Hong Kong sees IPO slowdown reversing, eyes international issuers
HONG KONG has more than 100 applicants in the pipeline for initial public offerings (IPOs) and is eyeing more companies and investors from markets including the Middle East and South-east Asia, said the chairman of the city’s bourse operator.
China’s economic slowdown, a sweeping regulatory crackdown that has tightened scrutiny over companies’ fundraising outside mainland China, and geopolitical tensions have all resulted in a bleak year for new listings in Hong Kong.
In recent years, anti-government protests, the imposition of a sweeping national security law, and punishing Covid-19 containment measures have also clouded Hong Kong’s status as a premier financial centre.
Public floats by Chinese companies account for most of the IPOs in Hong Kong, one of the top listing venues globally, and a major driver of revenue and fee income for the world’s biggest investment banks.
Based on Refinitiv data, about US$6 billion has been raised via 50 IPOs so far this year in the Asian financial hub, down sharply from more than US$25 billion in 2021.
While the bourse is on course to see its lowest IPO proceeds in a decade, Hong Kong Exchanges and Clearing (HKEX) chairman Laura Cha is “quite confident that the IPO market activity will return very quickly in the new year”.
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She added: “Currently, we have over 100 companies in the pipeline. Many of them are waiting for the market sentiment to improve so that their valuations could be better when they come to the market.”
While Cha expects Chinese companies, mostly those from the new-economy sector, to revive their capital raising plans in Hong Kong, HKEX is also looking to attract others from elsewhere to burnish its credentials as an international platform.
On the radar are prospective investors and issuers from the Middle East and South-east Asia.
“We are trying to broaden our international footprint in terms of the products that we are offering,” Cha said. “In other words, we will make ourselves much more diversified, (with) many more international companies, and that will be our strategy.”
International investors account for about 42 per cent of investments in Hong Kong’s equity market, and that share is “a lot higher” in the derivatives market, she said. “So we are already international in nature, but we will continue to expand that.”
Years of strict Covid restrictions have also badly hit Hong Kong’s economy, but the city has lifted most of its curbs in the last couple of months.
“With Covid restrictions being removed almost completely now, and the financial markets also performing well, I think we will be able to continue to attract new talents to Hong Kong,” Cha said. REUTERS
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