HONG KONG • A coronavirus vaccine trade could emerge in Asia’s capital markets next year, with dealmakers confident that the record-breaking pace of raisings in the past year should be maintained in the new year.
Equity capital markets (ECM) deals in the Asia-Pacific region, including Japan, totalled US$439.1 billion (S$586 billion) this year, the highest ever, accounting for 41 per cent of the world’s total of US$1.06 trillion, according to Refinitiv data.
The contribution by the Asian region to the global total value of capital raisings was the most since 2010, and advisers attributed this to some countries – led by China – emerging from the pandemic faster than the rest of the world.
In Asia, healthcare deals recorded the strongest growth in the past year, up 148.6 per cent in terms of money raised, and bank executives believe the global roll-out of the coronavirus vaccine will see the sector dominate the local capital markets again next year.
“There is a window of opportunity for Covid-related trades to raise money in 2021,” said Ms Selina Cheung, head of greater China ECM at UBS. “We expect to see more health-related and vaccine companies coming to the market in the first half.”
The pace of capital market activity throughout the year surprised dealmakers, who had expected reduced activity until unprecedented liquidity from governments and central banks began flooding the global system.
Almost US$7.5 trillion has been spent by global central banks this year to cushion the economic impact of the coronavirus pandemic, according to the International Monetary Fund’s annual report published last month.
“A lot of people did not expect this level of activity in the market, but it’s been very welcome and it’s been a good boost to the economy as it has injected a lot of capital that has been needed,” said Mr Kenneth Ho, managing director of ECM at Haitong International.
“The market is driven by liquidity and it should remain in place for a while to come.”
Hong Kong will finish this year as the world’s second-most popular initial public offering (IPO) venue – behind the Nasdaq – with 119 deals worth US$31.21 billion, the Refinitiv data showed.
In regard to Hong Kong’s IPO prospects, Credit Suisse’s head of ECM for the Asia-Pacific Johnson Chui said: “We see a sizeable pool of companies that have reached a certain scale in their business where they are ready to become public, and we expect investors in 2021 will continue to be open to looking at such companies across different sectors.”
The US$37 billion Ant Group IPO, shelved last month when China announced a new regulatory regime for fintech companies, would have propelled Hong Kong to the top of the global rankings.
Mega deals such as those of Kuaishou Technology, which could raise up to US$5 billion, and JD Logistics, which is aiming to raise up to US$2 billion, according to Reuters reports, will be closely watched for the first half of the new year.
Bankers are also on the lookout for Didi Chuxing, which is considering a Hong Kong IPO next year that would value it at up to US$60 billion, according to sources.
REUTERS
