China Stock Bubble Fuels H1 2015 APAC IPO Surge

July 25, 2015

The Asia-Pacific (APAC) region saw 355 IPO offerings that raised $48.4 billion in capital during H1 2015, up 66% and 48% y-o-y, respectively, according to Ernst & Young's recent IPO Market Update.

 

This performance dwarfed the 101 offerings and $19.5 billion raised in the United States, and outstripped the 165 IPOs and $34.7 billion registered in Europe, Middle East and Africa (EMEA) during the same period. 

 

Industrials and Tech Companies Lead the Way

 

The industrial sector was the most active in terms of IPO activity in APAC in H1 2015, with 79 IPO deals and $4.4 billion raised, compared with 37 deals and $3.9 billion raised in H1 2014.

 

Tech companies, particularly e-commerce companies, were the second most active, with 61 deals and $5.3 billion raised, up in deal terms but down in capital terms compared with the 30 deals and $5.5 billion raised in H1 2014. 

 

Shanghai and Shenzhen the most active APAC exchanges

 

Buoyant sentiment in China drove APAC's stellar performance, with Shanghai and Shenzhen exchanges seeing a total of 190 deals and $23.6 billion during H1 2015.

 

Deal volume in mainland China surged because mainland authorities gave the green light to a swathe of offerings, freeing applications that had been postponed in 2013 and 2014 when regulators tried stabilize the stock market by limiting IPOs.

 

Faster approvals, plus a frenzy for stocks between January and May 2015, saw many companies rush to market during H1 2015, with eye-catching results. 

 

Japan buoyant, but Australia and ASEAN down following stellar 2014 

 

Japan also saw stronger performance in H1 2015 - 46 offerings, compared with 31 in H1 2014 - but ASEAN and Australian exchanges saw a slight decline in activity during the first half of 2015.

 

That said, both ASEAN and Australia were competing with very high base effects, since activity in both areas reached historic highs in in H1 2014.

 

Government crackdown may slow IPO pace in H2 2015

 

China's recent stock marlet crackdown looks likely to mean a slower H2 2015 for IPO activity in the APAC region as a whole, despite underlying conditions seeming good due to looser regional monetary policy and a steady economic outlook. 

 

China's government recently announced the suspension of IPOs as it sought to shore up its stock market, resulting in 10 companies suspending IPOs on the Shanghai Stock Exchange and 18 halting proceedings on the Shenzen Stock Exchange.

 

 

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