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Wednesday, September 26, 2018, 21:57
Deloitte raises Hong Kong IPO expectations
By Edith Lu in Hong Kong
Wednesday, September 26, 2018, 21:57 By Edith Lu in Hong Kong

In this Sept 25, 2017 photo, a Deloitte logo is pictured on a sign outside the company's offices in London. (DANIEL LEAL-OLIVAS / AFP)

Hong Kong could have about 220 initial public offerings on board raising around HK$300 billion this year - which is likely to make the Hong Kong Stock Exchange top the world again in terms of total fundraising amounts, Deloitte predicted on Wednesday.

We are excited to see the new regulations on listing rules have brought great benefits in a very short time. 

Edward Au, Deloitte China

Both the number and amount are expected to reach record highs. The new forecast exceeds Deloitte’s original expectation in June, which was 180 firms listed and as much as HK$190 billion financing. This is because it believes technology, media and telecom business and new economy firms will support the city’s IPO market.

“We are excited to see the new regulations on listing rules have brought great benefits in a very short time,” said Edward Au, co-head of Deloitte China’s national public offering group.

READ MORE: Deloitte maintains 180-firm IPO forecast

“In the third season, despite the negative impact of trade disputes and renminbi depreciation, Hong Kong’s strength in attracting fund flow can support firms going public successfully.”

By the end of September, Hong Kong will have seen 158 IPOs, a 49 percent increase compared to the same period last year. The total fundraising amount could rise 184 percent to HK$243 billion. 

New economy firms dominated the city’s IPO market, with three new economy firms out of the top five IPOs generating over 30 percent of the total fundraising amount. They included Xiaomi, Meituan Dianping as well as Ping An Healthcare and Technology.

However, many new economy firms experienced a weak trading debut. Shares of Xiaomi opened more than 2 percent below its IPO price, while Ping An Healthcare and Technology saw its shares close unchanged from its IPO price.

ALSO READ: Deloitte proposes tax relief as fiscal reserves swell

Investors questioned whether these companies are overvalued. Au said the reason for this was due to the market’s imbalanced investor structure.

“The valuation process is led by institutional investors who are taking a long-term view. But after the firm listed, many retail investors participated. The two sides hold different views and goals, which make these IPOs witness fluctuating debuts,” he explained.

Deloitte believes another new economy firm will be listed in the last quarter of 2018 and will raise approximately HK$8 billion. It also reported the IPO market can afford only three companies with dual-class shareholding structures and eight biotechnologies yet to generate revenue this year.

edithlu@chinadailyhk.com

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