Hong Kong named 3rd largest IPO market

Hong Kong IPO markets are set to have remained strong in H1.

Hong Kong Stock Exchange rose to third place in terms of posting the largest initial public offering (IPO) funds raised, according to the latest Deloitte China National Public Offering Group analysis.

Hong Kong’s initial public offering (IPO) markets are set to have remained strong in H1 amidst the pandemic. The tech sector remained vibrant even as most economic and business activities were suspended due to lockdowns and is expected to continue flourishing until H2.

Moreover, reforms and market developments, such as proposed changes to the listing regime for businesses in the US, incorporation of weighted-voting rights (WVR) and secondary listed companies into Hong Kong Hang Seng Indices (HSI), shortening the period from offering to pricing, partnership between Hong Kong Exchanges & Clearing and MSCI to launch a suite of Asia & Emerging market equity index futures and options, as well as potential introduction of corporate WVR beneficiaries, are set to encourage more Chinese tech firms to flock to Hong Kong markets.

"Last year, Hong Kong established itself as the world's second largest biotech listing venue. The market has been awaiting more WVR and secondary listed innovative companies and now conditions are more conducive to an increase in such listings," says Edward Au, Deloitte China Southern region managing partner and co-leader of the National Public Offering Group.

Hong Kong is expected to have had 59 new listings in H1, a 22% YoY decline from the same period in 2019. However, proceeds are expected to have increased by 25% to about $87.1b from $69.9b.

Deloitte forecasts Hong Kong will have had about 130 new listings raising $160-$220b over the course of 2020. Another three or four mega listings could raise about $7.8b each in H2, including IPOs by a food and beverage brand, an online medicine and healthcare platform and a financial services institution. Overall, life sciences, healthcare, biotech and TMT listings are set to shine.

Meanwhile, the mainland IPO market is doing well with Shanghai Stock Exchange sustaining its global leadership in IPO funds raised.

IPO activity among Chinese companies in the US remains subdued by the pandemic, intense Sino-US relations and policy headwinds. Large offerings from a cloud business, biotech company and an online retail and distribution platform contributed to the small increase in IPO proceeds.