Ernst & Young expects Hong Kong IPOs to raise HK$220 billion ($28.2 billion) next year — and if the market has any mega IPOs, the fundraising could hit HK$350 billion or more.

The London-based professional services company estimated that the funds raised in the special administrative region this year will be HK$310.5 billion, or 8 percent higher than in 2018. About 160 companies had IPOs on the city’s stock exchange.

With the successful listing of Alibaba in Hong Kong, more and more Chinese enterprises that previously listed in the United States or somewhere else overseas are expected to pivot back to the exchange in the Asian financial hub, especially if the SAR government can include the Shanghai-Hong Kong Connect and Shenzhen-Hong Kong Connect in the package for those potential Hong Kong-bound enterprises

Ringo Choi, EY Asia Pacific IPO leader

However, Hong Kong’s global IPO crown — held by the SAR in 2018 and this year — would be hard to sustain in 2020 if no mega companies decide to float on the Hong Kong Stock Exchange next year, said Ringo Choi, EY Asia Pacific IPO leader.

Choi said that where oil production giant Saudi Aramco chooses to list for a second time will be a make-or-break factor for Hong Kong’s IPO title in 2020.

Given the fact that Saudi Aramco has a closer relationship with the London Stock Exchange, it is very likely that the Middle East oil producer will list with London’s bourse instead of Hong Kong for its secondary listing next year, and that could snap the SAR’s potential three-year title run, Choi said.

Nevertheless, with the successful listing of Alibaba in Hong Kong, more and more Chinese enterprises that previously listed in the United States or somewhere else overseas are expected to pivot back to the exchange in the Asian financial hub, especially if the SAR government can include the Shanghai-Hong Kong Connect and Shenzhen-Hong Kong Connect in the package for those potential Hong Kong-bound enterprises, said Choi, adding that a package of this type would be attractive to those companies seeking a secondary listing.

Adding to the strength is that more companies from the Chinese mainland are expected to list themselves in Hong Kong due to its relatively lower entry requirements.

Choi believed that new-economy companies — including those in technology, media and telecommunications, and healthcare — will remain a growth engine of IPO activities, coupled with the city’s traditional growth drivers such as retail, real estate and financials.

Regarding the worries of potential capital outflow from the city due to civil unrest, Jacky Lai, EY Hong Kong assurance partner, said that fundraising in the SAR is not that sensitive to any capital outflow since the movement of capital back and forth between cities could happen in a short time, rendering the concerns from Hong Kong’s primary market unnecessary.

kevindai@chinadailyhk.com