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The Market’s Expectations for a Booming IPO Scene in the Next Three Years

31 January, 2025

The global IPO market has been relatively subdued in recent years. In 2024, there were only 1,251 IPO deals worldwide, raising over $121 billion. This figure slightly decreased from 2023 and continued a downward trend seen in previous years.

India stood out as the most prominent market, leading the world in the number of IPOs for the first time. It doubled the number of deals compared to the US market and was 2.5 times higher than Europe. However, the US still dominated in terms of capital raised, with 55% of listings coming from foreign organizations due to capital flow shifts towards the US market caused by yield differentials and a strong dollar.

In contrast, Southeast Asia experienced a decline, hitting a nine-year low with just 122 deals and a meager $3 billion raised. This was a significant drop from 163 deals and $6.8 billion in 2023, mainly due to the weakness of regional currencies and interest rate differentials. Despite this, Malaysia emerged as a bright spot, leading the region in both the number of IPOs and total capital raised.

Overall, the global IPO market is influenced by various factors, including economic downturns, fiscal and monetary policy disparities, geopolitical tensions, the digital transformation trend, diverse capital-raising methods, and capital-raising requirements to mitigate environmental impact and enhance sustainability (ESG).

Vietnam’s IPO market followed the global downward trend. After a booming period from 2016 to 2018, both in terms of deal volume and capital raised, Vietnam’s IPO market experienced a decline. The primary driver during the booming period was the wave of privatization, listing, and divestment of state-owned enterprises, with many state-owned businesses being listed and providing significant capitalization to the stock market.

Additionally, foreign investor ownership ratios surged above 20%, and the Vietnamese stock market gained a substantial weight in the FTSE Frontier Index and MSCI Frontier Index. This progress fueled expectations for a potential market upgrade.

Mr. Nguyen The Minh, Director of Research and Customer Development, Yuanta Securities Vietnam

In 2019, there was a decrease in the number of IPO deals and capital raised, a common trend following a period of rapid growth. However, the COVID-19 pandemic significantly impacted Vietnam’s IPO market in 2020, causing a sharp decline due to economic downturns and investors’ risk-averse behavior. But, from 2021 onwards, the IPO market gradually recovered, aided by the strong performance of the stock market, although it has not yet returned to pre-pandemic levels.

In 2022, Vietnam’s IPO market faced further challenges due to the turmoil in the bond market and the aftermath of the overheating real estate sector. Investor sentiment turned pessimistic towards the capital market, making businesses cautious about listing and capital raising.

The number of IPO deals and capital raised continued to decline during 2022–2024. In 2024, there was only one IPO deal, raising approximately VND 900 billion, accounting for 1.3% of total IPO capital raised in Southeast Asia.

The subdued IPO activity was mainly due to economic challenges and the poor performance of businesses, resulting in many companies not meeting the listing requirements. Additionally, the stock market’s difficulties made the capital market less attractive, and the outflow of foreign investment further reduced the demand for IPOs.

Looking ahead to 2025, there are several factors that could contribute to a recovery in Vietnam’s IPO market. Firstly, Vietnam’s economic growth is expected to be strong, with the government targeting a GDP growth rate of 7.5–8% and even aiming for double-digit growth. Additionally, the recovery of the real estate market in the second half of 2025, driven by the government’s resolute efforts to address legal issues, is expected to boost capital-raising activities through the stock market.

New policies, such as the Securities Law and the Law on the Use of Public Assets, along with amendments to existing laws in 2024, will come into force and be implemented in 2025, providing further impetus to the IPO market.

Interest rates are expected to remain high or increase slightly as the Fed may only modestly reduce rates in 2025 due to concerns about resurgent inflation. Similarly, the State Bank of Vietnam may soon promote higher interest rates to manage future exchange rate and inflation pressures after the government’s economic stimulus measures.

Foreign investors are likely to return to Vietnam’s stock market in 2025, particularly with the wave of listings of state-owned enterprises and the shift from Upcom to HOSE. The potential market upgrade also acts as a catalyst for the IPO market to explore opportunities in the capital market. It is estimated that there will be approximately $47.5 billion in IPO deals over the next three years.

Mr. Nguyen The Minh, Director of Research and Customer Development, Yuanta Securities Vietnam