Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  News  >  Economy & Forex

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Asia bankers look to follow-on deals as capital raising hits 12-year low

03/26/2020 | 06:19pm EST

Asia's equity capital market (ECM) bankers are pinning hopes on a pick-up in follow-on share sales when markets stabilise, after suffering the worst start to the year since the early days of the global financial crisis.

Companies in the Asia-Pacific region have raised less through share sales this year than at any time since 2008 as stock market turmoil brought about by the coronavirus outbreak pushed investors and those seeking funds to the sidelines.

In the first quarter, $20.28 billion was raised across the region including Japan, showed Refinitiv data, as markets experienced their most volatile days in decades.

The turmoil, however, is widely expected to lift the need for already listed companies to sell more shares and raise fresh capital to help recover from the economic downturn, following a drop in business activity as governments worldwide impose restrictions on movement to stop the spread of the virus.

The head of Goldman Sachs' financing group in Asia excluding Japan, Aaron Arth, said the equity-linked new-issuance market had "come to a standstill in the face of extreme volatility".

"In terms of follow-ons, convertible bonds and blocks (trades) we were already anticipating a ramp up in volumes coming through the full-year earnings season," Arth said.

"The coronavirus outbreak has clearly added to capital needs in numerous cases and we expect second-quarter activity levels to reflect this."

In China, where the virus was first reported late last year, contract medical researcher WuXi AppTec Co Ltd said this week it would raise up to $1.7 billion in an A and H share deal to expand research and development facilities and fund overseas growth.

Australia's Cochlear Ltd raised A$930 million ($549.35 million) on Wednesday through an institutional and retail share offer which bankers said could be a sign that more transactions will unfold across the region.

"The revival of the follow-on market may take some time because investors need to assess not only the business outlook in the wake of the virus but also the extent of the stimulus required to buoy those companies and sectors worst affected," said Hannah Malter, UBS head of equity syndication in Hong Kong.

"But volumes are likely to be elevated significantly from current levels in the second quarter and the second half of the year," Malter said.

One question for investment bankers is whether beaten-down investors would be prepared to buy into a rush of regional capital deals.

"On the investor side, we do see them looking seriously at exercising their cash holdings," said JPMorgan's Asia ECM syndication head Niccolo Manno.


Initial public offering (IPO) volume in the first three months of the year was worth $16.2 billion, up from $9 billion in the same period last year due to some mega deals before the coronavirus outbreak took hold.

The largest deals were the $4.4 billion listing of Beijing-Shanghai High Speed Railway Co Ltd in mainland China in early January, followed in February by the $2.5 billion IPO of Central Retail Corp PCL in Thailand's biggest-ever deal.

Goldman Sachs' Arth said while the pipeline of would-be IPO candidates remained active, the timing of any transactions was uncertain given market volatility.

"Issuers are actively engaged to tap any market window available - especially in the second half when the virus situation will hopefully come under control," he said.

"We could well see a pick-up in IPO issuance activity, but we would need some market stability for this to be significant."

(Reporting by Scott Murdoch; Editing by Jennifer Hughes and Christopher Cushing)

By Scott Murdoch

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AMP LIMITED 0.64% 1.565 End-of-day quote.0.32%
AT HOME GROUP INC. 10.20% 24.75 Delayed Quote.45.28%
BEIJING-SHANGHAI HIGH-SPEED RAILWAY CO.,LTD. 0.73% 5.55 End-of-day quote.-1.94%
COCHLEAR LIMITED 0.30% 196.67 End-of-day quote.4.06%
EXTREME CO.,LTD. 1.96% 1147 End-of-day quote.-0.95%
JPMORGAN CHASE & CO. -0.84% 134.83 Delayed Quote.8.63%
LETS HOLDINGS GROUP CO., LTD. -0.27% 7.43 End-of-day quote.-4.50%
LINE CORPORATION 0.00% 5350 End-of-day quote.0.00%
LOOK HOLDINGS INCORPORATED 1.97% 931 End-of-day quote.-2.72%
THE GOLDMAN SACHS GROUP, INC. -0.38% 289.37 Delayed Quote.11.56%
WUXI APPTEC CO., LTD. 3.78% 160 End-of-day quote.18.76%
Latest news "Economy & Forex"
05:46pINTEL : REFILE-Intel's financially sensitive information stolen by hacker - FT
05:41pJAMIE DIMON : JPMorgan board holds CEO Dimon's annual pay at $31.5 million
05:26pBiden administration pauses federal drilling program in climate push
05:19pUtilities Slip On Mixed Treasury Yields, But Solar ETF Rallies - Utilities Roundup
05:18pCommunications Services Up On Deal Anticipation -- Consumer Roundup
05:17pTech Up As Earnings Spur Rotation Back Into Sector -- Tech Roundup
05:16pFinancials Fall As Investors Rotate Out Of Value Stocks -- Financials Roundup
05:10pConsumer Cos Climb On Fiscal-Stimulus Bets -- Consumer Roundup
05:06pHealth Care Nudge Lower As Investors Hedge On Earnings View -- Health Care Roundup
Latest news "Economy & Forex"