IPOs in Asia Face Headwinds After Record Year of Fundraising
$Alibaba (BABA.US)$ $Baidu (BIDU.US)$ $Tencent (TCEHY.US)$ After a bumper year of stock listings, Asian companies may find it hard to repeat the success in 2022 given the prospect of rising interest rates and China’s tightening grip on Big Tech.
Thanks to a blistering first half amid a global boom, initial public offerings in the region have reached $190 billion so far this year, already a record and up 31% from the whole of 2020. But the momentum has weakened notably in recent months as Beijing escalated a regulatory assault on private enterprise, putting major deals on hold and injecting uncertainties into next year.
Bankers say they expect Asia’s IPO market to be less frenzied and more balanced in 2022, as higher inflation erodes valuations of tech firms and tighter U.S. monetary policy reduces the supply of idle cash. The listings landscape may also look more diverse, with South Korea and India charging ahead and industries from clean energy to financial services filling the void left by once-dominant Chinese tech.
“Markets in 2022 are going to face a more normalized environment,” said William Smiley, co-head of equity capital markets at $Goldman Sachs (GS.US)$ in Asia ex-Japan. “Withdrawal of fiscal and monetary stimulus, coupled with expectations for higher inflation may challenge risk assets, including equity markets.”
Beijing’s tight scrutiny of its tech firms, on issues ranging from data security to a loophole long used by companies to list overseas, also is expected to continue to slow the pace of fundraising from the sector.
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