China slump turns Oct. into worst month for Asia IPOs since 2019

INITIAL PUBLIC OFFERING (IPO) proceeds in Asia-Pacific slumped to the lowest in at least four years in October, hit mainly by slower capital-raising in mainland China.

Companies and their shareholders across the region raised about $3.89 billion through IPOs since the end of September, Bloomberg-compiled data showed. That’s a drop of 40% versus the same period last year, and the lowest monthly amount since February 2019.

Fundraising through new share sales in Shenzhen, Shanghai and Beijing combined plunged by 71% to $1.1 billion in October from a year ago, the data showed. While China was one of the busiest corners in the world for listings last year, activity has slumped as the nation’s appeal fades amid fears of an economic slowdown.

Beijing is also seeking to slow new offerings to boost liquidity in the secondary market and regulators pledged earlier this year to maintain equilibrium in IPO and refinancing activities. Some 279 companies began trading in mainland bourses this year, versus 339 over the same period of 2022, the data showed.

Chinese IPOs used to outperform newcomers within the region but lately have been trailing other Asian markets. New emerging market mandates that exclude China stocks reached a record this year, and global funds have cut their positioning in the country to the lowest since 2020.

In Hong Kong, where it is easier for foreign investors to participate in new share sales, IPO proceeds in October stood at $778 million, the second highest for the year. Still, total proceeds so far in 2023 are down 64% from the previous year and there are fewer jumbo deals.

Five companies are due to debut in Hong Kong over the next two weeks, but none of them is larger than $100 million.

To be sure, some Asian markets such as India and South Korea remained active this month, but average deal sizes are smaller than last year. And choppy markets have claimed some casualties.

Last week, Seoul Guarantee Insurance Co. withdrew a plan to list in South Korea as it was unable to get an “appropriate valuation.” It was expected to be the country’s second biggest this year, and the first insurer in Seoul since 2020. — Bloomberg

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