High interest rates and global economic uncertainty depressed IPO fundraising in Hong Kong by 35 per cent year on year to HK$11.6 billion (US$1.5 billion) in the first half, according to KPMG. Deal volume fell 15 per cent to 27 new listings, and the average deal size plunged 25 per cent to HK$428 million.
Those stats will put Hong Kong in 10th place among IPO venues globally for the first half, KPMG estimates. However, things are looking up, with the pipeline of active applications at 105 currently from 68 in January, KPMG’s report said.
“There is new-found positivity in the Hong Kong IPO market, as evidenced by the surge in IPO applicants,” said Irene Chu, partner and head of new economy and life sciences in Hong Kong for KPMG China.
“This upsurge has been supported by the CSRC’s five measures and A-share applicants switching their IPO plans to Hong Kong,” Chu said.
Mainland Chinese companies dominated the Hong Kong IPO market in the first half.
“Some [Chinese companies] have been planning to list in Hong Kong for a long time, while others have chosen to reroute to Hong Kong given the current regulatory environment,” said Jacky Lai, assurance partner with EY Hong Kong’s capital market service.
“For Chinese mainland companies, the processing time of getting listed in Hong Kong is shorter and of higher certainty.”
IPOs in mainland China’s A-shares market plunged 70 per cent to 52 deals in the first six months, while proceeds crashed 75 per cent to 56.5 billion yuan (US$7.8 billion), KPMG said.
Globally, 513 companies completed IPOs in the first half, raising US$51.6 billion while both proceeds and deal count fell 20 per cent year on year, according to KPMG.
The New York Stock Exchange, Nasdaq and the National Stock Exchange of India were the top three listing destinations, based on proceeds. Shanghai and Shenzhen rounded out the top five spots.
In the first half of the year, 92 per cent of Hong Kong IPOs were oversubscribed, up 6 percentage points year on year, and they were oversubscribed 196 times on average, compared with eight times in the prior period, according to EY.