The market has been buoyed by “very solid” Indian domestic flows thanks to a significant “democratisation of investment” as households increasingly pour money into local equity markets, Jayasankar added. “The overall activity has taken us by a positive surprise.”
The value of primary and secondary listings in mainland China, which in 2023 was the world’s largest market, fell about 86% from more than US$48 billion ($85b) to just US$7.5b ($13b) in 2024 by early December, according to Dealogic.
Analysts said a weaker economy coupled with restrictive regulation on company listings has held up the pipeline of Chinese companies looking to enter public markets, although the announcement of monetary and fiscal stimulus plans in September has helped to stabilise markets after a sell-off earlier in the year.
China’s IPO slowdown was in line with Beijing’s policy aims, according to Scarlett Liu, Apac equity and derivative strategist at BNP Paribas.
“It’s a regulatory attempt to achieve balance between primary and secondary market,” she said, adding that authorities were concerned that too many listings could drain activity from secondary market trading.
Hong Kong, China’s offshore financial hub, saw a relative increase in equity raising activity to more than US$10b by December from US$6b in 2023, including some large transactions such as electronics maker Midea raising more than US$4b in a secondary listing.
Analysts say Hong Kong will continue to benefit as a listing venue for mainland Chinese companies to raise offshore capital.
“For Chinese companies pursuing IPOs, the Hong Kong Stock Exchange remains a top venue offering a more streamlined listing process, market stability and transparency, and greater access to global capital,” said Frank Bi, partner and Asian practice head of corporate transactions at law firm Ashurst.
India, which had a large volume of relatively smaller deals in 2024, has been buoyed by companies seeking to raise funds while valuations remain sky-high, including by spinning off Indian units of multinational companies such as Hyundai.
“Obviously the number of transactions has gone up but the average ticket size per transaction is down about 75-80% in the last two years,” said one Mumbai-based banker. “Now, what that tells me is [companies are thinking] ‘run for the hills, let’s try to cash in as quickly as we can, whatever we can while market conditions remain supportive’.”
But as the world’s most populous nation’s rapid growth slows, with corporates reporting weak earnings and GDP growth falling sharply to 5.4% in the third quarter — the lowest rate in almost two years — foreign portfolio managers have turned cautious on its frothy equity market. They pulled more than US$11b out of Indian stocks in October, a record monthly exodus, as well as a further US$2.5b in November.
However, bankers think that the wider exuberance in primary and secondary listings in India is likely to be sustained into the new year.
“Not to comment on the quality of the offerings,” a second banker in Mumbai said, “there is enough activity lined up so long as the markets are supportive and the liquidity is there.
“Fair to say that the first two quarters of 2025 will see no change from where we are right now,” he added.
Global investment bankers too remain bullish on India, while warning that its relative growth may be eclipsed by a larger comeback in the US and elsewhere.
“Globally we expect the IPO market activity to normalise in 2025 and we will see a pick-up in volumes especially in the US and Europe and possibly also out of China. It would not surprise me if India continues to grow though,” said Gareth McCartney, global co-head of equity capital markets at UBS.
© Financial Times
