India roars ahead of China to top Asia’s IPO rankings

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India has overtaken China as Asia’s top market for corporate listings this year, as soaring stock prices fuel a surge in initial public offerings.

Powered by companies including Swiggy and Hyundai Motor, India will be the world’s second largest stock market after the US for the first time, according to data from Dealogic for 2024. India’s National Stock Exchange is set to become the first place of primary listings by value, ahead of Nasdaq. and the Hong Kong Stock Exchange, KPMG figures show.

The situation heralds a change in 2024 for Asian currencies, as tightening regulations lead to a dry spell in China. Meanwhile, companies are rushing to take advantage of higher prices after a multi-year rally in India’s finances, despite concerns about whether the market can weather the recession.

“It’s been one of the busiest periods in the history of Indian stock markets,” said V Jayasankar, managing director at Kotak Investment Banking, which has worked on some of the country’s biggest. IPOs this year. “India is being overlooked – China needs to do more to attract that business regularly.”

The market has been boosted by India’s “very robust” domestic flow due to “great investment democratization” as households increasingly invest in local equity markets, Jayasankar added. “The general action has really surprised us.”

The value of primary and secondary listings in China, which in 2023 was the world’s largest market, fell 86 per cent from $48bn to just $7.5bn in 2024 as of early December , according to Dealogic.

Analysts said it was weak the economy as well as restrictive controls on company listings have increased the pipeline of Chinese companies seeking to enter the public market, although the announcement of fiscal and monetary stimulus plans in September helped stabilize markets after a sell-off earlier in the year .

The decline in Chinese IPOs was in line with Beijing’s strategic plans, according to Scarlett Liu, Apac equity and strategist at BNP Paribas.

“It’s a regulatory attempt to find a balance between the primary and secondary markets,” he said, adding that authorities are concerned that more listings could reduce activity in the secondary market.

Hong Kong, China’s foreign investment hub, saw an increase in equity raising activity to more than $10bn in December from $6bn in 2023, including other major transactions such as electronics maker Midea raised more than $4bn in a second round.

Analysts say Hong Kong will continue to benefit as a place to list large Chinese companies to raise capital.

“For Chinese companies pursuing IPOs, the Hong Kong Stock Exchange remains a top destination that offers a structured listing process, market stability and transparency, and greater access to capital. the world,” said Frank Bi, partner and head of the law’s Asia business practice. firm Ashurst.

India, which had the smallest prices in 2024, has been boosted by companies looking to raise cash while rates are high, including divesting Indian units of multinationals such as Hyundai .

“Obviously, the number of passengers has gone up but the average ticket size per price has decreased by 75-80 per cent in the last two years,” said a Mumbai-based banker. “Well, that tells me that (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 supportive ‘.”

But as the most populous country in the world it is growing rapidly is slow, with companies reporting weak earnings and GDP growth slowing to 5.4 percent in the third quarter – the slowest rate in nearly two years – foreign portfolio managers have turned to are cautious in its equity market.

They pull more than $11bn from Indian stocks in October, a record monthly move, plus another $2.5bn in November.

However, bankers think that the widespread euphoria in India’s primary and secondary listings is likely to continue into the new year. “Not to mention the value of the offerings,” said a second banker in Mumbai, “there is enough activity as long as the markets are supportive and the money is there.”

“It’s fair to say that the first two quarters of 2025 will see no change from where we are now,” he added.

Global financial banks also remain bullish on India, while warning that its growth could be slowed by a sharp pullback in the US and elsewhere.

“Globally we expect the IPO market activity to normalize by 2025 and we will see a significant increase in the number in America and Europe and possibly outside of China. It would not surprise me if India is still continue to grow,” said Gareth McCartney, co-head of capital markets at UBS.