Hong Kong IPOs drop to 20-year fundraising low as exchange ranks ninth globally amid hopes of fourth-quarter mega deals
- A total of 42 companies raised US$3.13 billion in the first nine months, a 65 per cent year-on-year drop and the lowest since 2003, Refinitiv says
- Investors and analysts hope for a fourth-quarter turnaround, with US$1 billion listings by Cainiao and Midea in the works
Share listings in Hong Kong in the first nine months of 2023 raised the smallest pile of funds in 20 years, putting the city’s bourse in ninth place in a global ranking of initial public offering (IPO) venues as investors and analysts look to the fourth quarter for a resumption of mega deals.
A total of 42 companies raised US$3.13 billion on the main board of the Hong Kong stock exchange in the first nine months, according to data company Refinitiv.
“It reflects the continued sluggishness of the secondary market, which had an impact on the primary market for new listings, as potential issuers are waiting for market conditions to improve to obtain higher valuations,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International.
In the third quarter, Hong Kong saw only 13 new listings, which raised US$862.5 million, 87 per cent lower than a year earlier and 39 per cent below the second quarter’s total.
Shenzhen’s ChiNext was the top IPO market globally in the first nine months, with 100 new listings raising US$16.16 billion. But even its proceeds dropped 22 per cent from a year earlier, according to Refinitiv.
The start-up focused ChiNext dethroned its counterpart, Shanghai’s Star Market, which slid to second place from the top spot in June. The Star Market hosted 62 new listings that raised US$15.79 billion in the first nine months.
US markets took the next two spots: Nasdaq in third place with 78 IPOs raising US$10.56 billion, and the New York Stock Exchange in fourth with 13 deals raising US$7.8 billion.
Hong Kong also ranks behind Shanghai’s main board, Abu Dhabi, Shenzhen’s main board and India’s National Stock Exchange, but ranks higher than Indonesia’s stock exchange.
Globally, among the 104 markets Refinitiv tracks, the number of deals during the first nine months fell 9.5 per cent to 957, while funds raised dropped 28 per cent to US$92.9 billion.
Johnson & Johnson’s consumer health business Kenvue raised US$4.37 billion in New York in May, which was the second largest IPO this year. This was followed by Adnoc Gas, a unit of Abu Dhabi National Oil in the United Arab Emirates, which raised US$2.5 billion in Abu Dhabi in March.
“Hong Kong’s IPO market is hard hit by rising interest rates, which tightened liquidity in the first nine months of this year,” said Louis Tse Ming-kwong, managing director of Wealthy Securities.
“However, things should get better in the fourth quarter onwards, as we have already seen several big players file listing applications,” Tse said. “With inflation now more under control, it is expected the US may start to cut down interest rates next year. Market sentiment will improve, and that will encourage more new listings.”
“Many companies tend to rush to go public before the end of the fiscal year,” said Everbright’s Ng. “There is a chance that the number of listings may rebound in the fourth quarter.
“The Hong Kong government is studying measures to invigorate the investment market. If these measures are implemented in the near future, there may be opportunities to improve the overall condition of the Hong Kong stock market as well as the IPO market.”
