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Hong Kong no longer in top three IPO venues
[HONG KONG] Hong Kong is not part of the top three listing venues globally for the first time in six years, as a slow start to 2020 has weighed on initial public offering activity.
Companies have raised only US$3.2 billion through initial public offerings (IPO) in the financial hub this year, putting it in fifth place behind exchanges in mainland China and New York, according to data compiled by Bloomberg. Shanghai leads the pack, with almost US$14 billion of IPO proceeds, thanks to Beijing-Shanghai High Speed Railway's US$4.3 billion float in January. Some US$11.6 billion was raised through new offerings on the New York Stock Exchange and US$8.1 billion on the Nasdaq, while Shenzhen sits in fourth place with US$3.4 billion.
Hong Kong was the world's top listing venue last year, with more than US$40 billion raised. Since 2015, it has always been No 1, except in 2017, when it ranked third with US$16 billion, the data show. To be sure, there is still more than half the year to go and the city may well catch up with a spate of larger deals lining up, including second listings by JD.com and NetEase.
IPO activity slowed to a trickle after the Lunar New Year holidays at the end of January, as the coronavirus outbreak rattled markets and issuers opted to stay on the sidelines. The biggest deal of 2020 has raised just US$383 million - a billion-dollar plus IPO had already come to the market by this time last year. This year's haul is down 36 per cent from the same period last year.
"Investors are more risk averse and don't want to place big bets unless they already understand a company well," said Edward Au, Deloitte's co-leader of the national public offering group.
Still, the companies that have listed since March have proved incredibly popular with investors, who have rushed to back health-care and biotech names amid the coronavirus pandemic.