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  • Writer's pictureTharindu Ameresekere

Asia the New Hotspot for Equity Deals

Credit: AVCJ Merger Market

The second half of 2024 might witness a resurgence in initial public offerings (IPOs) in Asia, particularly in Hong Kong and India. This optimism is driven by an increase in Chinese regulatory approvals and significant deals in India, according to bankers and analysts.

India has seen a remarkable rise in its equity capital market (ECM) deals. In the first half of 2024, ECM deals in India surged by 137% from the same period last year, raising a total of $28.5 billion. IPOs contributed $4.3 billion to this figure, up by 89.3% from H1 2023. A notable upcoming IPO is Hyundai India's $2.5-$3 billion offering, which is set to be the largest in South Asian history and one of the biggest globally this year.

In contrast, ECM deals in mainland China dropped nearly 70% to $25.5 billion, and IPOs fell by 83.1% to $5.3 billion, marking the worst performance in 11 years. Hong Kong also experienced a decline, with IPO values dropping from $2.1 billion in H1 2023 to $1.5 billion in H1 2024.

Citigroup's Udhay Furtado points out that India's growth outlook, supported by a favorable monetary environment, will likely attract foreign investors. This gradual shift towards India is expected to gain momentum with impactful upcoming IPOs.

Meanwhile, despite the low performance in Hong Kong's IPO market, the recent 9% rise in the Hang Seng index over the past three months is seen as a positive sign. Improved investor sentiment, driven by policy support and strong corporate earnings, is leading to a reduction in underweight positions by global investors.

The China Securities Regulatory Commission (CSRC) has approved 76 IPO applications for offshore listings this year, nearly matching the 80 approvals for all of 2023. However, some companies still face uncertainties in the approval process and market volatility, leading to postponed deals. UBS' Selina Cheung suggests that an increase in market valuations could lead to more follow-on deals in Hong Kong, with hopes for stronger market conditions and relaxed CSRC approval policies.

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