Asia dodges global IPO slump in summer as China records big deals

Share offerings have declined this year on fears that tighter monetary policy to curb inflation will lead to a recession

People walk in front of a large screen showing the latest stock exchange data in Shanghai, China. EPA

In a year in which initial public offerings globally have slumped by more than two thirds, one would expect the summer break to be especially quiet.

Not so in Asia, where stock listings have notched their second-highest August haul on record.

First-time share sales in the Asia Pacific region totalled $14.9 billion in August, data compiled by Bloomberg show.

The strong showing is almost entirely down to issuers from mainland China and Hong Kong, which accounted for all but two of the IPOs raising at least $100 million, the data show.

The world’s largest travel retailer, China Tourism Group Duty Free, tops the list with its $2.1bn Hong Kong listing, followed by the two mainland IPOs of Shanghai United Imaging Healthcare and Hygon Information Technology.

The busy August in Asia stands out globally, with a typical Northern Hemisphere summer lull coinciding with a 2022 slump in share offerings due to fears that tighter monetary policy to curb rampant inflation would tip the global economy into recession.

Stock indexes in the red aren’t helping either. European IPOs fetched only $510m in August, while proceeds in the US were a mere $637m.

“China’s onshore IPO activity will likely extend its stellar run with a laxer liquidity environment than the rest of the world,” said Gary Ng, senior economist at Natixis in Hong Kong.

“Even though the pressure may be increasingly high on growth and corporate earnings, it takes only enough liquidity to wash the worries away from investors temporarily, especially for the sectors with a long-term growth story.”

This year’s August tally for Asia is lower only than last year’s, when the amount was more than double at $30bn, as soaring stock markets and central bank largesse fuelled a flurry of share sales.

While individual markets in the region haven’t been shielded from the listings slowdown — Hong Kong’s IPO proceeds are 80 per cent below last year’s levels — mainland China has bucked the global trend with a record year for first-time share sales, helping mitigate the Asia-wide downturn in listings.

New stock offerings in Asia are down only 23 per cent year on year, compared with a 68 per cent plunge globally, the data show.

China’s monetary policy — making it an outlier among major central banks — as well as a large domestic investor base for its listings are among factors that have helped its IPO market withstand the global slump.

The strong performance of newly listed stocks is also a boon: Shanghai United Imaging Healthcare has surged 57 per cent from its offer price while Hygon Information Technology has climbed 39 per cent.