IPOs in Asia

Roundup: Chinese IPOs continue to drive Asian stock markets

Alibaba came back to Asia in November and dominated the equity landscape. But people are now starting to ask what markets next year are going to look like.

We might see a few more Chinese high-tech companies go public in 2020, riding on the momentum of the tech investment at the year-end. 

Alibaba finally made its debut on the Hong Kong Stock Exchange on November 26, with a hefty 42 times oversubscription rate for the retail tranche of its $11.2 billion issue.

State-owned Postal Savings Bank of China also completed its Shanghai listing on Tuesday, as institutional investors subscribed to Rmb1.3 trillion ($184 billion) worth of shares and retail investors bought Rmb7 billion of the $4 billion issue.

By size, these two Chinese companies topped the IPO deal list in November. Indeed Alibaba’s IPO is the biggest IPO this year so far. Public excitement about this still stock saw the Hang Seng Index rise 1.4% on the day before Alibaba’s debut.

Alibaba’s Hong Kong IPO also won FinanceAsia’s award for Deal of the Year in 2019.

The charts below are compiled using data from Dealogic as of November 29

Top 10 IPOs across Asia in terms of deal size in November

The stocks have also performed well on the aftermarket. Alibaba’s shares have gained about 9% so far, while shares in China Feihe, Asia's third-largest IPO in November, have risen 5.4% since their debut on November 13.

Share price performance since debut in decending deal size

Thanks to Alibaba, the computer and electronics sector dominated November’s IPO market. IT is in favour as one of the few high-growth sectors around, according to a Credit Suisse 2020 investment outlook released on Tuesday. “A de-escalation of the US-China trade war would significantly benefit the countries closely tied to China-based supply chains. Even more important is the evolution of domestic demand in China and its impact on imports from the region,” said John Woods, chief investment officer the Asia Pacific at Credit Suisse. “We now expect Chinese equities to outperform the global emerging market aggregate.”

A few firms may follow Alibaba’s lead to dual list their stocks in Hong Kong, one HK-based international investment banker told FinanceAsia. But such a headline-grabbing IPO is only suitable for companies which can raise a critical mass of equity in the city to maintain liquidity.

“Chinese TMT companies have more options now when choosing where to list,” Jingyuan Shi, partner of Shenzhen and Hong Kong at law firm Simmons & Simmons said at a press conference last month. “Chines companies will continue to invest in tech sectors such as AI, machine learning, blockchain, fintech.”

The secondary market also get affected by the increasing interest in technology sector. “Equity investment is more attractive than gold and bonds in 2020,” said Yang Yan, fund manager at Atlantis Investment Management. “We see increasing opportunities in emerging markets, especially in China and Southeast Asian countries. Sector-wise, 5G, e-commerce, healthcare and consumer sectors are our priority choices.”

Sector Comparison

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