The IPO of Tokyo Metro could boost the Japanese market as investors look for alternatives to China.

• The initial public offering of Tokyo Metro could stimulate the Japanese market and attract more businesses to the country, according to analysts, as China's momentum slows down.
• Tokyo Metro raised $2.3 billion in Japan's largest IPO in six years by pricing its shares at 1,200 yen each, according to a regulatory filing on Tuesday.
• Tokyo Metro's success will attract more companies to consider Japan as an IPO destination, according to Ringo Choi, EY's Asia-Pacific IPO leader.

The initial public offering of Tokyo Metro could stimulate the Japanese market and attract more businesses to the country, according to analysts, as China's momentum slows down.

Tokyo Metro raised $2.3 billion in Japan's largest IPO in six years by pricing its shares at 1,200 yen each, according to a regulatory filing on Tuesday.

According to two sources close to the matter, Reuters reported that the IPO was more than 15 times oversubscribed. The stock is expected to be listed on the Tokyo Stock Exchange on Oct. 23.

"Mio Kato, founder of LightStream Research, stated on CNBC's "Street Signs Asia" on Tuesday that it is widely known that the IPO has been priced at a relatively low cost. Kato believes that both the Tokyo government and the Ministry of Finance will not want the IPO to fail."

"The upcoming IPO is a significant event, and the entire public will be closely watching it as it comes close to the election. We believe that the offering presents excellent value."

In September 2023, equity capital market issuance in Asia-Pacific was $168 billion, which is 15% lower than the first nine months of the year and 27% less than the same period in 2022, according to a recent report by Dealogic, a financial markets platform.

Despite a decline in overall Asia-Pacific issuance, China's slowdown was offset by increased issuance from India and Japan, according to the report.

Kato believes that Japan's positive trend will persist, and the country will soon recover from its years of low IPO activity.

"Recently, there has been news about NASDAQ attempting to draw more Japanese IPOs. This is because the Chinese IPO market has been relatively quiet lately," he stated.

This week, Hyundai India began accepting orders for its $3.3 billion IPO in Mumbai, marking the country's largest listing.

On Tuesday, Ringo Choi, EY's Asia-Pacific IPO leader, stated on CNBC's "Squawk Box Asia" that both Hyundai India and Tokyo Metro are in "very hot positions" and possess "high liquidity."

Choi predicted that those two IPOs will be bellwethers for their respective markets.

He replied, "Yes, I believe that the opening of Tokyo Metro and Hyundai India's listings will pave the way for increased activity."

If the two IPOs are successful, it will encourage more companies to choose these markets as their IPO destination, according to Choi.

— CNBC's Dylan Butts contributed to this report.

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