Decline in New Listings on Japanese Exchanges: January-June Period Registers a 26.3% Drop
In the first half of 2022, the number of new listings on the Tokyo Stock Exchange (TSE) has seen a significant drop, with a decrease of 26.3% compared to the same period in the previous year. This decline is largely due to the TSE implementing stricter listing criteria and a stronger focus on shareholder returns and capital optimization.
This shift has led securities firms to become more cautious in assessing companies seeking to go public, particularly affecting smaller companies and startups. For instance, new listings on the TSE's Growth section for startups dropped from 34 to 18 in the first half of the year.
The decrease may also be attributed to the record pace of Japanese companies exiting the TSE via delistings, driven by management buyouts and pressures to improve capital efficiency and shareholder value. This environment likely dissuades some firms from going public, contributing to the lower number of new listings.
Despite the overall decline, the corporation JX Advanced Metals Corp. made a successful debut on the TSE's top-tier Prime section in March. On its debut, the company's market capitalization surpassed the level on an initial public offering (IPO) price basis, reaching 782.6 billion yen.
Soichiro Saito of SMBC Nikko Securities attributes the decrease in new listings on the TSE's Growth section for startups to securities firms more carefully assessing companies seeking to go public. He predicts that the number of new listings on the TSE's Growth section for startups in 2022 will be lower than the number in the previous year, and the total number of new listings for the whole of 2022 is expected to fall far short of the previous year's 86.
It's worth noting that the impact of U.S. President Donald Trump's tariffs was minimal in a survey conducted during this period. The first half of 2022 saw a total of 28 new listings recorded on Japanese stock exchanges.
In summary, the decrease in the number of new listings on Japanese stock exchanges is mainly due to regulatory reforms aimed at improving market quality and encouraging more efficient capital use, leading to more rigorous assessment of candidates for public listing and consequently fewer IPOs in early 2022.
- The decline in new listings on the Tokyo Stock Exchange (TSE) can be partly attributed to the finance sector becoming more cautious in assessing companies, particularly in the industry of startups.
- The expected decrease in the number of new listings on the TSE's Growth section for startups in 2022 suggests a slowdown in business activities for these companies, as securities firms are mindful of capital optimization and shareholder returns.
