India set to be key listing hub by 2015
The future of equity capital markets is shifting towards the East and in 15 years time, India is likely to be among the most favourable listing destinations for foreign companies, says a report.
According to PricewaterhouseCoopers’ Capital Markets in 2025’ report, that covered 400 senior managers at companies from across the globe, developing Asia is emerging as the most popular region for future listings.
Nearly 80 per cent of respondents covered by the study believe China will be the home of most new issuers and will also be the domicile to raise the largest pool of equity capital by 2025, while India comes second in terms of issuers (voted for by 59 per cent of respondents) and third in terms of capital (39 per cent).
As per the report, foreign companies overtook Chinese enterprises to become the biggest participants in the Hong Kong Stock Exchange’s IPO market. Overseas companies raised HK dollar 122.5 billion, contributing to a record high of 70 per cent of the total IPO capital proceeds in Hong Kong this year.
A similar pattern has emerged in Singapore, where more than 40 per cent of companies listed on the Singapore Exchange now originate from outside of Singapore, the report said.
In terms of IPO deal volumes in 2004 emerging markets represented less than one quarter of global IPO volume. By the end of 2010, that figure had rocketed to 67 per cent. Emerging markets have accounted for 55 per cent of global IPO volumes in the year to date.
In terms of electronic-order-book value, the National Stock Exchange of India is now the fourth-largest exchange by number of trades in equity shares globally. India’s primary markets are growing rapidly; in 2010 a total of 63 IPOs raised US$8.3 billion for domestic companies, up from US$4.5 billion raised by 36 IPOs in 2008. However, amid global economic turmoil, domestic firms raised only US$1.14 billion through 34 IPOs in 2011 calendar year, according to Ernst & Young.
Developed markets still far outstrip their emerging rivals in terms of size. Besides, the legal and regulatory environment, followed by political uncertainty, is seen as the factor most likely to derail the shift to emerging market exchanges, the report said. As trade and investment between emerging markets rises, economists believe so-called “south-south” integration will intensify.
