, there has been a shift in this trend as these financial institutions have begun to actively extend credit overseas again ( chart 17 ). lending activities to emerging asia have undergone a particularly brisk expansion through both japanese - and non - japanese affiliated firms. while the presence of european banks has declined in this region, japaneseowned financial institutions have been swiftly extending credit to such countries as china, indonesia, south korea, malaysia, and thailand, thereby mitigating the adverse impact of stocks. there was a short - lived but rapid increase in investment from overseas in japanese short - term sovereign bonds from the autumn of 2011 to the beginning of 2012, when a worsening of the european sovereign debt problems aggravated strains in the global financial markets and increased demand for japanese sovereign bonds as safe assets. for example, the progress of asian economic integration annual report 2012 compiled by the boao forum for asia reports the correlation of stock market index returns between countries. from 2002 to 2006, japan was positively correlated with all other asian economies. after the global financial crisis, there has been a trend of increasing stock market synchronization in asia. in particular, china has become increasingly important as its correlations with india, japan, south korea, malaysia, the philippines, and singapore have grown. some studies indicate that singapore, india, and japan have stronger impacts on asian stock markets ( for example, see meric et al., “ co - movements of and linkages between asian stock markets, ” business and economics research journal, 2012 ). bis central bankers ’ speeches deleveraging by european banks. in an increasing number of cases, japanese financial institutions act as leading banks in arranging syndicated loans and project finance. most economies in emerging asia still lack basic infrastructure, including systems of transportation, energy supply, information and communications, and water supply and sewerage. a deficiency of adequate long - term funds hinders infrastructure development in this region. this points to the large potential demand for such long - term credit. it is estimated that the scale of this credit demand will amount to 8 trillion u. s. dollars between 2010 and 2020, according to data from the asian development bank ( adb ). public funds are insufficient to meet such credit demand, and this signifies the need for private - sector initiatives and funds in the form of long - term loans and bond finance. there are thus growing business opportunities for japanese financial institutions. at the same time, it is important for japanese financial institutions to make greater efforts to support entrepreneurial

more favorable, and their governments have begun to liberalize their financial markets, emerging economies have become increasingly capable of issuing bonds denominated in both foreign and domestic currencies. if east asia, including japan, collectively makes further progress in terms of improving each economy ’ s financial infrastructure – for example, in clearing and settlement institutions and securities depository institutions – as well as standardizing securities regulations, cross - border investment is likely to prosper. with regard to the stock market, the number of listed firms is rapidly increasing in emerging asia. as a result, the number of initial public offering ( ipo ) - related listed firms currently accounts for over half of the world total. in addition, the share of stock market capitalization in east asia and the pacific region now accounts for over 30 percent of the world total. the development of securities markets in emerging asia provides a revenue - enhancing opportunity for japanese investors. but as well, asia ’ s growing savings could be utilized on a global scale for a wide range of firms, including those of japan. given that investors in each economy generally have different investment patterns and risk attitudes, some japanese firms may be able to make use of such funds in the process of exploring new business models and strategies. over the past decade, securities markets have become increasingly synchronized at the international level. in general, securities markets among japan, the united states, and europe have shown a relatively high degree of synchronization. this is because cross - border investment has long been carried out through well - developed institutional investors and a large number of multinational firms. in addition, japan has historically enjoyed a strong economic relationship with the united states. therefore, the prices of japanese stocks and bonds tend to be highly correlated with those of the united states and europe ( chart 13 ). 6 it is well known that japan has been the world ’ s largest net external creditor, reflecting its considerable external assets. generally, japan ’ s portfolio investment is centered on medium - and long - term bonds ( such as treasury securities, agency bonds, and corporate bonds in the united states and bonds in europe ). although some investment had been made in stocks in the united states and europe, the global financial crisis has promoted a shift of japanese investors ’ preference from stocks to medium - and long - term bonds. meanwhile, overseas securities investment in japan is generally concentrated on medium - and long - term bonds and bis central bankers ’ speeches though there remains a strong one - way influence from the united states