The IPO market is being re-globalized as Asia’s markets embrace dual listings and corporate governance reform

“Historically, we have been dominated by one major capital market, which is the US and Wall Street,” Vikram Lokur, CEO (Singapore) of Morgan Stanley investment Management, said at the Fortune Innovation Forum in Kuala Lumpur, Malaysia, on Tuesday.

But this may change, as companies explore the possibility of listing in non-US markets. “I think we are entering an era of what we like to call the re-globalization of regional centres,” Locore said.

Hong Kong, for example, has seen a boom in dual listings over the past year, both from companies listed in mainland China hoping to tap international capital, and from US-listed Chinese companies wanting to access mainland Chinese investors.

Some stock exchanges have launched programs to encourage people to invest domestically rather than abroad, potentially leading to an era of financial nationalism.

“In the past, we relied more on foreign capital, but today not so much,” said Jason Cao, head of the investment banking group at CGS International Securities. “Malaysia is home to one of the largest pension funds in the region… and the Monetary Authority of Singapore has launched a program to invest S$5 billion ($3.8 billion) in the local market. So we are seeing a trend of governments requesting funds to invest in local markets.”

Some Asian governments, especially Japan, have launched reform plans to improve corporate governance and increase shareholder value among listed companies. Japan’s success in this regard, with the Nikkei 225 reaching all-time highs in recent years, should encourage other governments such as South Korea, Singapore and Malaysia to activate their own reform programmes.

Yulin Yang, a board member of the Asian Corporate Governance Association, said there was “cautious optimism.” He warned that issues such as cross-shareholding – where companies hold shares in each other – and tunneling – where majority shareholders secretly turn the business over to themselves for personal gain – still create “a lot of fundamental differences in each market.”

“one block”

Southeast Asian markets alone may not be as large as their regional counterparts. Both the United States and China offer deep pools of institutional and retail capital. But CGS’s Su noted that ASEAN as a whole may be big enough to compete.

“I’m very optimistic about the capital in ASEAN and the connectivity that we can do. If we can narrow that capital together to say we are one bloc, that will be a really powerful thing,” he said.

The IPO market in Southeast Asia, after a long period of stagnation, has begun to recover. According to Deloitte, total IPO proceeds across Southeast Asia have risen 53% so far this year, with a particular focus on the real estate, financial services and consumer sectors.

But the issue of where to list may soon become less important in the future, especially as new tools and services allow investors to more easily access global markets.

“The key question for many companies in the last century was where to list their shares,” said Morgan Stanley’s Lokor. “But in the next century it will be about how to communicate.” “This is a reimagining of finance itself.”