Last updated: February 11, 2013 4:39 pm

Asia leads in global IPO resurgence

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Asian companies have sold more equity in the capital markets in the past five weeks than any start to the year since records began, driving hopes of a revival in the global initial public offering market this year.

In the Asia-Pacific region excluding Japan, equity capital market volumes stand at $24.6bn so far in 2013, almost four times the $6.4bn raised in the same period last year and the strongest since at least 1995, according to Dealogic.

The strong start to the year comes as the MSCI Asia ex-Japan index has risen steadily in recent months, up nearly 15 per cent from September last year on the back of central bank actions and improving market sentiment.

Higher equity prices make it more attractive for companies to issue equity and raise money, and many analysts are forecasting stocks in the region will continue to make gains throughout the year.

“Asia ex-Japan does not have the same overhang from the financial crisis as the US or Europe, yet it trades on valuations not far above Europe’s,” said Anders Nielsen, strategist at Goldman Sachs in a note.

This stronger risk appetite has prompted speculation about a rise in IPO activity in particular in 2013. This follows the weakest year for IPOs since the financial crisis in 2012 when the $38.7bn of activity was 50 per cent lower than 2011.

Already this year, Sinopec Engineering has filed for a $1.5bn listing after China Galaxy Securities filed to raise as much as $1.9bn.

Chinalco Mining Corporation International, the copper company spun out of state-run Chinalco, raised $400m last month in an IPO.

Volumes for equity capital market activity more generally have also been pushed up in the year to date by China Petroleum & Chemical Corp, which did a $3.1bn equity follow-on issue last week.

Analysts are hoping that the leadership reshuffle in China and expected reforms will be positive this year for Chinese equities and the new issues market.

China led the decrease in Asian IPO volume last year with activity down from $52.9bn in 2011 to $21.5bn in 2012.

Around the world, deal activity has been picking up this year as global risk appetite continues to improve following central bank action late last year.

The $50bn of global initial public offering issuance in the year to date is up from $37bn in the same period last year, according to Dealogic.

But the markets have dipped slightly in recent weeks on profit-taking following a strong four-month rally and in Europe mounting worries about the political scandal in Spain and the Italian election are unsettling investors.

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