Asian listings set pace

PUBLISHED : Tuesday, 03 April, 2012, 12:00am
UPDATED : Tuesday, 03 April, 2012, 12:00am


Analysts have been surprised by the fine performance of global equity markets, and especially Asian stocks, in the first quarter of this year.

The same applies to initial public offerings (IPOs). Despite a tough start for IPOs elsewhere in the world, the Hong Kong, Shenzhen and Shanghai stock exchanges were among the top-five global markets ranked in terms of capital raised.

According to Ernst & Young's (E&Y) Global IPO Update, eight out of the top 20 global IPOs this quarter were listed on Asian stock exchanges, and IPO activity in those markets accounted for 47 per cent of global IPO funds raised, with 84 deals completed, involving US$6.7 billion.

However, E&Y says Asia experienced a 74 per cent fall in capital raised, compared with the same period last year (155 deals which raised US$25.9 billion).

The largest Asian IPO in that time was the US$794 million listing of China Communications Construction on the Shanghai Stock Exchange.

Terence Ho, Greater China strategic growth markets leader at Ernst & Young, says China remains an attractive destination for companies from developed markets in the consumer products, industrial (infrastructure), materials (metals and mining) and technology sectors. 'In addition, as the Shanghai Stock Exchange fully opens to overseas investors in the near future, we will see an abundance of foreign companies listing on the mainland and Hong Kong,' Ho says.

The report says that global IPO activity has fallen sharply in the first quarter of this year.

So far, a total of 157 deals has raised only US$14.3 billion, down by 69 per cent by capital raised (US$46.6 billion in 296 deals), compared with the same period last year.

This is the lowest quarter on record since the second quarter of 2009, when there were 82 IPOs worth US$10.4 billion. Globally, this quarter was the first time that just one deal has exceeded US$1 billion since the first quarter of 2009.

E&Y's report says that the size of an average deal fell to US$91 million compared to US$157 million in the first quarter of last year, a 42 per cent drop.

'Despite difficult current market conditions, there are a number of positive signs of fundraising activity worldwide,' Ho says. 'Companies are no longer simply listing on their national market by default. This year is already seeing more cross-border activity, with companies from all regions listing in Hong Kong, London and the United States.'