US$109.6 billion.

Analysts believe banks in the region are set for a record year in their investment banking revenues, as the growth momentum is expected to follow through into the second half of this year amid a strong economic climate.

'Based on what we can see, we expect continuing strong economic growth, ample liquidity, buoyant real estate and stock markets - this should lead to 2007 being a very good year for investment banking revenue,' Mr Lee said.

'There's still a lot of liquidity out there and the prospects remain pretty upbeat, especially when there's a property boom across many Asian countries and stocks are doing well. At the same time, some companies are delivering the earnings growth,' Mr Chua said.

He noted that Singapore stands out in the region as a destination for investment banking, thanks to less political risks and strong economic fundamentals.

For the first half of the year, Singapore saw its equity capital volumes hitting a record half-year level of US$5.2 billion, up from US$3.97 billion a year ago while targeted M&A volume also posted the highest half-year level of US$16.9 billion, up from US$7.63 billion a year back.

As a result, investment banking revenue in Singapore grew about 5 per cent year-on-year to US$205 million against a high base of comparison in the first half of last year. Dealogic said this is the second highest level after banks here generated some US$322 million in investment revenue in the first half of 2000.

'There are a lot of people who have a positive view about Singapore and what sets Singapore apart is that it's a very open environment,' Mr Chua said.

'Tech companies in Singapore stand out for example because they have underperformed other sectors, so their valuations are quite compelling. Property is also another key lead because there's really a hot demand for property assets across Asia,' he added.