HK expected to lose top ranking for IPOs amid global crisis
Fears over mainland China and Europe have led to a sharp drop in companies seeking to list in the city's stock exchange
The worsening financial situation in the world, in particular growing uncertainties about the debt crisis in the euro zone, and the economic slowdown in mainland China, had already seen the city's stock exchange slump to its worst performance in attracting new listings in the past 10 years, said Edward Huang, a strategist with Haitong International.
In the first eight months of this year, new listings raised just under HK$43 billion, down 77 per cent from about HK$190 billion over the same period last year. The amount was also a 10-year low for the Hong Kong Exchanges and Clearing.
"Institutional investors favoured bonds over stocks, and low trading and investment amounts," Huang said.
This cautionary behaviour was the main factor behind the slump in new public stock offerings, he said.
In July, the South China Morning Post reported that many of the companies that succeeded in launching their initial public offerings earlier this year should have been thankful mostly to their so-called cornerstone investors, who subscribed to between 40 and 50 per cent of the share offerings.
More recently, the fund-raising situation worsened as many companies could not get enough cornerstone investors to commit to such take-ups before their public float.