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India has overtaken China as the top Asian market for companies this year, as rising stock prices fuel a boom in public offerings.
Powered by companies including Swiggy and Hyundai Motor, India will be the world's second largest fund raising market behind the US for the first time, according to data from Dealogic by 2024. India's National Stock Exchange is set to become the first major stock exchange by price, ahead of Nasdaq. and the Hong Kong Stock Exchange, KPMG figures show.
The list shows changes in 2024 in Asian finance, as the tightening of regulations leads to a list of droughts in China. Meanwhile, companies have rushed to take advantage of higher valuations after a multi-year rally in Indian equities, despite concerns about whether the market can withstand the economic downturn.
“It's been the busiest period in the history of Indian capital markets,” said V Jayasankar, managing director at Kotak Investment Bank, which has worked on the country's largest. Pos this year. “Of course India is remarkable – China has to do a lot more to attract this industry.”
The market has been supported by domestic flows in India that are “very strong” due to the “democratization of investment” as households increasingly pour money into domestic equity markets, Jayasankar added. “The whole project has taken us by surprise.”
The value of primary and secondary listings in China, which by 2023 will be the world's largest market, has fallen about 86 percent from more than $48 billion to just $7.5 billion in 2024 as of early December, according to Dealogic.
Analysts said it was weak the economy combined with restricted regulation on company listings has held back a pipeline of Chinese companies looking to enter the public markets, although the announcement of monetary and fiscal stimulus plans in September helped stabilize markets after a sell-off earlier in the year.
The slowdown in China's IPO was in line with Beijing's policy objectives, according to Scarlett Liu, Apac equity and derivative strategist at BNP Paribas.
“It's an attempt to manage to achieve a balance between the primary and secondary markets,” he said, adding that authorities are worried that many of the listings could end work in the secondary market.
Hong Kong, China's offshore financial hub, saw an increase in equity capital raising activity to more than 10bn dollars in December from 6bn in 2023, including other major transactions such as electronics manufacturer i – Midea raising more than $ 4bn in the second round.
Analysts say Hong Kong will continue to benefit as a listing site for large Chinese companies to raise offshore capital.
“For Chinese companies pursuing IPOs, the Hong Kong Stock Exchange remains a top destination that offers a streamlined listing process, market stability and transparency, and greater access to global capital,” said Frank Bi, partner and head of Asian transactions at the law firm. strong Ashurst.
India, which had a large volume of small deals in 2024, has been supported by companies looking to raise capital while forecasts remain high, including spinning off Indian units of multinationals such as Hyundai.
“Obviously the number of transactions has increased but the average ticket size per transaction has come down by around 75-80 per cent in the last two years,” said a Mumbai-based banker. “Now, what that tells me is (companies are thinking) 'run for the hills, let's try to get money as fast as we can, whatever we can while the market conditions are still supportive'.”
But as the most populous country in the world it is growing rapidly slowdown, with companies reporting weak earnings and GDP growth slowing to 5.4 percent in the third quarter – the lowest rate in nearly two years – foreign portfolio managers have turned cautious on the equity market.
They pulled over $11 billion out of Indian stocks in October, a record monthly move, and another $2.5 billion in November.
However, the bankers think that the general excitement in the primary and secondary sector in India can be maintained in the new year. “Not to comment on the quality of the offerings,” said a second banker in Mumbai, “there are enough jobs lined up as long as the markets are supportive and the wealth is there.”
“It is fair to say that the first two quarters of 2025 will see no change from where we are now,” he added.
Global investors have also remained bullish on India, while warning that its growth could be hampered by a major return to the US and elsewhere.
“Globally we expect IPO market activity to normalize by 2025 and we will see volumes pick up especially in the US and Europe and possibly outside of China. It wouldn't surprise me if India continues to grow,” said Gareth McCartney, head of equity markets at UBS.