Asia share offerings plunge 60 percent in first half, seen pushing new job cuts

Wed Jun 29, 2016 9:04pm EDT
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By Elzio Barreto and Sumeet Chatterjee

HONG KONG (Reuters) - Share offerings in Asia-Pacific ex-Japan sank nearly 60 percent in the first half of 2016 amid the weakest activity since 2008, weighed by volatile equity markets, China's slowdown and uncertainty over Britain's exit from the European Union.

The drop underscores expectations of further job cuts in a financial industry already reeling from declining revenues, and with the impact of Britain's decision last week to leave the EU a major new source of instability.

Proceeds in the region's equity capital markets (ECM) tumbled to $66.6 billion in the first six months of the year from $155.3 billion in the same period in 2015, according to preliminary Thomson Reuters data through June 27.

Global markets were on edge for most of the first half on concerns over the U.S. Federal Reserve's plans for higher interest rates, China's slowest growth in 25 years and Britain's vote on EU membership.

Global markets sank on Friday in response to Britain's EU exit vote, and uncertainty about what happens next could affect demand for listings across the region even as the outlook for China improves.

"The next couple of months are going to be volatile, but things in the UK will stabilize and the noise out of Europe will calm down," said George Taylor, co-head of Asia Pacific Global Capital Markets at Morgan Stanley.

"Sentiment toward China isn't too bad. The country looks quite stable, given what's happening in Europe. Chinese fund managers are buying again."

Global investment banks were hardest hit by the slump in activity since most of them cannot rely as much on China's domestic market for deals and underwriting fees, which are dominated by homegrown firms.   Continued...

A man reads a newspaper in front of an electronic board at a brokerage house in Beijing, China, June 27, 2016. REUTERS/Kim Kyung-Hoon/File Photo