Hong Kong’s initial public offering (IPO) market is poised to bounce back later in the year thanks to market improvement measures and a strong pipeline of potential issuers, financial experts said on Monday following the city’s lackluster start.
Hong Kong’s IPO fundraising amount dropped 30 percent year-on-year to HK$4.7 billion ($600 million) in the first quarter, the latest data from Deloitte shows.
The Asian hub, with its IPO market hitting a new low not seen since the same period in 2009, slid to 10th position on the fundraising list globally in the first three months, Deloitte’s IPO report, published on Monday, said.
The number of new listings in the city’s bourse also decreased by 33 percent to 12 from 18 during the same period last year, with no “mega IPO” taking place, according to the accounting firm.
We have witnessed an increase in listing applications, in particular from the artificial intelligence, life science, and healthcare industries, which are important and potential sectors.
Edward Au, Managing partner at Deloitte
Robert Lui, southern region Hong Kong offering services leader of the capital market services group at Deloitte, said the city’s market has continued to be hit by external markets and weak sentiment, in particular on the end of the US interest rate hike cycle.
Nevertheless, he noted that Hong Kong’s market started to show positive signs in March with more new listings and better market turnover, and its pipeline had grown stronger by the end of the first quarter.
In Deloitte’s estimate, Hong Kong is expected to see 80 IPOs, raising HK$100 billion for the full year — more than double last year’s HK$45 billion.
“Amid speculation of a potential delay in the US interest rate cut timetable, we remain optimistic about the outlook and performance of the Hong Kong IPO market in 2024,” said Edward Au, southern region managing partner at Deloitte.
“We have witnessed an increase in listing applications, in particular from the artificial intelligence, life science, and healthcare industries, which are important and potential sectors,” he said.
While many potential issuers await a market valuation rebound, certain companies are committed to listing in Hong Kong despite the current environment, driven by pressing fundraising needs to support their business development, he added.
Last August, the Hong Kong government set up a dedicated task force to enhance stock market liquidity. Most of their proposals have been implemented so far, including expanding the scope of recognized stock exchanges and reducing stamp duty on stock trading.
The remaining short-term measures, such as reviewing the bid-ask spread in securities trading and the continuation of trading during inclement weather, are expected to be implemented in the first half of this year or are subject to public consultation, said Undersecretary for Financial Services and the Treasury Joseph Chan Ho-lim.
Addressing a meeting by the Legislative Council Panel on Financial Affairs on Monday, Chan said the government will step up efforts to host international mega events and showcase the latest developments and opportunities in Hong Kong’s financial services sector.
Attending the same meeting, CEO of HKEX Bonnie Chan Yiting said the median approval time for main board listings on the exchange last year had been shortened to 48 business days from the previous year's 70 days.
She added that the bourse operator received 65 new listing applications in the first quarter of this year, up over 30 percent year-on-year.
However, companies are inclined to get floated only when they see an improvement in market conditions and attractive pricing, Chan said.
According to Deloitte, the New York Stock Exchange topped the global IPO list with 12 listings, raising HK$33.6 billion in the first three months.
The second spot was taken by the Nasdaq’s 25 listings that raised HK$29.5 billion, with the Swiss Stock Exchange, the National Stock Exchange of India and the Shanghai Stock Exchange in third, fourth, and fifth places respectively.
Contact the writer at evanliu@chinadailyhk.com
