Hong Kong IPO forecast slashed in half, as PwC expects 2022 proceeds to shrink 40 per cent amid tumbling valuations
- The accounting firm cut its forecast for 2022 by half amid a worsening economic outlook and dismal first-day returns so far
- PwC expects the number of deals to fall from 120 last year to 80 this year, as GoGoX moves forward with its IPO despite much lower expectations
PwC has become the first among the big four accounting firms to dial down its full-year IPO forecast for Hong Kong, slashing its prediction roughly in half from a previous estimate amid a worsening economic outlook and weakening investor confidence following lacklustre returns from initial public offerings so far.
The company now expects Hong Kong IPOs to raise between HK$180 billion (US$22.9 billion) and HK$200 billion this year, compared with its January forecast of between HK$350 billion and HK$400 billion. The predicted number of deals tumbles from 120 to 80.
Even at the high end, PWC’s new forecast means IPOs in the city would raise 40 per cent less cash than last year, when 99 deals generated HK$331.7 billion.
So far this year, 22 IPOs in the city have raised HK$17.1 billion – a 92 per cent drop compared to a year ago at this time. The other major accounting firms, Deloitte, KPMG and EY, are likely to release their half-year reviews and full-year outlooks later this month.
PwC predicted in January that Hong Kong could place among the top three IPO venues in 2022, in terms of funds raised. The city has topped that list in seven of the previous 13 years.
“I would not make a forecast on whether Hong Kong could still sustain the top-three IPO position for this year,” said Benson Wong, PwC Hong Kong’s entrepreneur group leader.