Asian IPOs Set for Blockbuster Week as ‘Animal Spirits’ Return

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(Bloomberg) — Asian stock markets are bracing for their busiest week of listings in more than two years, marking a crucial test of demand as companies rush to raise money ahead of the U.S. election.

About 20 companies from the Asia-Pacific region will list their shares next week in deals that could raise as much as $8.3 billion, the largest weekly volume since April 2022, according to data compiled by Bloomberg. The large supply includes deals from China, India and Japan, underscoring the broad recovery in stock sales across the region.

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“There is a level of animal instincts coming back to the Asian market,” said Matthew Emsley, a partner at Herbert Smith Freehills Ltd in Hong Kong who works on IPOs, using a popular term to refer to changes in market behavior that are often driven by emotion. “There is an increased level of activity and urgency to capitalize on that positivity.”

The performance of newly listed stocks will be closely watched by bankers who plan to make a series of equity offerings in Asia over the next few weeks, as companies and major shareholders try to close deals before the November 5 election in the United States.

These deals will also provide insight into long-term investor demand after years of weakness due to lackluster markets. Bottled water maker China Resources Beverage Holdings and self-driving technology company Horizon Robotics are set to make their Hong Kong debuts on Wednesday and Thursday respectively, with the two companies raising more than $1.3 billion. Their success could revive broader Chinese equity sales in Hong Kong, once a crowded – and lucrative – segment of the IPO market.

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“We are likely to see the initial phase of recovery in the capital markets in Hong Kong and China,” said Cathy Chang, head of capital markets in Asia at Morgan Stanley. “We need more larger, high-quality companies to list in Hong Kong and continue to perform well to ensure this trend is sustainable.”

China Resources Beverage, which has raised about $649 million, closed its order books a day earlier than scheduled after getting strong demand, people familiar with the matter said. Horizon Robotics’ $696 million IPO has attracted Alibaba Group Holding Ltd. and Baidu Inc. Among the investors are anchor investors, who commit to holding shares for at least six months.

India beware

The stakes are also high in India, with Hyundai Motor India Ltd’s $3.3 billion listing, the country’s largest ever initial public offering, starting trading on Tuesday. The deal was oversubscribed more than twice on the final day of the sale, but attracted weak interest from small investors.

“The whole sector does not look very promising at the moment,” said Keshav Gupta, a 25-year-old individual investor based in Kolkata. Gupta was among small investors in India who bid for previous IPOs using family members’ trading accounts, a way to acquire more shares. He chose not to include Hyundai on the list.

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Part of the concern relates to the refrigeration vehicle industry in India after demand surged during the Covid-19 pandemic. Retail automobile sales in India fell more than 9% in September compared to the same month last year, and passenger vehicle dealers are facing inventory levels at all-time highs of 80 to 85 days, according to data from the Federation of Automobile Dealers Associations. .

Foreign investors are increasing their broader participation in IPOs, and larger deals are likely to lead to others, said Mahesh Natarajan, head of India capital markets for Nomura Holdings.

“There is a positive boost for other issuers who see the success of larger IPOs and then get the confidence to do bigger and bigger IPOs,” he said.

With Hyundai’s proceeds, Indian IPOs will raise more than $12 billion so far this year, surpassing volumes from the past two years but still short of the record $17.8 billion raised in 2021, according to data compiled by Bloomberg. Other suspended companies include food delivery company Swiggy Ltd. and the renewable energy arm of state-run power producer NTPC Ltd.

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In Japan, Tokyo Metro is scheduled to list at $2.3 billion on October 23. The deal, which would be the country’s largest initial public offering since 2018, comes amid a turbulent period for Japanese markets. The yen fell to more than 150 yen to the dollar last week, and the appointment of a new prime minister has fueled speculation about politics.

Japanese X-ray technology company Rigaku Holdings Corp. will close out the week, having closed a deal worth nearly $750 million. The company’s shares are scheduled to begin trading on Friday.

Not all potential issuers are moving forward with their listing plans. Korean online lender K Bank, which had hoped to raise about $700 million in an initial public offering in its home market, pulled the deal after failing to generate enough demand, it said in a regulatory filing.

– With assistance from Julie Chen.

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