HONG KONG • As the Asia-Pacific wraps up its best quarter for new listings in almost a decade, the region's investment bankers are preparing for a busy start to next year.
Citigroup and Morgan Stanley are among firms predicting more big offerings in the first half as investors and issuers look past the United States-China trade tensions and other geopolitical risks.
Potential deals in the pipeline include a blockbuster listing of Thai Beverage's brewery business in Singapore and a US$1 billion (S$1.4 billion) initial public offering (IPO) by bottled water producer Nongfu Spring in Hong Kong.
With concerns over the trade war and Hong Kong's unrest tentatively receding, some companies are looking to take advantage of a rally in Asian stocks that sent the benchmark index to an 18-month high this week.
The region's IPOs and local market debut offerings have swelled to US$43.6 billion in the fourth quarter, a tally that includes Alibaba Group Holding's US$13 billion listing in Hong Kong.
"Issuers seem to have put aside geopolitical volatility, so we are probably going to start with quite a busy issuance calendar in 2020," said Mr Udhay Furtado, co-head of Asia equity capital markets at Citigroup in Hong Kong. "We expect some major transactions in Thailand, Korea, Indonesia and India for the first half of 2020 and it'll be more diversified."
Other potential listings in Asia next year include Lion Air, Indonesia's largest private airline; U Mobile, a Malaysian mobile service provider; Tavan Tolgoi, Mongolia's state-owned coal miner; and Tigermed, a Chinese clinical research service provider.
To minimise the risk of deals getting derailed by market volatility, some companies have opted for shorter roadshows in recent months, according to Mr Johnson Chui, head of Asia-Pacific equity capital markets at Credit Suisse Group.
Anheuser-Busch InBev, which listed its Asian unit in September, debuted in Hong Kong just two weeks after it started marketing shares to investors. Alibaba filed its listing application with the city's stock exchange on Nov 13 and began trading on Nov 26.
The value of deals that the Hong Kong Exchange saw this year, making it the world's busiest listing venue despite months of anti-government protests in the city.
Next year's deal flow is expected to be strongest in the first half as issuers try to avoid uncertainty surrounding the US presidential election in November.
Britain's negotiation with the European Union over a post-Brexit trade deal is another potential overhang, as is continuing concern over the viability of fast-growing but unprofitable companies like Uber Technologies, which has tumbled 33 per cent since listing in the US in May.
The outlook for IPOs in Asia will depend in large part on what happens in Hong Kong, where more than six months of anti-government protests have weighed on investor sentiment.
The city's exchange still ranks as the world's busiest listing venue with US$39 billion of deals this year - narrowly topping Nasdaq and the New York Stock Exchange - but Ernst & Young estimates issuance will slow to around US$28 billion next year.
In mainland China, some worry that appetite for IPOs will wane next year after the market's eye-popping returns cooled in the fourth quarter; first-week gains for new listings fell to about 76 per cent during the period, from 127 per cent in the first nine months of the year.
Hong Kong and China accounted for about 76 per cent of new share sales by value in Asia this year, according to Bloomberg data.
Bankers said potential bright spots for next year include the healthcare and consumer industries, along with companies focused on South-east Asia.
Among the most closely watched prospects is Gojek, the Indonesian ride-hailing and payments giant. It is preparing for an IPO, co-chief executive Andre Soelistyo said.
Mr Magnus Andersson, co-head of Asia-Pacific equity capital markets at Morgan Stanley in Hong Kong, said: "The consumer and healthcare sectors will continue to be important drivers for the IPO market in Asia next year, on the back of measures initiated by China to boost domestic consumption, and... the increased spending power of (South-east Asia's) emerging middle class."