Asian IPOs In U.S. Poised To Increase As Region’s Economies Recover, Nasdaq Vice Chairman Says

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In 2019, the year before Covid upended global travel and business, the Nasdaq attracted 33 listings from Asia-Pacific companies. All but five were from China, underscoring the country’s heft as the world’s No. 2 economy and the strength of its tech sector. Chinese Internet billionaires that have listed their main business on the Nasdaq over the years include Robin Li, chairman of Baidu and Richard Liu of JD.com.

This year, with Asia helping to lead a global economic recovery from Covid, the number of listings from the region may beat that pre-Covid number, Vice Chairman Robert McCooey, Jr. said in an interview. “Our pipeline is super strong,” McCooey said via Zoom, noting 94 active “F-1” filings with the U.S. Securities and Exchange Commission by Asia-Pacific businesses aiming to go public.

China businesses and entrepreneurs that led the way in 2019 may have to share the stage with those from other Asia nations this year, however, McCooey said. Though it’s impossible to say for sure how many will come through, McCooey noted that only about half of those F-1 filers are from Chinese companies.

“If you rewind the clock three-four-five years, 80% of them would have been Chinese and only a small number from other parts of Asia,” including Singapore, South Korea and Japan, he said. “The fact that 50% of them come from China is great, but I think it does show where the market has shifted over the past few years,” McCooey said. “We’re casting a broader net here that includes China, but also looking at Asia (overall).”

To be sure, the Nasdaq is mostly for U.S. companies – they account for about 80% of the 4,000 businesses that trade there. Yet the remaining 20% — or about 800 — are based overseas. Among the largest are JD.com and Trip.com from China. Even amid the pandemic last year, a total of 48 international listings came to Nasdaq (including SPAC IPOs), 30 of which were from the Asia-Pacific. Some of biggest listings in 2022 were Gogoro, a Taiwan operator of a battery-swapping platform and scooter maker, and Atour Lifestyle Holdings, a mainland China hotel chain operator.

There remains an international listing backlog this year in part due to the difficulties of traveling during the pandemic, said McCooey, a 15-year Nasdaq veteran who oversees IPOs from Asia and Latin America. A shadow over China fundraising lifted in December when the U.S. regulators said they had reached an agreement over auditing of Chinese-listed firms that had caused new listings from the country to grind to a near halt. This week, Hesai Group, a supplier of sensors for self-driving vehicles whose investors include Baidu and smartphone maker Xiaomi, is expected to list. So far, there have been four other international listings on the Nasdaq this year, three of which were from the Asia-Pacific: Cetus Capital Acquisition, Quantasing Group and Lichen China.

Aside from the easing of Covid-related restrictions in China itself, hopes for a recovery in Chinese listings at the Nasdaq got a boost when China’s New York consulate chief Huang Ping came to ring an opening bell last month to mark the Lunar New Year.

Whether China gains actually materialize will also depend in part on confidence among listees and investors alike, he said. “Success begets success,” said 57-year-old McCooey. “That’s what my dad used to always say.” The more companies that go public and are successful, the more confidence others will have to follow them and go down that path, he said.

One further challenge this spring for China firms and their underwriters will be fallout from the U.S. downing of the suspected spy balloon this month, stoking Cold War fears. McCooey said he didn’t expect an impact on listings. “Tensions between the U.S. and China have gone on for decades,” he said. “They just get heightened in the press sometimes more during certain periods.”

Also potentially poised for a good year in 2023, believes McCooey: U.S. listings by companies from Southeast Asia. “There’s been a tremendous amount of growth in the companies in the region,” he said. “Companies have now grown to a size and a scale” and in industries associated with the Nasdaq such as technology, healthcare, consumer logistics, and robotics, McCooey said. “They’re interested in the U.S. market and they’re growing.”

Among the 18 Asia-Pacific companies to file F-1s since December, four have come from Singapore, including CytoMed Therapeutics, a biotech firm, and IMMRSIV, a software company.

“There’s been a lot of money that has left other parts of Asia (and) come into Singapore. It’s looked at as kind of the Switzerland of Southeast Asia and warm and welcoming,” he said. “A lot of people are comfortable there, a lot of businesses are comfortable there, and the business climate is good there. There just are a lot of factors that are working in (Singapore’s) favor right now. And then obviously, with some of the geopolitical tensions that have gone on, companies (will) try to remove themselves from that.

Although India hasn’t accounted for many international Nasdaq issuers of late, owing to restrictions by the country on direct overseas listings (companies have to list at home first), McCooey said he’s also optimistic that more businesses from that country will also seek to tap U.S. markets.

“I’ve been a huge believer in India for years,” said McCooey, a graduate of College of the Holy Cross in Worcester, Massachusetts. “It’s just too large, and an amazing market for us not to think about it that way. It just takes a while.”

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