Asia’s stock markets are gearing up for their busiest week of listings in more than two years, offering a crucial test of demand as companies rush to raise money before the US election.
Around 20 companies from the Asia-Pacific are listing shares next week in deals that may raise as much as US$8.3 billion, the biggest weekly volume since April 2022, according to data compiled by Bloomberg. The heavy supply includes deals from China, India and Japan, underscoring the broad revival in share sales across the region.
“There is a level of animal spirits returning to the Asia market,” said Matthew Emsley, a partner at Herbert Smith Freehills in Hong Kong who works on IPOs, using a popular term for changes in market behaviour that are often driven by emotions. “There’s an increased level of activity and urgency to take advantage of that positivity.”
The performance of the newly listed shares will be keenly watched by bankers planning to bring a spree of equity offerings in Asia over the next few weeks, as companies and major shareholders attempt to close deals before the Nov 5 election in the US.
The deals will also offer insight into investor demand in the longer term following years of weakness due to lacklustre markets. Bottled-water maker China Resources Beverage Holdings and autonomous-driving technology firm Horizon Robotics are set to debut in Hong Kong on Wednesday (Oct 23) and Thursday, respectively, raising more than US$1.3 billion between them. Their success may spark a broader revival of Chinese share sales in Hong Kong, once a busy – and lucrative – segment of the IPO market.
“We are likely witnessing the initial stage of a recovery in the Hong Kong and China capital markets,” said Cathy Zhang, head of Asia equity capital markets at Morgan Stanley. “We need more larger, high-quality companies to list in Hong Kong and continue to perform well to ensure that this trend is sustainable.”
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China Resources Beverage, which is raising around US$649 million, closed its order books a day earlier than planned after getting strong demand, people familiar with the matter said. Horizon Robotics’ up to US$696 million IPO attracted Alibaba Group and Baidu among its cornerstone investors, who commit to hold shares for at least six months.
India caution
The stakes are also high in India, with a trading debut on Tuesday for Hyundai Motor India’s US$3.3 billion listing, the country’s biggest-ever IPO. The deal was oversubscribed more than two times on the last day of sale but drew poor interest from smaller investors.
“The entire sector doesn’t look very promising currently,” said Keshav Gupta, a 25-year-old individual investor based in Calcutta. Gupta was among the small investors in India who had bid for previous IPOs using family members’ trading accounts, a way to get more shares. He chose to sit the Hyundai listing out.
Part of the concern has to do with India’s cooling vehicle industry following a demand surge during the Covid-19 pandemic. Retail vehicle sales in India fell more than 9 per cent in September from the same month last year, and passenger-vehicle dealers are facing inventory levels at an all-time high at 80 to 85 days, according to data from the Federation of Automobile Dealers Associations.
Still, foreign investors have been ramping up their participation more broadly in IPOs, and big deals are likely to lead to others, said Mahesh Natarajan, head of equity capital markets in India for Nomura Holdings.
“There is positive reinforcement for other issuers seeing the success of larger IPOs and then getting the confidence to do larger and larger IPOs,” he said.
With Hyundai’s proceeds, Indian IPOs will have raised more than US$12 billion so far this year, eclipsing volumes for the past two years but still below the record US$17.8 billion raised in 2021, according to data compiled by Bloomberg. Other pending debuts include food-delivery company Swiggy and the renewable-energy arm of state-run power producer NTPC.
In Japan, Tokyo Metro’s US$2.3 billion listing is scheduled for Oct 23. The deal, which will be the country’s biggest IPO since 2018, comes amid a tumultuous period for Japanese markets. The yen depreciated past 150 per US dollar recently, and the appointment of a new prime minister has fuelled speculation about policy.
Japanese X-Ray technology company Rigaku Holdings will cap the week, after it closed a roughly US$750 million deal. The company’s shares will start trading on Friday.
Not all potential issuers are moving forward with their listing plans. Korean online lender K Bank, which had hoped to raise around US$700 million from an IPO in its local market, withdrew the deal after failing to generate enough demand, it said in a regulatory filing. BLOOMBERG
