Hong Kong Exchanges and Clearing (HKEx), the holding company of the city's stock exchange, is facing challenging times in the coming months. A slew of negative economic factors, external and internal, have led to several firms either cancelling their listing plans or taking a wait-and-see attitude.
Will the second half of the year bring a positive tide or will the headwinds continue to lash the exchange as they did in the summer of last year? Financial analysts are divided in their opinions, but they all believe the recovery will remain anaemic if there is no resolution to the euro-zone debt crisis.
The euro zone has been lurching from one crisis to another and Greece, in the centre of the storm, has slipped into a deep abyss, affecting equity markets around the world. Analysts and strategists had already warned that, after a positive start to the year, the second half would test investors' resolve to hold on to their investments or to sell off everything at one go. Recent jobs data from the United States has also not been encouraging.
With all the doom and gloom lingering over equity markets, it's not surprising that several companies looking to list in Hong Kong are taking a second look at their options, while some have already withdrawn their applications.
The most high-profile company to withdraw was London-based jeweller Graff Diamonds. It was expected to raise US$1 billion, but volatile market conditions meant it put its listing plan on ice, making it the biggest initial public offering (IPO) to be shelved this year.
Graff management blamed adverse market conditions and 'consistently declining stock markets'. Adding to the uncertain environment was the fiasco surrounding Facebook's IPO last month that further spooked IT and software firms wanting to list.