According to PwC’s report entitled, “Capital Markets in 2025, The Future of equity capital markets,” there has been an increase in emerging market activity, with 55 percent of global IPO listing volume year to date taking place on exchanges located in emerging markets – a significant increase from 2004 when offerings in emerging markets only accounted for less than 25 percent.

“Despite a relative decrease in the number of foreign issuers in the U.S. in recent quarters, we have seen a considerable increase in the number of companies listing outside their home country,” continued PwC’s Friedman.  “As emerging economies in the East continue to grow, and established companies in the West look to tap new markets for growth, we expect that emerging market exchanges will see an increase in both the number of locally headquartered IPO registrants as well as the number of foreign filers, including U.K.-based, European or U.S. companies who are filing outside their home country.”

While emerging market exchanges are expected to see the majority of the projected growth, PwC believes global interest will continue in the NYSE and NASDAQ as they continue to be recognized as “blue-chip” exchanges that convey prestige, with a widely-held view that the overall oversight surrounding a U.S. listing includes high demands around corporate governance.  In addition to the comparative depth, knowledge and trust in U.S. exchange traded equities, the perception of a U.S. listing in itself has branding and other profile benefits that provide a solid foundation for companies who call emerging economies home, and as global equity issuance recovers to pre-recession levels, U.S. exchanges will continue to obtain quality listings from around the world.

Included in the report are the results of a survey in which executives were asked which foreign exchanges beyond their home exchange (a U.S. company would describe the NYSE and NASDAQ as their home exchange) they think issuers would consider when planning an IPO.  Surveyed executives confirmed that if they were not to plan an IPO in their home market, then they chose the current attractiveness of the mature markets of New York and London with 74 percent and 72 percent respectively.  When asked about the year 2025, surveyed executives choosing an exchange to list outside their home exchange, indicated China with 55 percent, then New York with 39 percent, India with 38 percent and London had declined to 29 percent.  These responses balanced the opportunities presented by a listing in a high-growth emerging economy including increased local brand awareness and customer engagement, with reduced access to banking and legal resources, currency issues, time and language differences and different regulatory environments.

There are a number of challenges to consider when pursuing an offering in any market.  According to PwC, companies need to properly assess a number of factors, including benefits of each market, access to investors and understanding the ongoing commitments to the regulatory requirements specific to each exchange.  The road to executing a successful IPO demands that companies carefully weigh each choice available before deciding which market best fits the company’s short- and long-term goals.

PwC