Hong Kong set to vault to the top of global IPO league with $300b haul

A strong Q3 performance has boosted expectations of the SAR taking the top spot.

In defiance of the subdued market environment that has seen better days, Hong Kong is well-positioned to claim the spot as the highest performing global stock exchange by end-2018 on the back of blockbuster listings and an IPO pipeline that’s fit to burst.

KPMG China has revised its IPO fundraising forecast for Hong Kong from $250b to over $300b by end-2018 after a strong performance in Q3 that bucked the increasingly bearish tone of global market rattled by trade jitters.

Also read: Hong Kong raises record US$19.2b in summer IPO haul

The Main Board hauled $190b in proceeds from 40 new listings in Q3 alone, smashing the full-year 2017 record of $122.6b thanks to China Tower’s mega $54.3b IPO. The GEM also booked a healthy performance after raising $4.6b from 67 new listings in the first three quarters of the year.

Also read: Meituan Dianping raises US$4.2b in IPO priced at high end

Moving forward, IPO proceeds in the Main Board are expected to hit $238.2b in the first nine months of 2018, almost triple the amount raised a year ago, according to KPMG. The number of IPOs is forecasted to balloon by 73% to 88, whilst the average deal size will also increase to $2.71b.

The buoyant forecast is boosted by sweeping bourse reforms implemented by the stock exchange operator which paved the way for new economy firms and biotech firms with no record of profitability to list.

“Three pre-revenue biotech companies and two with weighted voting right structures completed their IPOs by the end of Q3. We expect to see six to ten pre-revenue biotech companies list by the end of 2018 as the trend continues,” Maggie Lee, Head of Capital Markets Development Group, Hong Kong, KPMG
China said in a statement.

Also read: US biotech firms seeking higher valuations rush to Hong Kong

The high-end manufacturing and high-tech companies are expected to retain the lead in terms of total transactions and proceeds alongside the financial services sector which is expected to eat up market share by Q4, added Louis Lau, partner, capital markets advisory group at KPMG China.