Japanese initial public offerings (IPOs) have emerged as the top gainers in Asia, attracting global funds and leading the region in terms of performance. According to data compiled by Bloomberg, IPOs in Tokyo in 2023 have seen an average increase of 75% since their listings, outperforming other major Asian markets that raised at least $1 billion through IPOs. On their first day of trading alone, new listings in Tokyo experienced an average increase of 51%, marking the highest in five years.
Analysts attribute the success of the Japanese IPO market to the country’s attractiveness as an investment destination, often referred to as the buy Japan investment angle. The weak yen, corporate governance reforms, and the Bank of Japan’s loose monetary policy have all contributed to a bullish sentiment among foreign investors. Additionally, the Tokyo Stock Exchange has been making efforts to attract more companies to list domestically.
The two largest listings in Japan this year, Rakuten Bank Ltd. and SBI Sumishin Net Bank Ltd., have seen gains of over 30% since their IPO prices were set in April and March, respectively. Both companies have performed well despite the global banking crisis.
While the IPO success in Japan is largely attributed to the positive investment climate, some analysts believe that investors may also be driven by a fear of missing out (FOMO) mentality, hoping to capture the next big listing pop.
With 44 other stocks listing in Tokyo this year, but with offerings below $100 million, there is a wide range of opportunities for investors to explore. Companies like space aircraft developer ispace Inc., which experienced a moon landing mission failure, still saw their shares skyrocket around 500% from their IPO price in April.
The red-hot Japanese IPO market is not only a significant boost for companies going public, but it also offers substantial opportunities for investors who are keen to tap into the country’s thriving equity market. With ongoing bullish sentiment, reforms, and a favorable investment climate, the trend of Japanese IPOs outperforming their Asian counterparts is likely to continue.
