Asian IPOs Set for Blockbuster Week as ‘Animal Spirits’ Return: China, India, and Hong Kong Lead $8.3 Billion Surge

Asian stock markets are preparing for their busiest week of listings in over two years, with companies hurrying to raise money ahead of the US election. Next week, around 20 companies from Asia Pacific are set to go public, potentially raising up to $8.3 billion. This will be the biggest weekly total since April 2022, according to data from Bloomberg. The surge in activity includes companies from China, India, and Japan, signaling a widespread recovery in the region’s stock offerings.

“There’s a renewed sense of optimism in the Asian markets,” said Matthew Emsley, a partner at Herbert Smith Freehills in Hong Kong, who handles IPOs. He explained that market behavior, often influenced by emotions, is picking up, with more companies eager to take advantage of this positive trend.

Investors and bankers will be watching closely to see how these newly listed stocks perform. More companies are expected to follow in the coming weeks as firms and major shareholders aim to complete deals before the US election on November 5.

This wave of listings will also help gauge investor interest after a period of weak demand due to slow markets. Among the notable debuts are China Resources Beverage Holdings Co. and autonomous-driving technology firm Horizon Robotics Inc., which are scheduled to start trading in Hong Kong on Wednesday and Thursday. Together, these companies are set to raise over $1.3 billion. If successful, their IPOs could trigger a larger wave of Chinese listings in Hong Kong, a market that was once booming for IPOs.

Cathy Zhang, head of Asia equity capital markets at Morgan Stanley, said, “We’re likely seeing the beginning of a recovery in the Hong Kong and Chinese capital markets. We need more high-quality companies to list and perform well for this trend to continue.”

China Resources Beverage, expected to raise around $649 million, closed its order book earlier than planned due to strong demand, insiders said. Horizon Robotics is raising up to $696 million, with major backing from cornerstone investors like Alibaba and Baidu, who are committed to holding their shares for at least six months.

Caution in India

In India, the stakes are also high with Hyundai Motor India Ltd.’s $3.3 billion IPO set to make its debut on Tuesday. This is the biggest IPO in the country’s history, and it was oversubscribed more than twice by the last day of the sale. However, small investors showed limited interest.

“The auto sector doesn’t seem very promising at the moment,” said Keshav Gupta, a 25-year-old investor from Calcutta. He had previously invested in IPOs by using multiple family members’ trading accounts to secure more shares, but decided to skip Hyundai’s listing this time.

Concerns about India’s slowing auto market are one reason for the caution. After a surge in demand during the COVID-19 pandemic, the auto industry has cooled. In September, retail vehicle sales in India dropped by more than 9% compared to the same month last year, and passenger vehicle dealers are dealing with record-high inventory levels of 80-85 days, according to data from the Federation of Automobile Dealers Associations.

Despite this, foreign investors have been increasingly participating in Indian IPOs, and the success of big listings could encourage more companies to follow suit, said Mahesh Natarajan, head of equity capital markets at Nomura India. “Seeing the success of larger IPOs gives other issuers the confidence to launch bigger deals.”

With Hyundai’s listing, Indian IPOs will have raised over $12 billion this year, surpassing the totals from the previous two years, though still falling short of the $17.8 billion raised in 2021. Upcoming listings include food-delivery giant Swiggy and the renewable energy division of state-run power producer NTPC.

Activity in Japan

In Japan, Tokyo Metro Co. is set for a $2.3 billion IPO on October 23, the country’s biggest listing since 2018. This comes during a challenging time for Japanese markets, as the yen recently weakened beyond 150 per US dollar, and the appointment of a new prime minister has led to speculation about future policies.

Later in the week, X-ray technology company Rigaku Holdings Corp. will launch a $750 million IPO, with its shares starting to trade on Friday.

However, not all IPOs are moving forward as planned. Korean online lender K Bank Co., which had aimed to raise around $700 million in its local IPO, withdrew its offering due to a lack of investor interest, the company said in a regulatory filing.