Hong Kong on track to top last year's IPO haul of HK$169 billion
With HK$80.8b raised in the first six months, momentum is with the city's listings market to surpass the HK$169b raised in 2013, report says
The initial public offering market is on track to eclipse the HK$169 billion raised last year despite the slowdown seen in giant share sales, a report said.
The city's two listing venues - the main board and the junior Growth Enterprise Market - raised HK$80.8 billion from 44 companies in the first six months of this year, compared with the HK$40 billion in 21 deals seen in the same period a year earlier, the report published yesterday by KPMG said. But it added that the outlook for the listings market was "full of uncertainties" after WH Group's high-profile withdrawal of its US$2 billion listing in April due to poor demand.
"The weak investor demand for some IPOs has prompted us to form a blurry outlook for the rest of 2014," KPMG said, adding it expects mainland non-bank financial firms, including micro-credit lenders, will become the focus of the city's offering market due to their higher growth potential compared with traditional companies.
The upbeat first-half figures were bolstered by a strong June when 16 mostly small offerings took place. Those firms were among the 50 listing hopefuls to file their applications before a new sponsor rule took effect on April 1.
The new rule requires listing candidates to publish their preliminary applications online once they pass an initial three-day check after filing with the Hong Kong stock exchange. If a listing application is returned for failing the vetting process, listing applicants may only reapply eight weeks after the date that the application was returned.
The remaining pipeline will provide momentum in the second half, with more than 20 companies expected to list this month, said Rebecca Chan, a KPMG partner specialising in Hong Kong capital markets, adding that the 2014 performance will depend on the fourth quarter, the traditional peak season for listings. Among the upcoming offerings, Hong Kong Airlines - partly owned by mainland carrier Hainan Airlines - has drawn attention as it is planning a combined US$500 million sale in what could be Hong Kong's first dual-currency float by issuing yuan- and Hong Kong dollar-denominated shares.
In contrast to sizeable technology deals in the US market, Kenneth Tse, head of JP Morgan's depositary receipts group in Asia-Pacific, said Hong Kong remained a preferred venue for "old economy" stocks such as banks and real estate companies. The US has an advantage in hosting technology listings given its deep industry knowledge and entrepreneurial community.
Paul Keung, chief financial officer at Tian Ge Interactive, a Chinese live video streaming company whose shares were up 8 per cent on their Hong Kong trading debut yesterday, said Hong Kong was equally proficient in hosting technology IPOs given recent innovations that levelled the playing field.