Editor’s letter: Market bounce back? Think again
Asia’s capital markets have swung from euphoria to despair in the past year. The days of bumper deal flow are over, now followed by a relative drought – cancelled or smaller trades, market volatility, and talk of the need to trim back large teams. Heading into the second half of the year, the mood is set to get even grimmer.
Primary capital market action across asset classes in Asia has taken a beating in 2022. Volumes for bonds, syndicated loans, mergers and acquisitions and IPOs have all tumbled so far this year.
Fee income for investment banks in Asia has dried up, and shares in newly listed firms (of which there are not that many) are trading below their debut IPO price. Borrowers brave enough to tap the bond markets have to offer a generous new-issue premium to lure investors, while many of the regulars in the debt and equity markets have opted to defer their deals in the hope that sentiment will improve.
They may, however, be left waiting quite a while if recent developments are any indication of what’s to come in the rest of this year.