The Hong Kong IPO market is poised for a rebound due to the increasing funding demand from the region’s businesses amid the economic uncertainties caused by the COVID-19 pandemic, analysts from accounting firm KPMG said on Wednesday.
The market momentum comes from the continued growth of tech companies, resulting in strong pipelines in the major IPO markets, said Paul Lau, partner and head of Capital Markets at KPMG China.
“With continued growth of companies in the technology and biotech sectors, as well as companies involved in sustainable innovation, we are optimistic about global IPO activities as these uncertainties fade over time,” Lau said.
With continued growth of companies in the technology and biotech sectors, as well as companies involved in sustainable innovation, we are optimistic about global IPO activities as these uncertainties fade over time.
Paul Lau, partner and head of Capital Markets at KPMG China
The “homecoming listings” from Chinese companies listed in the United States also fuel the Hong Kong’s IPO market, the accounting firm said. “Hong Kong continues to be the natural choice for homecoming listings amid the uncertainty Chinese issuers are facing in the US market, with dual-primary listing showing an increasing trend,” KPMG said.
KPMG said it expects that homecoming listings and listings of healthcare companies to be among the key drivers of the IPO market for the rest of 2022.
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In addition, the launch of special-purpose acquisition companies, or SPACs, further brings momentum to the city’s IPO market for it could provide more funding options to issuers, as well as opportunities to investors, the firm said.
Eleven SPACs filed their respective listing applications in Hong Kong in the first quarter of 2022. The first SPAC listing took place on March 18 after the rules took effect in the city in January.
The launch of special-purpose acquisition companies, or SPACs, further brings momentum to the city’s IPO market for it could provide more funding options to issuers, as well as opportunities to investors, KPMG said
“The launch of the SPAC regime underlines the bourse’s continued efforts to enhance the city’s competitiveness as a fundraising hub,” said Irene Chu, a partner at KPMG China, adding that Hong Kong may see the first batch of SPAC mergers completed near the end of the year.
Meanwhile, the city’s financial regulators are reviewing the listing rules for large-scale advanced technology companies. Lau added that easing the listing requirements should make Hong Kong's capital markets increasingly attractive to high-growth and innovative companies from the mainland and other regions.
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“Not only would this support Hong Kong’s aspiration as an important hub for high-tech development in the (Guangdong-Hong Kong-Macao) Greater Bay Area, but also strengthen the city’s value proposition as a global leading IPO market,” he said.
