EY: Central Bank Policies, Geopolitics To Impact Global IPO Market For Rest Of 2024

KUALA LUMPUR, Oct 17 (Bernama) -- The global initial public offering (IPO) market is projected to be influenced by central bank policies, geopolitical development and key election outcomes for the remainder of 2024, said Ernst & Young Consulting Sdn Bhd (EY). 

The professional services provider said lower interest rates and easing inflation fuel the optimism, likely encouraging new listings and a resurgence in sectors sensitive to borrowing costs.

It said strong performance in key markets such as the United States (US), Europe and India is also expected to support IPO activities.

“Cross-border listings should continue to thrive, and significant public debuts, especially those backed by private equity firms and from spin-offs and carve-outs, are anticipated as they seek favourable public entry points,” it said in a statement today.

EY ASEAN IPO leader Chan Yew Kiang said IPO activities are expected to pick up in the next quarter and year ahead as interest rates ease and companies gear up for regional growth.

He noted that strong fundamentals and demands, together with regulators increasingly exploring policies to support growth companies to tap the capital markets for growth, also bodes well for the markets.

“We should also expect growing interest in cross-border listings as companies seek to achieve brand equity in other markets they are venturing into,” said Chan. 

Amid a global economic slowdown, market volatility, geopolitical shifts and monetary easing, the global IPO market in the third quarter of 2024 (3Q 2024) has shown signs of cautious optimism.

EY said that despite a dip in year-over-year volumes by 14 per cent to 310 IPOs and proceeds by 35 per cent to US$24.9 billion (US$1=RM4.29), the 3Q did modestly outpace the first two quarters of 2024 in IPO launches.

“Cross-border listings have also seen a significant uptick. In the first three quarters of this year, 77 companies chose to list abroad, up from 64 in the same period last year, a 20 per cent year-on-year increase,” said the company.

Since 2023, EY said foreign-domiciled issuers have represented approximately 52 per cent of IPOs on US exchanges, reaching a 20-year high.

It noted Asia-Pacific had made a notable turnaround in the 3Q, contributing to an 11 per cent quarter-on-quarter increase in global IPO numbers, as the region overcame earlier declines.

“This rebound, marked by increased activity in mainland China, Indonesia, Malaysia and South Korea, has injected confidence into the global market during a period of heightened uncertainty,” said EY.

Year-to-date (YTD), ASEAN saw a total of 94 IPOs raising US$2.5 billion, down from 127 IPOs raising US$4.9 billion, according to the statement.

In the 3Q 2024 alone, there were 28 IPOs with proceeds totalling US$1.1 billion, representing a surge in proceeds of 100 per cent from the previous quarter that saw 29 deals worth US$0.6 billion. 

“This was primarily driven by the prominent listing of 99 Speed Mart Retail Holdings Bhd from Malaysia, which stood as the second-largest IPO in the region in YTD 2024,” EY said. 

EY Malaysia senior executive director of strategy and transactions Kevin Chew said the economic climate in Malaysia is showing signs of robust positivity, reflected in the invigorated pace of the Malaysian IPOs.

He noted that in the first nine months of 2024 alone, the market had witnessed a tally of 36 IPOs, and notably, the 3Q contributed significantly to this count with 14 IPOs.

“This surge in activity marks a resurgence for Malaysia, boasting the highest number of IPOs since 2006, and signals a strong investor confidence,” added Chew.

Across Asean, other active exchanges in YTD 2024 include Indonesia (34 IPOs raising US$0.3 billion), Thailand (22 IPOs raising US$0.6 billion), Philippines (three IPOs raising US$0.2b).

Singapore and Sri Lanka each had one IPO that raised US$19.5 million and US$1.5 million, respectively.

-- BERNAMA