2 factors poised to amplify Hong Kong’s IPO Market in 2H23

There were 27 IPOs in HK from January to June.

From a decade low last year, Hong Kong’s IPO market could recover its footing in the second half of this year.

Elaine Tan, senior analyst at Refinitiv Deals Intelligence, told Hong Kong Business that there are two factors that can potentially improve IPO activity in the city.

One of these factors is the easing listing rules for Specialist Technology Companies.

Early this year, Hong Kong proposed a new regime where innovative or specialist technology companies will be exempt from existing financial eligibility tests under the Listing Rules.

Specialist tech firms include those involved in next-generation information technology, advanced hardware, advanced materials, new energy and environmental protection, and new food and agriculture technologies, amongst others.

Another factor that can help boost the IPO market to recovery is the launch of Hong Kong’s new innovative IPO settlement platform “that will reduce settlement period from five days to two days,” said Tan.

Globally, Tan said IPO markets remained weak. Hong Kong, however, showed resilience and “witnessed increases in both proceeds and number of IPOs in the first half of 2023, amidst a challenging market,” she said.

Data from Refinitiv showed that Hong Kong had 27 IPOs in the first half of the year and was able to raise US$2.03b (HK$15.91b).

ECM growth

Apart from its IPO market, Hong Kong also saw growth across various types of equity capital market (ECM) deals such as follow-on offerings and convertibles.

In 1H23, there were 88 follow-on offerings and seven convertibles, raising US$7.93b (HK$62.16b) and US$1.18b (HK$1.25b), respectively.

The growth across various issue types has led to a 6% year-on-year increase in the number of ECM issuances in the city and a 46% YoY increase in proceeds.

“[Hong Kong] is finally showing signs of recovery after last year’s first half period fell to almost a decade low,” Tan said.

(All figures are as of 22 July 2023)