Japanese initial public offerings may keep luring buyers after having delivered the biggest gains among newly listed Asian shares this year in the world’s best-performing equity market.
Tokyo’s debutants in 2023 are up an average of 75% since their listings, according to data compiled by Bloomberg. That’s more than any other major Asian market that had at least $1 billion raised through IPOs over the period. Looking at the first day of trade alone, newcomers in the city rose 51% on average, the most in five years, the data show.
“The Japanese IPO market is running red hot,” said Clarence Chu, an analyst at Aequitas Research Pvt Ltd. in Singapore. “Fundamentals aside, this is likely owed to the ‘buy Japan’ investment angle that is ongoing right now, with investors looking at the country as an attractive geography to risk on.”
Japan’s top performance comes as the nation boasts a stock market that has soared to levels unseen in more than three decades amid inflows from foreign investors bullish because of a weak yen, reforms in corporate governance and the Bank of Japan’s easy monetary policy. The exchange has been trying to get more companies to list domestically.
The two largest listings for Japan this year — Rakuten Bank Ltd. at $676 million and SBI Sumishin Net Bank Ltd. at $421 million — are both up more than 30% since IPO prices were set in April and March amid the global banking crisis.
“The IPO of SBI Sumishin resulted in a happy outcome for shareholders,” said Teruhiko Nishimura, a portfolio manager at Gordian Capital Japan Ltd. in Tokyo. This year’s debuts have valuations that are easy to explain, he added.
The other 44 stocks that listed in Tokyo this year had offerings smaller than $100 million. Newcomer ispace Inc., a space aircraft developer, saw its shares soar about 500% from its IPO price in April even after a highly-anticipated moon landing mission failed.
“With a number of successful listings in Japan, some investors could also be running with a ‘FOMO’ attitude, looking to catch the next listing pop,” Aequitas Research’s Chu said.
--With assistance from Hideyuki Sano and Kana Nishizawa.