Its a lean year for IPOs except for some parts of Asia Pacific

1 Sep 2022 , 07:45 AM

One would anticipate the summer holiday to be especially quiet in a year where Initial Public Offers (IPOs) have fallen by more than two-thirds internationally. In contrast, stock listings in Asia recorded their second-highest August total on record.

According to statistics gathered by Bloomberg, initial share sales in the Asia Pacific area topped $14.9 billion this month. The figures reveal that the majority of the issuers from Hong Kong and mainland China, which accounted for all but two of the IPOs raising at least $100 million, is to be credited for the impressive performance.

China Tourism Group Duty-Free Corp., the largest travel retailer in the world, leads the list with its $2.1 billion Hong Kong IPO, followed by Shanghai United Imaging Healthcare Co. and Hygon Information Technology Co.’s two mainland IPOs.

The bustling August in Asia stands out internationally, with a usual summer slowdown in the northern hemisphere coinciding with a decline in share offers in 2022 because of concerns that stricter monetary policy to combat high inflation would send the world economy into recession. Additionally, declining stock indices are not helpful. This month’s proceeds from US IPOs were mere $637 million, while European IPOs only brought in $510 million.

The total for Asia in August of this year is just slightly less than it was in August of last year when the sum was more than double at $30 billion due to surging stock markets and generous central banks fuelling a frenzy of share sales.

Even though certain markets in the region have not been spared from the listings slowdown (Hong Kong’s IPO proceeds are 80% below last year’s levels), mainland China has defied the global trend with a record year for initial share sales, assisting in reducing the Asia-wide listing slump.

According to the data, new stock offerings in Asia are down just 23% year over year compared to a 68% decline internationally.

A huge domestic investor base for its listings, China’s accommodating monetary policy–which makes it an anomaly among major central banks–and other factors have enabled the country’s IPO market to survive the global downturn.

It is also advantageous that freshly listed stocks have performed well. For example, Hygon Information Technology has increased by 39% and Shanghai United Imaging Healthcare has increased by 57% from its offer price.

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