SYDNEY (Reuters) - Dealmakers expect the momentum for new share sales in India, now the world's busiest market for initial public offerings, and Australia in 2025 will cushion the impact of sluggish Chinese deals in the Asia Pacific.

The Mumbai-based National Stock Exchange outranked the bigger U.S. exchanges in the amounts raised by IPOs for the first time, driven by India's robust economic growth and increasingly active domestic investors, following the rush of IPOs in 2024.

There was a 149% increase in the value of IPOs in India in the past year to $18.4 billion, according to LSEG data, which contributed to total equity capital market activity almost doubling.

The Indian exchange accounted for 16.8% of global market share for IPOs, outranking the New York Stock Exchange and Nasdaq, the data showed.

"Within emerging market portfolio countries, India is the bright spot," said Peihao Huang, JPMorgan's ( JPM ) co-head of Asia Pacific equity capital markets.

"Our forecast is for 2025 to outperform 2024 based on the pipeline visibility, but that will to a certain degree depend on where the Fed rates will be, and where other markets within emerging markets perform, for example, (if there is) a strong China recovery," Huang added.

Besides India, two major deals - HMC Capital's ( HMCLF ) A$2 billion ($1.25 billion) Digico REIT listing and fast food chain Guzman y Gomez's ( GYGLF ) A$335.1 million IPO - helped Australia's dormant new share sale market record a 294% jump in year-on-year volume in 2024.

Despite being the largest Australian IPO for six years, data centre owner Digico saw its shares fall by up to 20% in the first two days of trading after plunging below the issue price in the first trading session last week.

"The recent disappointing performance of the latest batch of IPOs, excluding GYG, means that for future deals, there will need to be a reset on price expectations to meet investor demand," said Ron Shamgar, head of Australian equities at TAMIM Asset Management.

However, a lack of major IPOs in the past three years before Digico and an increasing number of big companies being taken off the ASX has fuelled investor demand for new stocks, Macquarie's co-head of Asia Pacific ECM Georgina Johnson said.

"Large transactions that are well supported and trade well in the after market will give vendors and listed investors confidence," Johnson said, adding that private equity companies will be looking to IPOs in light of their depressed asset valuations in recent years.

CHINA EXPOSURE

The Asia Pacific region as a whole saw a 33% fall in IPO volume this year, while the value of Chinese IPOs remained weak with $13.3 billion worth of new share sales in 2024, according to LSEG, an almost 74% decline from last year.

Regulators in mainland China and Hong Kong have told some of the world's biggest banks to help speed up Chinese companies' listings in the city, Reuters reported on Dec 9, citing sources with knowledge of the matter.

In Hong Kong, a total of $5.3 billion was raised via IPOs, slightly down from $5.7 billion in 2023, the LSEG data showed.

Taking into account secondary listings like Midea's $4 billion transaction in September and SF Holding's $750 million deal in November, share sale volumes rose to $10.6 billion in 2024 from $5.9 billion last year.

Dealmakers are hopeful China's economic stimulus measures will prompt investors to increase exposure to mainland equities in 2025. Hong Kong's Hang Seng Index is up about 20% since the first stimulus measures were announced in September.

"While questions remain as to whether the policies will work, the fact is that Chinese stimulus policies are in place to shake up the economy and boost the market," said James Wang, Goldman Sachs' co-head of Asia ex Japan ECM.

"Previous expectations were that China could get worse. Now the stimulus and consequent market rally has provided the confidence to look at valuations."

($1 = 1.6054 Australian dollars)