Asia’s IPO Market is Heating Up, But Will it Last?
The Asian stock market is bracing itself for a busy week of listings, with over 20 companies from the Asia Pacific region set to raise as much as $8.3 billion in deals. This marks the biggest weekly volume since April 2022, according to data compiled by Bloomberg.
A Revival in Share Sales
The surge in listings underscores the broad revival in share sales across the region, driven by a mix of factors including improving market sentiment and the need for companies to raise capital before the US election. “There is a level of animal spirits returning to the Asia market,” said Matthew Emsley, a partner at Herbert Smith Freehills LLP in Hong Kong who works on IPOs.
China Leads the Way
Bottled-water maker China Resources Beverage Holdings Co. and autonomous-driving technology firm Horizon Robotics Inc. are set to debut in Hong Kong, raising over $1.3 billion between them. The success of these listings could spark a broader revival of Chinese share sales in Hong Kong, once a busy and lucrative segment of the IPO market.
India’s Cautionary Tale
In India, Hyundai Motor India Ltd.’s $3.3 billion listing is set to debut, but the deal has drawn poor interest from smaller investors. The cooling auto industry in India has raised concerns among investors, with retail vehicle sales falling over 9% in September from the same month last year.
Foreign Investors Ramp Up Participation
Despite the cautionary tale in India, foreign investors have been ramping up their participation in IPOs, and big deals are likely to lead to others. “There is positive reinforcement for other issuers seeing the success of larger IPOs and then getting the confidence to do larger and larger IPOs,” said Mahesh Natarajan, head of equity capital markets in India for Nomura Holdings Inc.
Japan’s Tumultuous Market
In Japan, Tokyo Metro Co.’s $2.3 billion listing is scheduled for October 23, amidst a tumultuous period for Japanese markets. The yen has depreciated past 150 per dollar, and the appointment of a new prime minister has fueled speculation about policy.
Not All Deals Are Moving Forward
Not all potential issuers are moving forward with their listing plans. Korean online lender K Bank Co. withdrew its deal after failing to generate enough demand, highlighting the risks and challenges in the IPO market.
As the Asian IPO market heats up, investors will be watching closely to see if the momentum can be sustained. With a mix of factors driving the surge in listings, it remains to be seen whether the market can continue to support the growth in share sales.
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