“It’s almost become fashionable … to pitch an Asian listing these days,” a senior banker at Credit Suisse told the Financial Times. “Virtually on every IPO we work on we now have a discussion on whether we should have a dual listing, or an Asia-only one.”
Western backed money has been flowing into the Eastern hemisphere for sometime now, however as the west slows and inches closer to a recession, Foreign companies headquarterd in the west are keen to list on the more lucrative eastern markets. With Hong Kong, the West’s gateway to the East being the first place companies are looking at listing, Singapore comes a close second. Although Eastern markets have also slumped of late due to the global meltdown, the severity of the drop isn’t as bad as the west. Further, in the long term, seeing the Eastern markets recover faster, being more secure bets and leveraged on the fact that Asia will grow, companies are increasingly looking at listing in the East.
While earlier, it was vital to have listed on the NYSE or LSE, to prove that you had arrived on the global stage, companies are now looking at Asian markets. In the past few months, Glencore a mining company, Prada a retail company, Rusal a metal & steel company, Samsonite and L’Occitane into consumer durables have all listed on the HKSE. Manchester United is the latest western company to eschew a local listing to head east. The UK football club recently appointed Credit Suisse to prepare an IPO on the Singapore Exchange.
Although Indian and Chinese companies haven’t yet shelved plans of listing on the NYSE or LSE, most listings aren’t performing well. Take for instance, Tudou, China’s answer to youtube which listed last Wednesday on the NYSE. As of midday in New York, Tudou shares had fallen 26 percent in its first two days of trading, following an 11.8 per cent drop in its first day. It was the third straight Chinese US IPO to decline in first-day trade.
Although the US markets, like the European markets haven’t proven welcoming, problems have emerged there too. In the week ending August 12, over a dozen US rights issues and IPOs worth an estimated US$1.5bn were withdrawn or postponed, according to Dealogic, the most in over a decade.
In the first half of the year, US$48.9bn of new shares were listed on Asia-Pacific exchanges, excluding Japan, according to Thomson Reuters. In comparison, the US had only US$24.7bn of flotations, and Europe, the Middle East and Africa US$29.6bn.
Hong Kong and Singapore’s lustre are heightened by somewhat lighter-touch but increasingly respected regulation, according to bankers and fund managers. “The local markets are a lot more transparent and well regulated than in the past, and institutional investors are agnostic as to where the listings are these days,” a banker says.
Bankers predict that there will be more western companies looking to list in Asia – particularly by luxury goods companies that also hope to capitalise on rapidly growing local operations – but do not expect a rush of flotations