Eastern emerging markets to lead IPO growth in 2010

Those looking for the engines of growth in the Initial Public Offerings market in 2010 should concentrate on China, technology and private equity, according to Ernst & Young.

A poll of institutional investors showed that 75% think China will lead IPOs, followed by India, then the UK, Australia and Germany, says E&Y.

Indeed, the majority view backs the Chinese market to rebound before the end of 2009, with the UK, Australia and Germany following suit in the first half of 2010 ­ though 42% believe the IPO markets of Japan and France won’t emerge from historical lows for as much as another 18 months.

Technology leads the way for sector growth according to E&Y’s poll, as almost half say they believe technology stocks will lead the recovery, followed by financial services, oil and gas, metals and mining and retail. Interestingly, investors think private equity houses will also take a leading role in the IPO market next year given the backlog of PE-backed businesses coming up for exit in 2010.

“Recent IPO activity in the past two quarters confirms that some IPO markets are making an early recovery, notably in the emerging economies of China, India and Brazil,” says Greg Ericksen, global vice chair of strategic growth markets at Ernst & Young.

“China-based companies in particular have been significant in driving recent capital market activity, with more deals than North America and Europe combined. Although the rest of the world appears to be picking up, full recovery will take longer and we don’t expect markets to stabilise for another 12 months.”

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