Asia’s stock markets are gearing up for their busiest week of initial public offerings (IPOs) in more than two years, with nearly 20 companies across the region set to list shares. The week is expected to raise up to $8.3 billion in equity deals, marking the largest single week of IPO activity since April 2022, according to data. Companies from China, India, and Japan are leading the charge, underscoring a broader revival in the region’s capital markets following years of lackluster performance.
This surge in IPO activity comes at a pivotal moment for global markets, as the world prepares for the upcoming U.S. election in early November. With economic uncertainty looming, many companies are racing to raise funds while investor sentiment remains buoyant, testing the appetite for new equity offerings.
“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 specializes in IPOs. He used the term to describe the resurgent optimism and emotional drive fueling market activity. “There’s an increased level of activity and urgency to take advantage of that positivity.”
The performance of newly listed shares in Asia over the coming weeks will be closely monitored by market players, as bankers prepare for a further wave of equity offerings across the region. For many, the success of these IPOs will serve as a barometer for investor sentiment and the longer-term recovery of capital markets in Asia.
Some of the key listings this week include China Resources Beverage Holdings Co. and Horizon Robotics Inc., two prominent Chinese companies debuting in Hong Kong. These companies are together expected to raise over $1.3 billion. A successful showing for these firms could reignite interest in Hong Kong’s IPO market, which has seen a sharp slowdown in recent years.
Hong Kong’s IPO Market: A Return to Form?
Hong Kong has historically been a global hub for IPOs, but the city’s market has struggled in recent years amid geopolitical tensions, economic uncertainty, and stringent regulatory changes in China. As a result, many companies delayed or abandoned their IPO plans, leaving a void in the region’s capital-raising efforts.
However, the listings of China Resources Beverage and Horizon Robotics signal a potential turning point. China Resources Beverage, a bottled-water maker, has already shown strong demand, closing its order books a day earlier than planned as investors scrambled to get a piece of the action. The company is expected to raise around $649 million.
Meanwhile, Horizon Robotics, an autonomous-driving technology firm, is aiming to raise up to $696 million in its IPO, with backing from high-profile cornerstone investors such as Alibaba Group Holding Ltd. and Baidu Inc. These cornerstone investors, who commit to holding shares for at least six months, bring credibility and confidence to the offering, which could help spark renewed interest in Hong Kong’s 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.”
India’s IPO Landscape
In India, the focus will be on Hyundai Motor India Ltd., which is set to make its trading debut on Tuesday with a $3.3 billion listing, the largest IPO in Indian history. While the deal was oversubscribed more than two times on the final day of the sale, it received a lukewarm response from smaller retail investors.
Some market observers attribute this to cooling sentiment in India’s automotive sector, which saw a surge in demand during the COVID-19 pandemic but has since slowed. Retail vehicle sales in India fell by more than 9% in September compared to the same month last year, according to data from the Federation of Automobile Dealers Associations. Meanwhile, passenger vehicle dealers are grappling with record-high inventory levels, with supplies reaching 80 to 85 days of sales.
“The entire sector doesn’t look very promising currently,” said Keshav Gupta, a 25-year-old retail investor based in Calcutta. Like many small investors, Gupta had previously bid for shares in IPOs using multiple family members’ trading accounts to increase his chances of getting a larger allocation. However, he chose to sit out the Hyundai IPO, reflecting broader concerns about the state of India’s auto industry.
Despite the challenges facing the automotive sector, foreign institutional investors have been more optimistic about Indian IPOs, particularly larger offerings. Mahesh Natarajan, head of equity capital markets at Nomura Holdings Inc. in India, believes that successful listings like Hyundai’s could pave the way for even larger deals in the future.
“There is positive reinforcement for other issuers seeing the success of larger IPOs and then getting the confidence to do larger and larger IPOs,” Natarajan said.
India’s IPO market has already raised more than $12 billion this year, surpassing the volumes of the previous two years, though it still lags behind the record $17.8 billion raised in 2021. Among the other highly anticipated listings are Swiggy Ltd., a food-delivery giant, and NTPC Ltd.’s renewable-energy arm.
Japan’s Largest IPO
In Japan, the week’s headline IPO is Tokyo Metro Co.’s $2.3 billion listing, which is scheduled for October 23. This will be the country’s largest IPO since 2018 and comes at a time of heightened volatility in Japanese markets. The yen recently slipped past the 150-per-dollar mark, and investors are closely watching the country’s political landscape following the appointment of a new prime minister.
Tokyo Metro’s IPO is seen as a major test of market confidence in Japan, where economic challenges, including inflation and currency fluctuations, have been weighing on investor sentiment. A successful listing could offer a much-needed boost to the country’s capital markets, which have seen fewer large-scale IPOs in recent years.
Also debuting in Japan this week is Rigaku Holdings Corp., a company specializing in X-ray technology. Rigaku raised around $750 million in its IPO and is set to begin trading on Friday. The performance of Rigaku and Tokyo Metro’s shares will be closely watched, particularly as investors grapple with uncertainty in both the domestic economy and global financial markets.
South Korea: K Bank’s Canceled IPO
While most of Asia’s capital markets are bustling with IPO activity, not every company has been able to capitalize on the market’s resurgence. In South Korea, online lender K Bank Co. was forced to withdraw its IPO plans after failing to generate sufficient demand. The company had hoped to raise around $700 million through its listing but announced in a regulatory filing that it would not proceed with the offering at this time.
The failure of K Bank’s IPO underscores the challenges that some companies still face in navigating the current market environment. While investor sentiment has improved in many parts of Asia, there are still pockets of weakness and uncertainty that could dampen appetite for new equity offerings.
The surge in IPO activity across Asia comes at a critical juncture for global financial markets. With the U.S. presidential election scheduled for November 5, many investors are taking a cautious approach, uncertain about the potential implications of the election outcome on global trade, monetary policy, and market regulation.
For companies looking to raise capital, this uncertainty has created a sense of urgency to complete deals before potential volatility hits. Asia’s IPO markets are likely to remain active in the coming weeks as firms aim to capitalize on favorable market conditions while they last.
Asia’s busiest week of IPOs in more than two years will serve as a crucial test of investor sentiment, not just in the region but globally. The success of major listings in China, India, and Japan could reignite confidence in capital markets that have struggled in recent years, while failures like K Bank’s IPO in South Korea highlight the risks that still remain.
