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Hong Kong: After a bumper year of stock listings, Asian companies may find it difficult to repeat the success in 2022 given rising interest rates and the prospect of China’s strong hold on Big Tech.
Thanks to the first half amid a global boom, initial public offerings in the sector have reached $190 billion so far this year, which is already a record and up 31% over the whole of 2020. But momentum has been particularly weak in recent months in the form of Beijing. Intensified a regulatory attack on private enterprises, halting major deals and injecting uncertainties into the next year.
Bankers say they expect Asia’s IPO market to be less frenzied and more balanced in 2022, as higher inflation lowers valuations of tech firms and tighter US monetary policy reduces the supply of idle cash. The listing landscape may also look more diverse, with South Korea And India is moving forward and industries ranging from clean energy to financial services are filling the void left by the once dominant Chinese tech.
“Markets are going to face a more normal environment in 2022,” said William Smiley, co-head of equity capital markets at Goldman Sachs Group Inc. in Asia East Japan. “The withdrawal of fiscal and monetary stimulus, coupled with higher inflation expectations, could challenge riskier assets, including equity markets.”
Beijing is closely scrutinizing its tech firms on many issues ranging from data security Escape route Long used by companies to list overseas, the sector is also expected to slow the pace of fundraising.
This, as well as sluggish secondary market performance, has pushed Hong Kong out of the world’s top three listing spots, a popular destination for Chinese tech firms. Several companies, from snack maker Weilong Delicious Global Holdings Ltd to Apple Inc supplier Beal Crystal Manufactory Ltd, have pushed back share offers in the city, a growth set to make the last three months of this year its weakest fourth quarter ever. Is. For Asian IPO from 2018.
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‘Wandering from China’
Chinese companies picking up the slack may not be influenced by Beijing’s regulatory clout or the country’s beneficiaries development priorities, including new energy providers and electric vehicle manufacturers.
Magnus Anderson, co-head of equity capital markets for Asia Pacific at Morgan Stanley, said the new year will see a more diverse group of companies enter the market. “It’s not only consumers, the Internet and technology, it’s also more industrial and financial institutions.”
Candidates include startups Hozon New Energy Automobile Company and the asset management business of developer Longfour Group Holdings Ltd., Bloomberg has previously reported.
The weak presence of Chinese technology will also help make the region’s IPO pipeline more geographically balanced, as South Korea, India and Southeast Asia maintain a busy issuance calendar.
Companies in India, South Korea and Indonesia have raised a record amount through share sales for the first time this year. And there’s more to come: Mega deals in the works include LG Energy Solutions’ $10.8 billion IPO in Seoul and India’s offering from Life Insurance Corp of Mumbai, valued at $131 billion.
Some of Southeast Asia’s biggest tech unicorns are also expected to float shares next year, said Selina Cheung, co-head of Asia’s equity capital markets at UBS Group AG. “Now is the right time as investors are turning their attention away from China, at least in the short term.”
Homecoming IPO
An increased number of their US-traded peers will likely seek listings in Hong Kong or Shanghai, known as ‘homecoming’, despite weak supply expectations from Chinese tech firms as first-time stock sellers.
Some of the prominent names that have been listed on the Asian financial hub in recent years include Weibo Corp, Baidu Inc. and Alibaba Group Holding Ltd. This trend is expected to accelerate amid growth. Threat To delist Chinese firms from the US there.
Already in line for such listings in Hong Kong are ride-hailing giant Didi Global Inc. and streaming video site IQiyi Inc. while Futu Holdings Ltd., Tencent Music Entertainment Group and Pinduoduo Inc. There are also potential candidates.
Once Beijing’s regulatory picture is clear, Goldman’s smiley said, “the issuance will resume.” “Positioning is light and China is under-owned.” – bloomberg
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