Asia Capital Markets Research
A GCash IPO in 2025 seems likely
Ant Group and Globe-backed Mynt, which operates the e-wallet GCash, has been on a winning streak. Long one of the Philippines’ most valuable startups, its valuation jumped to US$5 billion in August – more than doubling its previous valuation of US$2 billion that it reached in 2021 – following a combined US$800 million capital injection from Japan’s MUFG and the Philippine conglomerate Ayala.
Why SGX continues to have difficulties
Singapore has become one of the two most important financial centers in Asia alongside Hong Kong and the region’s top fintech hub. Yet Singapore’s strengths as a financial center do not extend to capital markets. In this segment, it is one of the weakest performers in the region. This has been consistently true in recent years, despite efforts to improve the situation.
Are Hong Kong's capital markets recovering?
Hong Kong’s capital markets have had a tough couple of years. The Hong Kong Stock Exchange (HKEX) closed 2023 as the worst performing exchange in the world. HKEX plunged 24%, erasing US$13 billion in market capitalization, according to Bloomberg. Unsurprisingly, IPO activity was tepid in Hong Kong last year, and remained that way up until a flurry of listings in recent months that suggested a turnaround in market sentiment.
K Bank IPO is now imminent
South Korean online lender K Bank is preparing for what could be the country’s largest market debut since 2022. After several false starts due to suboptimal market conditions, K Bank this time is committing to go forward with its long-awaited IPO. The listing should happen in late October.
Japan leans into sustainable finance
Japan has an ambitious plan to reach net zero by 2050, which includes reducing greenhouse gas emissions by 46% compared to 2013 levels by 2030. In support of that goal, the Japanese government has rolled out a Green Growth Strategy and created a US$15 billion Green Innovation Fund. An additional important part of Japan’s path to net zero are the world’s first sovereign transition bonds.
Hong Kong IPO market shows signs of life
The Hong Kong IPO market, which has been a laggard in recent years, is showing signs of life. Data compiled by the London Stock Exchange Group (LSEG) show a total of 42 companies raised US$7.14 billion via IPOs on the main board of the Hong Kong stock exchange from January to September, up 100% year-on-year and surpassing the total of US$5.9 billion raised in 2023.
Ever since Hong Kong threw its hat into the cryptocurrency ring in 2022, we have been warning that inflated expectations would lead to disappointment. Crypto bros intent on selling the narrative of digital asset liberalization in China had been insisting that turning Hong Kong into a crypto hub was only the first step – next would be the mainland. Not anytime soon. In fact, some prominent crypto exchanges have decided to pull out of the former British crown colony, likely in part because they cannot serve mainland customers.
Hong Kong IPO market faces tough times
Hong Kong has historically thrived as a financial center because of its ability to serve as a conduit for capital to and from mainland China. Under the one country, two systems governance model, Hong Kong’s financial system is more open than that of any mainland city, bestowing unique advantages on the territory. Meanwhile, with its capital markets flagging, Hong Kong has sought to use so-called “cornerstone investors” from the mainland – local government entities – to revive its IPO market. Results thus far have been underwhelming, suggesting the need for a more market-oriented approach.
Japan steps up green finance efforts
To reach net zero by 2050, Japan aims to slash greenhouse gas emissions by 46% compared to 2013 levels by 2030. To support that objective, in June 2021, the Japanese government announced its Green Growth Strategy and created a US$15 billion Green Innovation Fund. An additional important part of Japan’s path to net zero will be the world’s first sovereign transition bonds.
SGX has struggled to find a strong niche
There is a disconnect between Singapore’s ascendancy and the performance of the Singapore Exchange (SGX). Indeed, the city-state has in recent years solidified its status as Asia’s premier fintech hub as well as the most important financial center in Southeast Asia. In some aspects of financial services, Singapore has surpassed its long-time competitor Hong Kong. Yet definitely not in capital markets. Despite a subpar IPO year for the Hong Kong Stock Exchange (HKEX), it has still been far more active than SGX.
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The Japanese stock market remains on a hot streak
Japan’s stock market rally seems to have staying power: The Nikkei 225 climbed 0.52% to reach its highest level since July 3 on November 24 while the TOPIX advanced 0.54% to end at 2,390.94. Investors appear to have been reacting to inflation data suggesting that the Bank of Japan will exit its ultra-loose monetary policy sooner rather than later. Data compiled by Goldman Sachs show that the TOPIX had risen 24% in 2023 as November 10 in local currency terms, its fourth-best annual performance since 2001. The Japanese benchmark has significantly outperformed the S&P500 Index of U.S. stocks and Hong Kong’s Hang Seng Index.
Why is the Hong Kong IPO market still in a slump?
What happened to that expected recovery of Hong Kong’s IPO market? It’s now November, and we’re still waiting for it. Throughout the year, analysts have been forecasting that it would just be a matter of time, that as mainland China’s economy fully recovered from pandemic-related lockdowns, activity in Hong Kong’s capital markets would pick up accordingly. Yet a new report from KPMG shows that in the first three quarters of the year, the Hong Kong IPO market concluded 44 listings that raised 24.6 billion HKD (US$3.14 billion), down 15% in terms of proceeds and 65% in deal count over the first nine months of 2022.
The Japanese stock market is going the distance
With Japanese stocks up 20% since March and the market showing no sign of flagging, one wonders if there is a fundamental change underway in the capital markets of the world’s third largest economy. Unlike in recent years past, Japan’s stock market has in 2023 produced the best returns of any major advanced economy, buoyed by a more pro-shareholder approach by companies and regulators. At the same time, investors are waking up to the opportunities Japan offers now that they are no longer starry eyed about China.
Hong Kong works to revive its IPO market
The strong recovery that we and many others had envisioned in Hong Kong’s IPO market has yet to materialize. Listings in Hong Kong have raised just $2.6 billion this year, down 47% from the same period last year and far below 2021 levels, according to Dealogic. With that in mind, we are intrigued to see that Hong Kong’s financial regulators appear to be looking beyond the usual up-and-coming Chinese tech companies and cooperating with both local governments in China and the Indonesia Stock Exchange (IDX).