HONG KONG Exchanges & Clearing is among the worst-performing listed bourses worldwide this year as China’s extended corporate clampdown and pandemic-related woes have caused large initial public offerings to disappear.

The exchange’s shares have retreated about 28 per cent in 2022, just behind those of Moscow’s bourse and cryptocurrency platform Coinbase Global. HKEX is due to deliver earnings on Wednesday (Apr 27), with first-quarter net income expected to slump 23 per cent, according to an average of 6 estimates compiled by Bloomberg.

Hong Kong hasn’t hosted any IPO larger than US$1 billion so far this year. Overall proceeds in the Asian financial hub have slumped, with the vast majority of newcomers plunging below the listing price after they debuted. Losses in Chinese stocks have deepened this year as strict lockdowns add to persistent worries over regulation and rising global interest rates.

The bourse’s earnings “may be pressured by weak stock market sentiment, pandemic restrictions in the city and fewer IPOs by Chinese unicorns facing cybersecurity reviews or tighter overseas listing rules”, said Sharnie Wong, an analyst at Bloomberg Intelligence. 

On the listing front, the exchange is yet to see significant revenue generated by Chinese companies already public in the US and seeking to trade closer to home through so-called homecoming offers, as they aim to hedge against an expulsion stateside due to accounting scrutiny.

Such deals were cited by bankers and analysts late last year as a potentially active niche for the city’s exchange, but a further slump in equity markets has lowered valuations and made the deals less appealing.

“Hong Kong still stands to gain from a shift in US-listed Chinese companies to the city and mutual market access programmes,” said BI’s Wong.

Some US-listed companies such as Nio and Tencent Music Entertainment Group opted for a listing by way of introduction, a simpler and cheaper process that doesn’t involve raising new funds. Ride-hailing giant Didi Global was also considering the mechanism before it suspended plans in March for a listing that was initially expected around the summer. BLOOMBERG