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Capital Markets

151 reasons to be cautious

Following more than a decade of stagnation, the world's second-largest equity market has revived this year. Although the key index, the Nikkei 225, is currently flat year to date, the market has bounced back throughout the year such that at one point the index was up more than 17% from its opening levels. The encouraging performance coupled with more volatility has fuelled a recovery in Japan's IPO market that shows few signs of abating.

Year to date, more than $13 billion has been raised through Japanese IPOs, according to Dealogic, including some of the largest deals in years. Last month there were several new offerings, including the second-largest IPO globally, the $3.4 billion privatization of electricity generator Electric Power Development, known as J-Power. Also on their way shortly are a $920 million IPO from NTT Urban Development, the property arm of Nippon Telegraph and Telephone Corp; a $1.49 billion offering from state oil exploration company INPEX that will be Japan's third-largest IPO this year after J-Power and Shinsei Bank; and the $1 billion IPO of Elpida Memory Inc, a DRAM chip maker and a joint venture between Hitachi Ltd and NEC Corp.

NTT Urban Development priced its share offering at the higher end of expectations and the shares begin trading early this month.

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