Asian equities: Suntory time

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Suntory Beverage might be just the tonic, or shot in the arm, that the Asian markets have needed.

Japanese drinks company Suntory Beverage has successfully completed an almost $4 billion IPO, Asia’s largest this year, even though markets have continued to be choppy and not particularly supportive of companies going public.

The deal ticks a lot of boxes. It succeeded in coming to market for one thing. It’s big. It popped on first-day trading. It came to market in spite of choppy trading conditions. Perhaps the only slightly unfortunate thing is that it listed in Tokyo and not Hong Kong, which is far more in need of a big successful deal to kick-start the wider market.

Japan is often viewed, and often rightly, as a law unto itself when looking at Asia and the fortunes of companies there don’t have much bearing on the rest of the region.

That said, Suntory and its bankers should be applauded for getting the deal away, particularly because the issuer was forced to set the IPO price at the low end of the indicative range as volatile markets dented investor sentiment in the run-up.

The listing on the first section of the Tokyo Stock Exchange is the country’s largest stock market debut since that of Japan Airlines in September last year.

Encouragingly for the wider market, Suntory’s story is not unique. In Japan, the opening-day share prices for more than 20 recent IPOs have exceeded their pre-market fixed prices as retail investors pile into companies in the firm belief that Japan’s growth path is assured. In fact, with the much-reported liquidity problems in China, Japan is emerging as something of a bright spot in Asia at exactly the right time.

The important Tankan survey of Japanese businesses, issued by the Bank of Japan, recently offered still more support to the belief that reforms and a stimulus package under prime minister Shinzo Abe are working. An over-reliance on credit might yet be its undoing, but for the time being Japan is showing the way.