World Economy

Asia Equity Capital Markets a Boon for Bankers

Asia Equity Capital Markets a Boon for BankersAsia Equity Capital Markets a Boon for Bankers

With total deal value so far reaching $345.17 billion, the Asia-Pacific market is likely to retain its title as the biggest equity capital raising market in the world this year.

The total deal value in the region exceeds the $278.01 billion posted in the Americas market year-to-date. It also surpassed the $277.76 billion logged so far this year in the market encompassing Europe, the Middle East, and Africa, the report added, AsiaFirst reported.

The region also posted a 2.8% rise in equity capital markets revenue for 2015 to date from a year ago. This year so far, Asia-Pacific generated $6.23 billion in ECM revenue.

According to Dealogic, the top 10 Asia-Pacific ECM deals this year were Japan Post Holdings $5.71 billion, Japan Post Bank $5.01 billion, Huatai Securities $5 billion, Guotai Junan Securities $4.91 billion, Inner Mongolia Baotou Steel Union $4.88 billion, Haitong Securities $4.25 billion, GF Securities $4.14 billion, Toyota Motor $4.08 billion, Coal India $3.67 billion and Caltex Australia $3.66 billion.

China Suffers

For bankers in China, there was nowhere to go but down after the torrid first six months of the year. And down they went, some falling so far they ended up the subject of government investigations into the causes of the summer stock-market crash.

Still, thanks to a modest fourth-quarter rebound and stunning numbers posted in the first half, 2015 turned out pretty well for Asia’s equity-capital-markets bankers, who focus on initial public offerings and stock sales.

For 2015 to date, equity capital markets in the region generated $6.23 billion in revenue, up 2.8% from 2014, even including the blockbuster fees banks took home from Alibaba Group Holding Ltd.’s $25 billion IPO in September 2014. The first six months of the year allowed some banks to “squirrel away nuts for winter,” a senior investment banker in Hong Kong said.

The second half has been dismal, though. Asia-Pacific revenue from new listings in the third quarter totaled just $159 million, down 83% from the second quarter and 78% from a year earlier, according to Dealogic. Excluding fees from the Alibaba IPO, which listed in last year’s third quarter, revenue was down 63% from the same period a year earlier. Second-half revenue across IPOs and other products was down 25% from the first half.

Bright Spots

Some 27 Chinese companies listed in the US have announced plans to go private so far this year, with a total transaction value of $33 billion, a record level that is higher than the previous six years combined, according to Dealogic. Deals are moving ahead, bankers say, even though companies are unlikely to benefit from the sky-high valuations seen in China earlier this year, when such transactions became popular.

Despite the tumult, Hong Kong will regain its crown as the world’s leading stock exchange for initial public offerings this year for the first time since 2011. As of Dec. 22, 82 companies had listed on the main board of the Hong Kong stock exchange, raising $33 billion, according to Dealogic data. That beats New York, which was the world’s No.1 last year. Only 53 companies have gone public on the New York Stock Exchange this year, down from 118 in all of 2014, with the total equity raised down 74% from last year’s total of $74.2 billion.

Other Asian exchanges have offered bright spots. Tokyo saw some of the world’s biggest IPOs by value this year as the listings of Japan Post and its two financial units raised $12 billion in total.

Southeast Asia, which had been a strong area for banks in the first few months of the year but which sputtered in the latter half of the year, is poised for a bit more activity,” in coming quarters.