Activity in global capital markets may be flat or even lower next year as the world economy struggles to pull out of recession, according to a survey released Thursday by RBC Capital Markets.

The survey of executives, conducted in July and August by the Economist Intelligence Unit on behalf of RBC, the capital markets arm of the Royal Bank of Canada, said historic levels of economic uncertainty have changed the rules for capital markets.

More than half of capital raisers (54 percent) said in the survey of 736 senior finance executives that they expect to raise new debt or equity capital over the next two years, but few expect to do so via public markets.

Activity is likely to be led by mergers and acquisitions next year, but deal volumes will be lower or stay the same in IPOs, secondary market offerings and investment grade- and high-yield debt, the survey found.

Of the executives surveyed, 415 were involved in raising capital and 321 in investing capital, with just over half of the capital-raisers from non-financial corporations ranging in size from $75 million to over $100 billion.

Many in the financial sector doubt the ability of policymakers to set the economy on a path of sustainable growth, RBC said in its introduction to the report, which quotes the opinions of key executives.

Many respondents also said the U.S. Federal Reserve was losing its independence, and pointed to U.S. government actions as the biggest source of systemic risk in global markets.

Regionally, the report named China and India as capital markets with the best prospects for growth and stability, with the least confidence in Russia, Japan and the United Kingdom.

Survey respondents were split on the United States and the Eurozone, where they expressed optimism and pessimism in equal measures.

Between one-third and one-half of respondents worldwide do not expect any uptick for a year or longer. Ten percent of respondents anticipate at least two years of economic weakness, the report said. The figure is higher (15 percent) among Western European companies and finance providers.

That all means that companies are pessimistic about raising capital after a current bond frenzy has abated, the report said.

We want to make sure we have 12 to 18 months of dry powder in case the capital markets get worse, the report quoted Vern Yu, vice-president of investor relations and enterprise risk at Canadian pipeline company Enbridge Inc.

The global crisis my be ebbing, but RBC reported that most investors (69 percent) said they would now assign more weight to a company's financial strength than they did before the recession started to spread through international markets.

Capital-raising has become a contact sport. Companies will have to look farther, dig deeper and work harder to lock in the long-term capital that fuels growth, the report concludes.

($1=$1.07 Canadian) (Reporting by Pav Jordan; editing by Rob Wilson)