The downturn in China causes October to be the most challenging month for Asia’s IPOs since 2019.
INITIAL PUBLIC OFFERING (IPO) proceeds in Asia-Pacific
In October, the numbers dropped to their lowest point in four years, primarily due to a decrease in capital-raising activity in mainland China.
According to data compiled by Bloomberg, businesses and their stockholders in the area have generated approximately $3.89 billion from Initial Public Offerings (IPOs) since September’s conclusion. This marks a decrease of 40% compared to the same timeframe from the previous year and is the smallest monthly amount since February 2019.
According to the data, the amount raised through selling new shares in Shenzhen, Shanghai, and Beijing dropped by 71% to $1.1 billion in October compared to the previous year. Despite being a popular location for listings in the past, China’s appeal has decreased due to concerns about a potential economic downturn.
The government of Beijing wants to decrease the number of new offerings in order to increase the amount of available funds in the secondary market. Regulators have promised to keep a balance between initial public offerings (IPOs) and refinancing actions, according to earlier statements this year. Data reveals that 279 companies have started trading on mainland stock exchanges this year, compared to 339 during the same time last year.
Previously, initial public offerings (IPOs) from Chinese companies were performing better compared to other new companies in the region. However, recently they have been falling behind other markets in Asia. This year, there has been a significant increase in new market projects that do not include Chinese stocks, and international funds have decreased their involvement in the country to the lowest level since 2020.
Hong Kong’s October IPO proceeds reached $778 million, the second highest of the year, due to its accessibility for international investors. However, the total proceeds for 2023 have decreased by 64% compared to the previous year and there are fewer large deals.
In the coming two weeks, five companies are scheduled to make their first appearance in Hong Kong. However, none of them exceed a value of $100 million.
Although there was continued activity in certain Asian markets, such as India and South Korea, this month saw smaller deals on average compared to last year. Additionally, some companies have been affected by volatile market conditions.
Last week, Seoul Guarantee Insurance Co. canceled its intention to be listed in South Korea due to not receiving a satisfactory valuation. The company was predicted to have the second largest listing in the country this year.fi
The first insurance company established in Seoul since 2020.