Asia has had its best third quarter on record for initial public offerings (IPOs), even with Hong Kong turning quiet as many firms put listing plans in the regional powerhouse on hold amid China’s sweeping regulatory clampdown.
Thanks to blockbuster deals in markets like South Korea and India, first-time share sales in the region raised US$56 billion in the three months through Thursday, the most ever for such a period, data compiled by Bloomberg show.
“Activity will continue — 2021 remains an extraordinary year for equity capital markets volume,” said William Smiley, cohead of Asia ex-Japan equity capital markets at Goldman Sachs Group Inc. “Global investors still want access to Asian growth.”
Photo: Bloomberg
Asia’s record third-quarter came despite the slowdown in Hong Kong, one of the world’s busiest listing venues.
As Beijing broadened its efforts to rein in corporations and align business models with Chinese President Xi Jinping’s (習近平) “common prosperity” campaign, about US$1 trillion was wiped off the value of Chinese stocks globally in July and Hong Kong’s stock benchmark sank into a bear market in August.
That saw listing volumes in the financial hub dip to US$6 billion in the third quarter, trailing South Korea for the first time in four years.
It was also the lowest quarterly IPO haul for Hong Kong since the start of last year, when the COVID-19 pandemic was taking hold and equity capital markets ground to a halt.
Share performance also suffered. Firms that listed in Hong Kong in the third quarter and raised at least US$100 million saw their stocks climb just 2.8 percent from their offer prices on average, according to data compiled by Bloomberg.
That is versus 20 percent in South Korea and 25 percent in India, both of which saw big increases in volumes compared with the first two quarters.
“Following a very strong first half for the Street, we are still seeing good activity levels for the remainder of this year albeit at a slower pace,” said Magnus Andersson, cohead of Asia Pacific equity capital markets at Morgan Stanley. “We expect to have a healthy pipeline as we enter next year.”
IPOs by the likes of game developer Krafton Inc and online-only bank KakaoBank Corp pushed third-quarter volumes to US$10.4 billion in South Korea, about four times what was fetched in each of the previous two quarters.
Similarly, in India, food-delivery start-up Zomato Ltd raised US$1.3 billion in July.
Many more listings are lined up for the final quarter, starting with digital payments company Paytm, which has filed to raise as much as 166 billion rupees (US$2.24 billion) in what would be the nation’s biggest IPO ever.
“India now has a savvy, tech-educated population with good Internet penetration,” said Anvita Arora, cohead of Asia Pacific equity capital markets at Bank of America Corp. “The combination of factors for tech success is there. In general the tech pipeline is very strong.”
While Shanghai pulled off the biggest third-quarter deal in Asia with China Telecom Corp’s (中國電信) bumper offer, few bankers expect a heavy pipeline of Chinese listing candidates to come back soon.
That is owing to the continued uncertainty on the regulatory front and as issuers await new rules on overseas IPOs.
Chinese firms that had initially eyed Hong Kong or US listings might opt to raise money privately instead as they wait for the clouds to clear.
Even with the slowdown in Hong Kong, first-time share sales in Asia have raised US$140.5 billion so far this year, more than the same period in any other year, Bloomberg-compiled data show.
While IPOs by Chinese issuers might slow down over the next three months, listed companies are still raising funds.
London-based insurer Prudential PLC fetched US$2.4 billion in a Hong Kong share sale last month in one of the territory’s biggest follow-on offerings of the year.
The complexion of transactions in Asia would differ from last year, and a more thoughtful approach to price, size and structure might be needed, but deals will keep being done, Smiley said.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai
RSS