A total of 102 companies are expected to list their shares on domestic stock exchanges in 2020, the highest number since the 2008 collapse of U.S. investment bank Lehman Brothers, the Tokyo Stock Exchange has announced.
Although the novel coronavirus outbreak caused a series of setbacks for listings, the subsequent rapid rise in stock prices has provided a tailwind. This will be the first time since 2007 -- when 121 companies went public -- that the number of new listings exceeds 100.
The number of new listings is a wider barometer of stock market activity. After dropping to 19 listings in 2009, a year after the collapse of Lehman Brothers, the number has gradually recovered and has been in the 80s to 90s range in recent years.
After the virus outbreak started to bludgeon global stock prices early in the year, 18 companies that had planned to go public in March or April put off their listings. When the market is in a slump, initial offering prices for shares also drop, meaning that companies may not be able to raise enough money evenif they go public.
As of June, some market participants thought that the number of new listings this year would be 20% to 30% less than usual. However, funds flowed into the markets, driven by massive monetary easing by the central banks of various countries. Expectations rebounded that the economy would recover in anticipation of the development of a vaccine, which led to an upturn in the stock market.
The Nikkei 225 stock average has also showed a clear upward trend since summer, recovering to the 26,000 yen level and reaching 29-year highs.
Seeing this trend, 10 of the 18 companies that suspended their listings at the beginning of spring went public afterward. Also, a number of new listings have occurred since July. It is notable that companies with growth potential amid the coronavirus crisis, such as IT-related companies, went public.
Tokyo-based Arara Inc., which listed on the Mothers section of the Tokyo Stock Exchange on Nov. 19, offers efficiency improvements using IT, such as cashless services, to regional supermarkets. At the event to celebrate the listing, Arara President Yosuke Iwai, who rang the bell with a wooden hammer, said: "I feel the weight of the listing and I'm filled with emotion. We want to provide services that will energize rural areas."
A general manager at Daiwa Securities Co. said: "Some companies that have taken advantage of the demand associated with the spread of new lifestyles have accelerated their listing plans. This trend is likely to continue in the future."
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