Japan posts longest streak of first-day IPO flops since 2020

[TOKYO] Japan’s run of struggling stock market debuts has stretched to the longest in six years, another sign of investor sentiment being shaken by the war in Iran.

J-Pharma dropped as much as 22 per cent and Basic fell as much as 8 per cent on their first day of trading, on a day when Japan’s stock benchmarks advanced along with the rest of Asia. Three other companies this year also fell at the open compared with their initial public offering (IPO) prices. The last time more than five new shares sank on their debut was in March 2020.

Japanese stocks had entered a technical correction this month as the war in Iran turned investors more risk averse. The same sentiment is amplified in the IPO market, with only seven deals priced so far this year, the fewest in any first quarter since 2011, according to Bloomberg-compiled data.

“The sentiment is getting pretty bad,” said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management, who has stopped joining IPOs this month as buying newly listed shares in the secondary market looked more reasonable.

Japan’s IPO market has been reshaped by banks turning to bigger deals and the Tokyo bourse raising the bar for companies to remain listed on its startup market section. That resulted in the number of tiny-sized deals decreasing to a 12-year low last year. BLOOMBERG