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Monday, 23 October 2017

NYSE sees rebound in Asian IPOs

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The New York Stock Exchange sees technology companies driving a revival in new Asian listings and expects double-digit IPOs from the region through the end of 2017, according to the exchange’s global head of capital markets.

In an interview, Garvis Toler, finishing a trip to Asia with stops in Japan, Indonesia, Hong Kong and China, said new listings should start picking up pace in the next few months after a slow first half of the year.

NYSE, which has seen only two listings from Asia this year, is betting technology companies, which have raised billions of dollars in private markets, will lead the rebound.

“If that number was in the double digits in the next year and a half, it wouldn’t be surprising at all,” Toler told Reuters. “I would absolutely say technology is where the greatest interest is coming from.”

The comments mirrored those of Nasdaq chief executive officer Robert Greifeld, who said in June that Chinese companies were eager to list in the US and that double-digit listings this year would be seen as a success.

Companies such as Chinese car-hailing app Didi Chuxing and financial technology company Lufax, plus India’s Flipkart and cab hailing firm Ola, are among several to have raised billions of dollars from investors betting on the region’s booming demand for internet services.

NYSE, which is part of Intercontinental Exchange, regularly battles with rival Nasdaq for listings. Technology and internet companies had been a staple for Nasdaq for many years.

More recently, the two have lost ground in China’s technology sector, with a long list of companies looking to follow Giant Interactive and Focus Media in delisting their US shares in search of higher valuations closer to home. Among the recent departures are Youku Tudou, Mindray Medical and Qihoo 360 Technology, an internet security provider with a US$9.3bn market capitalisation.

NYSE, however, has hosted some high-profile IPOs from Asia’s technology sector, including the world’s largest in 2014, when Chinese e-commerce giant Alibaba Group Holding went public, and, this year, Japan’s Line Corp.

”If we take a look back probably five or six years, there was a large number of companies that for various reasons chose to list in the US. I think we can look at this in hindsight and say for some of these companies it may not have been the best fit for them,” said Toler.

”We have about 124 companies listed currently from Asia in the NYSE. Certainly this is an area of focus for us and we’re very proud of our partnership.”

New listings have plunged 50% globally in the year to-date because of a spike in volatility in equity markets, in line with the decline in IPOs on the NYSE, while, in market leader Hong Kong, activity has fallen 26%, Thomson Reuters data show. Large capital raisings in private markets and a pick-up in mergers and acquisitions among technology companies also meant a lot of them would postpone listing plans, Toler pointed out.

”If you overlaid a chart of volatility with IPO issuance, you’d see an almost perfect inverse correlation and that certainly was the case in the back half of last year when the markets all but closed,” Toler said. ”The first half of this year was a very similar trend.”

“That said, we’re sitting here now with relatively low interest rates, equity valuations are at an all-time high, you’ve got really low volatility and so you have some of the trappings of what should be a decent IPO market,” he said.

How the US elections in November impact on listing plans will be more apparent in early September, when the US holiday season ends.

“It would be absolutely fair to say that companies and bankers are watching the elections with quite a bit of interest,” Toler said.

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