‘Less impacted’ AI to lead 2024 IPO trends

Artificial intelligence and emerging economies are expected to energize the IPO landscape amidst a high-interest rate environment and geopolitical uncertainties.

Artificial intelligence related businesses will drive the growth for the IPO market next year due to its resistance in energy price increases, Andy Wong, IPO leader and PRC-HK Business Coordination Partner said.

According to Wong, as the global economy continues to adapt to post-pandemic realities, the IPO market is bracing for a dynamic 2024 with AI taking over the interest of potential investors.

“Other industries like the new economy sectors and life sciences sector are also of particular interest to both ends of the universe. But the weather and uncertainty on valuation shall bring the investor appetizer to a wait and see attitude in two to four,” he said.

Wong mentioned that the biggest headwind for the IPO market in 2024 is likely the high-interest rate environment, which could dampen investor confidence. Geopolitical tensions and the ongoing energy price fluctuations also contribute to uncertainties that may influence the performance of issuers and the market at large.

“For example, the US tension and Russia, you can have conflict and also the recent Israel Hamas conflict, these also impact energy prices potentially in the world. So, this may affect the performance of the issuer,” he said.

Wong added that regulatory changes in Mainland China and economic recovery after the pandemic also add layers of complexity for potential issuers considering going public.

Despite the challenges, Wong said that emerging countries like Turkey, Romania, and Southeast Asian nations, including the Philippines, Indonesia, and India, will drive the major IPO trends next year. These markets, buoyed by strong local governance and economic potential, could become hotbeds for IPO activity.

The real turnaround, according to Wong, could occur in the latter half of 2024, with a potential decrease in global interest rates that may restore investor confidence. He predicts that this resurgence will be driven by sectors less impacted by volatile energy prices and other prevailing headwinds such as AI.