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India overtook China as Asia's largest market for corporate listings this year, as buoyant stock prices led to a boom in initial public offerings.
Driven by companies including Swiggy and Hyundai Motor, India It will be the second-largest market for raising equity funds in the world after the United States for the first time, according to data from Dealogic for 2024. India's National Stock Exchange is set to become the number one place for primary listings by value, ahead of the Nasdaq. And the Hong Kong Stock Exchange, KPMG figures show.
The rating heralds a turnaround in 2024 in Asian finance, as tightening regulations lead to a relative drought in listings in China. Meanwhile, companies have been quick to capitalize on higher valuations after a multi-year rally in Indian stocks, despite concerns about whether the market can withstand an economic slowdown.
“This has been one of the busiest times in the history of Indian capital markets,” said V Jayasankar, managing director at investment banking firm Kotak, who has worked at some of India's largest companies. Initial public offerings this year. “India is certainly getting interest – and China may need to do more to attract this business on an ongoing basis.”
Jayasankar added that the market is supported by “very strong” Indian domestic inflows thanks to the significant “democratization of investment”, with households increasingly pumping money into domestic equity markets. “The overall activity has surprised us positively.”
The value of primary and secondary listings in mainland China, which in 2023 was the world's largest market, fell by about 86 percent from more than $48 billion to just $7.5 billion in 2024 by early December, according to Dealogic.
Analysts said that weaker economy Combined with restrictive regulation on corporate listings, this has crippled the pipeline of Chinese companies looking to enter public markets, although the announcement of monetary and fiscal stimulus plans in September helped stabilize markets after the sell-off earlier in the year.
China's IPO slowdown was in line with Beijing's policy goals, according to Scarlett Liu, Asia-Pacific equity and derivatives strategist at BNP Paribas.
“It is a regulatory attempt to balance the primary and secondary market,” she said, adding that authorities were concerned that too many listings could drain activity from trading in the secondary market.
Hong Kong, China's offshore financial centre, saw a relative increase in equity raising activity to more than $10 billion by December from $6 billion in 2023, including some large transactions such as electronics maker Midea, which raised more than $4 billion. $ in secondary inclusion.
Analysts say Hong Kong will continue to benefit as a place for mainland Chinese companies to list to raise offshore capital.
“For Chinese companies seeking IPOs, the Hong Kong Stock Exchange remains the premier venue that provides a simpler listing process, market stability and transparency, and increased access to global capital,” said Frank Pei, partner and head of the law's Asian corporate transactions practice. Ashurst Company.
India, which had a high volume of relatively smaller deals in 2024, has been supported by companies seeking to raise money while valuations remain high, including by spinning off the Indian units of multinationals such as Hyundai.
“Obviously the number of transactions has gone up, but the average ticket size per transaction has come down by about 75 to 80 per cent in the last two years,” said a banker in Mumbai. “Now, what this tells me is (companies that are thinking) ‘We're running for the hills, let's try to make money as fast as we can, as hard as we can while market conditions remain supportive.'
But the rapid growth of the most populous country in the world With companies reporting weak earnings and GDP growth falling sharply to 5.4 percent in the third quarter – the lowest rate in almost two years – foreign portfolio managers have become wary of the frothy stock market.
They withdrew More than $11 billion of Indian stocks in October, a record monthly outflow, plus another $2.5 billion in November.
However, bankers believe the broader exuberance in primary and secondary listings in India is likely to continue into the new year. “Without commenting on the quality of offers, there is enough activity as long as markets are supportive and liquidity is there,” said another banker in Mumbai.
He added: “It is fair to say that the first two quarters of 2025 will not witness any change from where we are now.”
Global investment bankers also remain bullish on India, while warning that its relative growth may be outpaced by a bigger comeback in the US and elsewhere.
“Globally, we expect IPO market activity to return to normal in 2025 and we will see volumes pick up particularly in the US and Europe and perhaps also outside China. I would not be surprised if it continues,” said Gareth McCartney, global co-head of capital markets at UBS. India is growing.
