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How EY can help
The floodgates for cross-border listings have swung open. In the first three quarters of this year, 77 companies chose to list overseas—which included cross-border deals within the Americas, Asia-Pacific, and EMEIA regions—an increase from 64 during the same period last year. This represented a 20% YOY increase and accounted for 9% of global IPOs this year. Since 2023, approximately 52% of IPOs on US exchanges have been from foreign-domiciled issuers, hitting a 20-year high. While this percentage is partially caused by the generally low volume of IPOs in the last two years, it highlights a growing trend of international companies choosing US markets for their listings. In 2024, the robust US market attracted more listings from Mainland China, Hong Kong, Singapore and Australia compared with last year, though deal sizes were smaller. As US-China audit agreements eased delisting fears, Chinese firms have stopped pursuing Swiss listings, preferring the US for its liquidity and more advantageous valuations. Large cross-border deals, however, were dominated by Europe, with two mega transactions listed in the US and one in the Netherlands.
While cross-border listings have continued to gain momentum, stock exchanges are tailoring their listing regimes with varying degrees of changes to accommodate the evolving business landscape, where traditional financial metrics may not fully capture a company's value or potential.
In 2024, the UK introduced its most significant listing reforms in decades, aiming to make London more competitive with markets such as New York. Effective from September 2024, the Hong Kong Exchange (HKEX) also eased listing requirements to encourage IPOs of specialist technology firms and de-SPAC transactions.
Valuation metrics like price-earnings (P/E) ratios play a critical role when companies choose their listing destination. A higher P/E ratio signals stronger investor interest and can indicate a market’s optimism about future growth. This can make certain exchanges more attractive depending on the industry and prevailing market conditions. P/E ratios are relatively high in the US, India and the Middle East, making them favored destinations for IPO candidates and investors.