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Capital Markets

Haitong IPO is a bellwether for Asian ECM

With primary Asian equity markets quiescent so far this year, ECM bankers are hopeful that the well-supported IPO expected from Haitong Securities will spark off an issuance revival.

As Facebook grabs headlines with its impending multi-billion dollar stock market debut, it is tempting to view the flotation of China’s second-largest brokerage as a footnote.

But the initial public offering of Haitong Securities in Hong Kong, although small compared with that of the ubiquitous social network, is an important bellwether for the primary Asian equity capital markets, which have been all but closed so far this year.

If the Haitong deal does come to fruition, as most in the know believe it now will, companies in the pipeline in Asia are likely to take it as a signal that the time has come to pull the trigger on their own offerings. Trading in Haitong was due to begin on April 27.

Kester Ng, chairman of equity capital and derivatives markets for Asia Pacific at JPMorgan, says: "If a sizeable IPO goes well, it will certainly help the wider market."

He cautions that nobody is expecting a 15% pop on the first day from IPOs in the current environment. "But we are looking for decent performance," he says. "If you look at the rally, it is bifurcated in nature – larger-cap stocks do well but smaller ones are difficult."

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