As we settle for the New Year, the global early public offering (IPO) landscape presents an attractive tapestry of challenges and opportunities. 2024 was characterized by geopolitical uncertainty, macroeconomic headwinds, and an evolving regulatory framework.
In a recent Fireside Chat, industry experts Mike Tan, CFA, CPA, and CFA Grace Yong and CPA delve into key trends that defined the IPO market last year. From impressive growth in the US and Emeia (Europe, Middle East, India and Africa) regions to the astonishing rise of the national stock exchange in India, the dynamics of global capital flows have been changing.
2024 presented a mixed bag of challenges and opportunities. Tang and Yeung discussed some important trends and observations during the fireside chat.
Globally, total capital raised through the IPO in 2024 reached $119.1 billion, a 10% decrease from the previous year. The number of listings was also signed, down from 1,371 in 2023 to 1,159 in 2024. The entire market has experienced a recession, but if you look closely, a more subtle picture reveals.
Excluding the A-Share market in mainland China, global IPO funding has experienced an increase driven primarily by robust activities in the US and Emeia regions, both recorded impressive growth rates of around 50% and 40%, respectively. This difference suggests a potential readjustment of global capital flows, with investors seeking opportunities beyond traditional markets.
The outstanding development of 2024, which surprised both Tan and Yong, brought the Indian National Stock Exchange (NSE) to the top of the global IPO rankings, raising $17.3 billion. This notable climb reflects India's fast-growing economy, recent capital market reforms, and the success of foreign investments and the growing trend of multinationals from Indian subsidiaries. Hyundai's $3.3 billion IPO in Indian operations exemplifies this trend, highlighting the growing importance of India's multinational business hub, Tang and Yeung agreed.
Meanwhile, NASDAQ and the New York Stock Exchange (NYSE) have solidified their positions in the global rankings, demonstrating the enduring appeal of the US capital markets. NASDAQ has raised $5.1 billion, benefiting from Lineage Inc., the largest IPO of the year. Total funding for the exchange reached $16.5 billion, up from $12.5 billion in 2023. The revival of Chinese companies seeking US listings due to access to deep capital pools also contributed to their activities on US exchanges that are open to the US in 2024 compared to 36 in 2023.
The Shanghai and Shenzhen Stock Exchanges, which focused on Chinese companies, led the global IPO market in 2023, so in 2024, funding plunged due to regular tightening of the China Securities Regulation Commission (CSRC) new list. According to Tang, this policy shift indirectly benefited the Hong Kong market as Chinese companies were looking for alternative listing venues.
The Hong Kong Stock Exchange (HKEX) made a notable comeback in 2024, returning to the top five global rankings. With 63 new listings, including many of mainland China, HKEX has raised Hong Kong Dollar 82.9 billion, a surge of 80% from 2023. MIDEA's landmark HK 35.7 billion IPO is the second largest IPO in the world and was a key contributor to this rebound.
HKEX's continued efforts to enhance market appeal, including recent consultations on IPO price discovery and open market requirements, demonstrate a commitment to continued growth. CFA Institute and CFA Society Hong Kong contributed to the consultation process. A more detailed analysis of these proposed changes and their implications will be provided in future articles.
Navigating today's dynamic global IPO market offers both exciting opportunities and inherent risks. While there is a potential for profitable returns, investors need to approach a new list with discerning eyes. In-depth due diligence is essential, including corporate financial health, competitive positioning and a comprehensive analysis of growth trajectories. We carefully consider the appeal of potential rewards with the inherent uncertainty associated with early stage ventures.
Regulators play a key role in promoting market stability and investor trust. A rapidly developing market like India, where the NSE has seen amazing growth recently, is seeking a robust regulatory framework. This includes not only clear listing requirements and transparent disclosure practices, but also effective enforcement mechanisms to ensure market equity and investor protection.
The IPO market for 2024 was defined by its dynamism. Exchange rankings have shifted dramatically, along with telling the story of the rise of the NSE, the continued domination of the US exchange, and Hong Kong's rebounds all evolving market forces. This evolving landscape continues to require both investors and regulators to be vigilant, adaptable and informed to exploit opportunities while reducing risk.
It is essential to approach a new list with discerning eyes. In-depth due diligence, including a comprehensive analysis of the company's financial health, competitive positioning and growth trajectory, is important. By carefully considering the appeal of potential rewards against the inherent uncertainty of early-stage ventures, investors can make informed decisions.
