(Bloomberg) – Japanese IPOs may continue to attract buyers after posting the biggest gains among newly listed Asian stocks this year in the world’s best-performing stock market.
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According to data compiled by Bloomberg, Tokyo debutants are up an average of 75% since their listing in 2023. That’s more than any other major Asian market that raised at least $1 billion from IPOs during that period. Looking at just the first day of trading alone, newcomers to the city rose an average of 51%, the highest in five years, the data shows.
“The Japanese IPO market is heating up,” said Clarence Chu, analyst at Aequitas Research Pvt Ltd. in Singapore. “Fundamentals aside, this is likely due to the current ‘buy Japan’ investment approach, with investors viewing the country as an attractive region to take risks in.”
Japan’s top performance can be attributed to the country having a stock market that has not been buoyant in more than three decades on the back of inflows from foreign investors who are bullish on the weak yen, corporate governance reforms and the Bank of Japan’s loose monetary policy has reached a higher level. The exchange has tried to get more companies to list domestically.
The two biggest listings for Japan this year – Rakuten Bank Ltd. with US$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 produced a pleasing result for shareholders,” said Teruhiko Nishimura, portfolio manager at Gordian Capital Japan Ltd. in Tokyo. Ratings for this year’s debuts are easy to explain, he added.
The story goes on
The other 44 stocks to list in Tokyo this year had offers of less than $100 million. Newcomer ispace Inc., a spaceplane developer, saw its shares rise about 500% from its April IPO, even after a much-anticipated moon landing failed.
“With a string of successful IPOs in Japan, some investors might also go with a ‘FOMO’ attitude and try to see the next IPO,” said Chu of Aequitas Research.
– With support from Hideyuki Sano and Kana Nishizawa.
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