This July 4, 2018 photo shows the bronze bull sculptures outside the Hong Kong stock exchange building in Central, Hong Kong. (CALVIN NG / CHINA DAILY))
Hong Kong fell from second place in 2021 to sixth place in the first quarter of 2022 in global IPO rankings by funds raised, with proceeds slumping 90 percent, but the market momentum could pick up quickly, accounting firm Deloitte said on Friday.
The city’s 15 IPOs raised HK$13.6 billion ($1.7 billion) during the first quarter, with funds falling from HK$132.8 billion in the same period in 2021. The number of listings was down 53 percent from 32 last year, according to Deloitte.
Internal and external factors have caused speculation among investors, and weighed on the market, analysts said.
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“The Hong Kong stock market started to plunge in early February 2022 due to speculation and worry about US interest rate rises and tapering, and the Russia-Ukraine conflict. The fifth wave of the pandemic cut back much of local business activity, further weighing on the performance of the IPO market,” Dick Kay, offering services leader at Deloitte China, said on Friday.
The Hong Kong capital market has many strong, proven fundamentals and leading edges that enable it to pick up much quicker than peers once adverse market conditions like the Russia-Ukraine conflict ease.
Edward Au, Managing partner, Deloitte China
However, the analyst said he expects market momentum could pick up swiftly once negative factors are removed.
“The Hong Kong capital market has many strong, proven fundamentals and leading edges that enable it to pick up much quicker than peers once adverse market conditions like the Russia-Ukraine conflict ease,” Deloitte China’s southern region managing partner Edward Au added.
In addition, Hong Kong’s ecosystem for nurturing new economy companies will provide a “strong backbone” for new economy IPOs, attracting technology and innovative companies, especially China concept stocks, to continue to flock to Hong Kong, Au said.
Despite the uncertainties posed by the Russia-Ukraine conflict and the COVID-19 outbreak on the Chinese mainland, the accounting firm made the prediction that Hong Kong will have about 120 listings in 2022, raising about HK$330 billion.
The “homecoming listings” from Chinese companies listed in the United States will be the key theme, with IPOs from TMT (technology, media, and telecom), life sciences and healthcare, and environmental, social and governance companies taking the spotlight, the company estimated.
In the rankings of global IPO financing in the first quarter of 2022, the Shanghai Stock Exchange took the first place, followed by the Korea Stock Exchange, Shenzhen Stock Exchange, Saudi Stock Exchange, and Nasdaq.
Meanwhile, the Hong Kong Exchanges and Clearing Limited announced on Thursday that there were 25 new listings in the first quarter of 2022, including one from the Growth Enterprise Market to the Main Board, a decrease of 14 or 36 percent compared to the same period last year; 60 Main Board and one GEM listing applications were accepted during the period, a decrease of nine and one respectively compared to the same period last year.
By the end of March, 2,573 companies were listed in Hong Kong, of which 2,224 were from the Main Board and 349 from the GEM. In March alone, the HKEX accepted 24 applications for listing on the Main Board, 14 of which have been approved in principle, according to the city’s bourse.
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