(This June 27 story has been corrected to repair the spelling of the identify ‘Dhupelia’ in paragraph 10)
By Scott Murdoch
SYDNEY (Reuters) – A potential revival in IPOs in Hong Kong after a pickup in Chinese language regulatory approvals, and a string of mega offers in India are anticipated to make Asia a brilliant spot for fairness offers within the second half of this yr, bankers and analysts mentioned.
Regardless of the prolonged downturn in Asia preliminary public choices (IPOs), India’s share in Asia fairness capital market (ECM) offers is at file excessive now, and the surge in offers is anticipated to final for the foreseeable future, they added.
India’s whole ECM offers jumped 137% within the first half of this yr from the identical interval of final yr, with $28.5 billion raised, in keeping with LSEG information. IPOs accounted for $4.25 billion of that, up 89.3% on final yr’s first half.
Hyundai (OTC:) India’s $2.5 billion to $3 billion IPO due later in 2024 is about to be the South Asian nation’s largest ever new share sale, and it will even be one of many greatest IPOs globally this yr.
Compared, elsewhere in Asia, mainland Chinese language ECM offers dropped practically 70% to be price $25.5 billion and IPOs have been off 83.1% to $5.3 billion, the worst first half efficiency in 11 years.
The worth of IPOs in Hong Kong fell from $2.12 billion within the first half of 2023 to $1.46 billion, the LSEG information confirmed.
“As investors get to grips with India’s growth outlook and the growth adjusted valuations, helped further by the monetary easing environment, it will spur foreign investors to come back,” mentioned Citigroup Asia ECM origination head Udhay Furtado.
“That pivot to India growth is a staggered rotation. That’s why it’s not been a flood. I think you’ll see that change with the names that are coming to market in the next 18 months as they are going to be globally impactful.”
Whereas Hong Kong’s IPO market stays at a low, the ‘s virtually 9% rise up to now three months is seen as a constructive to encourage extra public market debuts within the coming months.
“While global investors remain cautious towards Hong Kong and China there is improved sentiment on the back of ongoing policy support and strong corporate earnings,” mentioned Sunil Dhupelia, JPMorgan’s co-head of Asia ECM, ex-Japan.
“This has led to global investors reducing underweight positions in the past couple of months,” he mentioned, referring to the 2 markets.
The China Securities Regulatory Fee (CSRC) has authorised purposes from 76 IPO hopefuls thus far this yr to listing offshore, in comparison with 80 for all of 2023, in keeping with the regulator’s web site.
Some Chinese language firms, nevertheless, nonetheless discover the method of gaining approval unsure and risky markets means some don’t go forward with launching a deal, bankers mentioned.
“If the broader market valuation increases, you will see a lot more follow-on deals and blocks in Hong Kong from China – that will come first,” mentioned Selina Cheung, UBS’ co-head of Asia fairness capital markets.
“Hopefully we are on the right upward trend with the right policy supports. When the market is sufficiently strong, hopefully, the CSRC will have a relaxation towards approving IPOs.”