Why Asia has no SpaceX-scale IPO [Debriefing]

By Seo Ji-yeon, The Herald Business

Asia has world-class competitiveness in semiconductors, electric vehicles, robots and advanced manufacturing — yet it has struggled to produce mega-scale initial public offerings like SpaceX's in the United States. Analysts say the gap is not a matter of technology or market size but of capital market structure: Asian companies lack the ecosystem that allows firms to raise large sums over many years before listing and grow into blockbuster valuations.

CNBC reported Monday that Asia is not short of entrepreneurs, engineers or large domestic markets, but still lags far behind the US in producing companies that debut at stratospheric valuations.

"Asia has the technological capabilities, scale and talent base to support mega IPOs, but capital markets remain constrained by structural and behavioral factors," said Lenny Zephirin, founder of the Zephirin Group.

Large IPOs are not entirely absent from China, India and South Korea. CXMT, a Chinese memory chip company, plans to raise at least 29.5 billion yuan ($4.34 billion) through a listing on the Shanghai stock exchange. India's telecom and digital conglomerate Jio Platforms is targeting a valuation of around $120 billion in its IPO.

But the gap with America's technology giants is stark. SpaceX debuted at a valuation of $1.77 trillion and briefly surpassed $2 trillion in early trading.

Experts point to long-term pre-IPO capital as the single biggest difference between the US and Asia. In the United States, venture capital and private equity funds back high-risk, high-growth businesses for a decade or more before a listing, steadily building up valuations. In Asia, investment horizons tend to be shorter, and institutional investors are comparatively reluctant to absorb prolonged losses in exchange for long-run growth.

"The biggest driver of this phenomenon in the US has been the massive influx of private capital through private equity and other vehicles, which has allowed companies to grow until they can enter the market at very high valuations," said John Fields, a partner at Bain & Company.

China's industrial base is widely regarded as sufficient. Companies capable of competing with the US in AI, semiconductors, robotics and advanced manufacturing are emerging. The problem is the financial ecosystem.

"China has the industrial capacity, market scale and talent pool to produce mega-cap companies," said Ding Wenjie, a global capital investment strategist at China Asset Management. He noted, however, that China's venture capital industry operates on shorter investment cycles than its US counterpart and that cross-border capital inflows remain restricted. He said the country needs greater participation from long-term investors such as insurers and pension funds, as well as stronger capital inflow channels through Hong Kong.

Hong Kong has the infrastructure to handle large-scale offerings, but analysts say it lacks the ecosystem to consistently nurture venture-backed technology companies. Its landmark IPOs in the past have centered on banks and other financial firms rather than technology startups.

South Korea is home to world-class semiconductor and battery companies, but analysts say its market structure and corporate governance constrain valuation expansion. SK hynix and Samsung Electronics account for such a large share of the Kospi that growth prospects for the rest of the market are relatively limited, while key industries such as automobiles and shipbuilding have traditionally traded at low valuation multiples.

"Chaebol have played a central role in Korea's industrial growth, but today they are becoming an obstacle to nurturing newly emerging independent listed companies," said Palka Mishra, an analyst at Javelin Wealth. She said concentrated ownership structures, the "Korea discount" and a lack of long-term institutional investor participation have all held back mega-scale IPOs.

India, by contrast, has strong IPO demand. Retail investors, mutual funds and pension funds are active participants, and domestic savings flowing into equity markets have strengthened the listed market's capacity. The Jio Platforms IPO is seen as a potential inflection point for India's capital markets.

Yet Indian technology companies remain heavily domestically oriented and face significant pressure to turn profitable early. "India has the conditions to pull off many IPOs successfully, but the time is not yet ripe to pursue mega IPOs on the scale of large US companies," said VK Vijayakumar, chief investment strategist at Geojit Financial Services. "Indian startups cannot access the abundant private capital available in the US and face pressure to generate profits early," he said. "There is a tendency to prioritize profitability over growth."

Analysts say that for Asia to develop a US-style mega-IPO market, what is needed is not better technology at individual companies but a structural transformation of capital markets. That means aligning greater participation from long-term investors such as pension funds and insurers, longer venture capital investment horizons, improved corporate governance and broader analyst coverage of growth companies.

Signs of change are nonetheless emerging. Domestic savings in India continue to flow into equities, China is again expanding its technology and financial investment, South Korea is pushing ahead with governance reforms, and Hong Kong continues to serve as a gateway for international capital into China and the broader region.

"Asia is gradually building the ingredients needed to produce US-style mega IPOs," CNBC said. "The question is not technology — it is how patiently capital markets can support the long-term growth of companies."