People walk in front of an electronic stock board showing Japan's Nikkei 225 index at a securities firm, on Dec 12, 2023, in Tokyo. (PHOTO / AP)

SYDNEY - Bankers in Asian equity capital markets are hopeful of a better year in 2024 after a dismal showing for IPOs this year, noting that interest rates have stabilized globally but they add that elections across the region and in the US could crimp demand.

High interest rates, sticky inflation and geopolitical tensions have seen share sales by Asia Pacific (including Japanese) companies sink by a fifth in value so far this year to $229 billion, LSEG data shows. That's put this year on course to be the weakest since 2012.

The data covers new and secondary share sales, convertible bond issues and block trades.

But as interest rates in many countries appear to have peaked and talk turns to rate cuts next year, equity capital market (ECM) sentiment has improved in the last few weeks, bankers said.

Competition for IPOs in Asia is fierce with fees generated from ECM deals accounting for almost 40 percent of the region's investment banking wallet versus 25 percent globally

"We're in a window right now where the market has factored in a fairly benign macro outlook which could prompt issuers to come. The pipeline is strong," said Udhay Furtado, Citi's co-head of Asia equity capital markets.

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Evidence of the improvement in sentiment for share sales has been seen in a number of block trade deals in the region over the past few weeks. These include Bain Capital selling down $448 million worth of its shares in India's Axis Bank this month.

Furtado said, however, that windows for companies to come to market for funds would be "tight and tough to navigate" as elections get underway. As political activity heats up, businesses are typically reluctant to make major deal decisions, wary of potential policy changes.

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Elections in the region will kick off with Indonesia in February. South Korean and Indian voters will also head to the polls and the US election will be held in November.

Major deals in the pipeline for next year include Alibaba logistics firm Cainiao's plan to raise $1 to $2 billion in a Hong Kong IPO. It would be the first major listing of an Alibaba unit.

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Competition for IPOs in Asia is fierce with fees generated from ECM deals accounting for almost 40 percent of the region's investment banking wallet versus 25 percent globally.