Hong Kong IPOs to raise HK$100 billion less in 2019, says KPMG
- Fundraising through listings hit an eight-year high in 2018 at HK$300 billion
- Investors, companies yet to fully adapt to listings reform aimed at technology, biotechnology firms
Fundraising through initial public offerings in Hong Kong is expected to decline by HK$100 billion (US$12.8 billion) in 2019 amid market uncertainties, according to professional services company KPMG. At HK$300 billion, such fundraising hit an eight-year high in 2018.
The special administrative region is expected to retain its position as one of the world’s largest IPO markets next year, even if it only raises HK$200 billion from 200 listings in 2019, a third below this year because of smaller flotation sizes, according to the accounting giant.
Six months after the largest listing reform in three decades, what has Hong Kong exchange gained?
“Global uncertainties such as Brexit and the trade war, the fact that we have not yet heard of mega deals in the coming year and the shrinking IPO sizes of many newly listed companies may prompt others to reschedule their listings,” said Maggie Lee, head of the capital markets development group at KPMG.
Seven companies listed in Hong Kong slashed their IPO sizes recently, amid a surge in new share offerings and a major sell-off in the equity market. Alibaba Group Holding-backed Babytree shrank its listing size by 70 per cent and Club Med owner Fosun Tourism Group reduced its IPO size by half. Alibaba owns the South China Morning Post.
The city’s bourse operator, Hong Kong Exchanges and Clearing, introduced its biggest listing reform in 25 years in April to attract technology and biotechnology companies, but the performance of many newly listed shares has been less than satisfactory.
Mainland China smartphone maker Xiaomi, whose listing was Hong Kong’s second-largest IPO this year, has been trading under its IPO price for about three months. Meituan Dianping, China's largest on-demand online services provider, has been trading under its IPO price of HK$69 for two months.
“This year is the first year for the Hong Kong stock exchange’s reforms aimed at attracting new economy companies, so it will take time for both investors to adapt and companies to adjust their level of pricing,” said Lee.