Asia-Pacific IPO market was weakened in 2022
The Asia-Pacific area finished the quarter with a 42% decline in proceeds and 37% decline in deals YOY. However, Asia-Pacific markets performed relatively better benefiting from the two largest global IPOs YTD. The region saw 181 IPOs raising US$23.3b in proceeds during Q2, and 367 IPOs raising US$66.0 in proceeds YTD 2022. In terms of sector activity YTD, materials led the way with 78 IPOs, closely followed by industrials with 77 IPOs. YTD, the Shenzhen Stock Exchange had the highest number of deals with 82, constituting 13% of global IPOs. Meanwhile, the Shanghai Stock Exchange had the highest proceeds with US$32.8b, making up 34% of global IPOs YTD.
YTD 2022, Greater China saw a YOY decline of 36% in deals (191) and a 16% fall in proceeds (US$51.2b). A convergence of factors (COVID-19 restrictions, geopolitical unrest, weakened stock market, economic uncertainty and rising interest rates) had negative impact on IPO activity in Hong Kong. With COVID-19 restrictions in Shanghai and Beijing lifting, along with the State Council’s 33 stabilization policies and measures, China’s economy is expected to rebound significantly in Q3 2022 and boost investor sentiment.
Japan saw 37 IPOs raise US$0.5b in total proceeds YTD, down 84% in proceeds and 31% in deals, YOY. Deteriorating investor sentiment is primarily driven by geopolitical conflicts, rising energy prices and depreciation of the Japanese yen. Tokyo Stock Exchange (TSE) has been restructured into three new market segments – Prime, Standard, and Growth – to boost investor sentiment and gain global market share.
YOY, Australia and New Zealand IPO activity witnessed a modest YTD decline in number of IPOs (3%). However, the decline in proceeds was substantial (76%). It can be attributed to several big IPOs being deferred to 2022 Q3/Q4. While fundraising activities have slowed down mostly due to poor investor sentiment, there have been some M&A activities, including demerger and IPO transactions for carved-out businesses.
YTD, Asean saw a total of 54 IPOs raising US$2.4b, down 2% in deal number and 55% in proceeds YOY. The notable decline in proceeds was due to a lack of mega IPOs (IPOs with proceeds equal to or greater than US$1b) in YTD 2022, compared to three mega IPOs in YTD 2021 that raised US$3.9b. Asean exchanges that were most active were Indonesia (22 IPOs raising US$1.3b), Thailand (13 IPOs raising US$0.3b), and Philippines (7 IPOs raising US$0.3b), followed by Malaysia (6 IPOs raising US$0.5b) and Singapore (6 IPOs raising US$33m).
Ringo Choi, EY Asia-Pacific IPO Leader, says:
“A multitude of factors, from COVID-19 restrictions and war in Europe to rising inflation rates and US/China tensions, have weakened Asia-Pacific’s IPO market in the first half of 2022. But a series of positive economic developments and new government policies in China should result in renewed optimism and a revival in IPO activity across the Asia-Pacific region for the remainder of the year.”